Greek Economic and Trade Office

Greek Economic and Trade Office

Embassy of Greece Prague, Czech Republic

Website: http://geocities.com/greek_trade

I N V E S T I N G I N T H E C Z E C H R E P U B L I C

General Information

The Czech Republic is an open economy and welcomes foreign direct investment in all sectors. Its stable political and economic environment, well-qualified workforce and central position in the European market make the Czech Republic an attractive place for investment.

Foreign direct investments in the Czech Republic, between 1993-2002, amounted to 36 billion US-$. The biggest foreign investors, during the same period were:

Country	Percentage
Germany	27%
Holland	24%
Austria	11%
USA	9%

The industry structure of foreign investment, 1990-1999, was as follows:

Field	Percentage
Banking	16%
Retails Services	14%
Metal Industry	8%
Cars & Foodstuffs	6%
Other

Greek direct investment in the Czech Republic so far does not exceed the 100 mio. US-$ mark. Greek owned companies or joint – ventures with local partners have concentrated mostly in the field of promoting the sales of products and services of the mother companies. No Greek investment has been made so far in manufacturing.

Investment Incentives

Foreign direct investment meeting certain eligibility criteria, including a minimum investment amount of a 10 mio US$, or 5 mio US$, if the investment is made in an area with high unemployment, may be eligible for all or any of the following incentives:

Tax relief on corporate tax for 10 years (new companies) or partial relief from corporate tax for 5 years (already existing companies).
Job - creation grants.
Training grants.
Provision of low – cost building land and / or infrastructure support.

Important Laws

Business activities in the Czech Republic have been liberalized to a great extent. Legislative regulations defining the conditions of establishing a company are given by the following Acts:

Commercial Code

The C.C. regulates the business activities of foreign persons, the Companies Register, the principles of accounting, the rules of competition, commercial companies and co-operatives and the law of obligations.

The C.C. regulates following commercial companies:

The general commercial partnership
The limited partnership
The private company limited by shares – 1.000.000 CK
The join-stock company - minimum capital 1.000.000 CK

Act No. 455/1991 Coll. (‘Trade Licensing Act”).

According to the Trade Licensing Act a foreign person should apply at the respective local Trades Licensing Office for issuing of a Trade Certificate. When the Trade Certificate is issued the foreign person should apply for entry into the Companies Register. Only after entry into Companies Register does the foreign person acquire authorization to conduct business on the territory of the Czech Republic with legal rights and obligations as Czech natural persons or legal entities.

Act No.326/1999 Coll., on the residence of foreign nationals in the territory of Czech Republic.

Individual Acts, defining specific features of certain types of business (cf. on the broadcasting and television transmission, on advocacy, etc.).

For more information regarding the above mentioned legal regulations and the full texts of laws an regulations please visit the web site of ASPI (only in Czech language): http://www.aspi.cz or http://www.bvll.cz

Joint – Ventures

Czech companies are eager to get into a joint venture with a foreign partner since this may be a solution to their long term loan and investment capital problem.

Czech banks, burdened by too many bad loans, are very reluctant to provide long-term loans, especially to small and medium companies. With current high interest rates, many Czech firms have no access to investment capital. Thus to remain competitive or increasingly competitive markets, many Czech manufacturing companies have started looking for foreign partners to set up a joint venture or a strategic partnership.

Bilateral Agreements with Greece

Greece and the Czech Republic have signed a number of agreements to promote bilateral trade and investment. The agreements includes:

Agreement on promotion and protection of investments (valid since 30.12.92, low no. 102/1993) that guaranteed the following principles:

Commitment to encourage and create favorable conditions for investors from the other state to invest in one’s territory and admit such investments in accordance with the respective laws and regulations;
Principle of national treatment and the most favoured nation clause;
Guarantee to prevent expropriation of foreign investors’ property, with the exception of property expropriated in the public interest, under due process of law and accompanied by prompt, adequate, and effective compensation payment;
Guarantee of free transfer of payments related to investments and returns into and out of receiving contracting party in freely convertible currencies;
Methods of settling disputes between an investor and a receiving contracting party, or mutually between the contracting parties.

Agreement on preventing double taxation (valid since 23.05.89, law no. 98/1989)

· Regulatse the taxation of all incomes and property and increases the legal protection of investors from both countries in relation to the existence and extent of their tax liability, therefore allowing them to better evaluate the profitability of their business projects abroad.

Sources of further information

CZEINVEST, a governmental organization for the promotion of investing in the Czech Republic, is a primary source for information and assistance to foreign investors. You can contact them at:

CZECHINVEST

Stepanska 15

120 00 Prague, Czech Republic

tel: (+420) 2 9634 2501

fax: (+420) 2 9634 2502

Contact: Mr. Rene Samek Director Of Marketing

e-mail: [email protected]

website: www.czechinvest.org

Other sources include:

Ministry of Trade & Industry

Na Frantisku 32,

110 15 Prague , Czech Republic