Starting a Business in Czech Republic
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Why Start A Business In Czech Republic?
What makes starting a business in the Czech Republic so attractive is its unbeatable location directly in the centre of the European Union, which is now the largest free-market trading block on the planet. The Czech Republic is a member country of the EU. As the country continues to ramp up its infrastructure in anticipation of joining the Euro Common Currency around 2012, high returns on all prudent investments are eagerly expected.
And the best news of all? The price of choice properties, businesses, consumables and labour in the Czech Republic are still only a fraction (about 20% on average) of what they cost in nearby Western countries like Austria and Germany, (Prague properties excepted).
If all that wasn't enough, the Czech Republic also features high standards of living, an educated populace, a vibrant economy, a stunning natural countryside and of course, and one of Europe's most beautiful capital cities, Prague.
Additionally, the capital city of the country's Eastern region of Moravia, Brno, is one of Europe's rising stars - a thriving European business hub centrally located between Prague, Vienna, Bratislava, Krakov, Munich and Budapest, served by direct flights from London and Prague.
What are the currency and exchange rate?
The official currency used in the Czech Republic is the Czech crown which has the international abbreviation CZK. Though the Czech Republic is a member of the EU, it will only enter the Euro Zone in 2012. You can pay for goods and services in the Czech Republic with cash and cards. There are also places in the country where payment can be made in euros - in most retail chains, electronics shops, at petrol stations and in restaurants. There are exchange offices on literally every corner in large towns.
You can change money in the Czech Republic in many places but never on the street!
At exchange offices in banks you will pay 2 % of the total sum in commission. In certain banks there is a minimum fee of 50 Kc (1.70 euros). You will pay this only when the 2 % commission comes to less than this amount. In privately run exchange offices it is recommended that you first of all ask for the exact sum you will receive for your money: the sign advertising 0 % commission often relates to buying foreign currency! You can also change money at hotel reception.
ATMs and credit and debit cards
In the Czech Republic you will find a dense network of ATMs (cash machines) which will accept all major credit and debit cards (Visa, MasterCard, Plus, Maestro, Cirrus and others). The majority of shops and restaurants also accept cards.
Geography and Climate
The Czech Republic is a landlocked country in the middle of Europe. It is located at the very heart of Central Europe. This small nation boasts a host of spectacular cultural treasures and a varied, rich tapestry of natural wonders. Thanks to increased exports, the interest of foreign investors and the drive of domestic business people, its economy continues to experience dynamic growth.
Geographically speaking, the Czech Republic is situated in a temperate zone, and there are four seasons of approximately all the same length. Winters are relatively mild (the average January temperature is -2 C, 28,4 F) and summers are not too hot (the average July temperature is 20 C, 68 F), so you can travel to the Czech Republic at any time without being too concerned about the weather.
Largest cities and towns
City/Town - Population
Prague - 1,218,644
Ostrava - 1,249,844
Brno - 1,142,013
Usti nad Labem - 833,218
Olomouc - 641,809
Ceske Budejovice - 633,750
Zlin - 590,828
Plzen - 562,783
Time Zone: GMT + 1hr
Official Language: Czech
Parliamentary System: Republic
What sort of opportunities are there in the Czech Republic?
The Czech Republic has attracted a large amount of foreign direct investment (FDI) since 1990, making it one of the most successful transition countries in terms of FDI per capita. The introduction of investment incentives has stimulated a massive inflow of foreign direct investment into greenfield and brownfield projects.
The agriculture sector has gone through a serious of crisis situations in the 90s and is even today highly subsidized in this former communist country. The agricultural sector generates 3.5% of the country's GDP and employs nearly 4% of the active population. The main agricultural products are sugar beets, potatoes, wheat, barley and hops. The manufacturing sector constitutes 40% of the country's GDP and is mainly privatized. One of the principal industrial sectors in the country is the automobile sector, with Skoda (Volkswagen company) being a well know brand. Foreign investors such as Toyota and PSA have also started producing cars in the Czech Republic for a handful of years. However, this sector has now reached a point of saturation. Textile sector is becoming very dynamic. The tourism sector is in full boom, thanks particularly to the city of Prague being a strong tourist attraction centre.
Key advantages of setting up a business in the Czech Republic include:
Foreign direct investment in all sectors and from all countries is welcome and there are no restrictions on the level of investment or ownership.
The "knowledge pipeline" in the Czech Republic is of a higher quality than in most western European countries, boosted by a stronger enrolment pattern in secondary education and evidenced by a higher level of performance in mathematics tests at the secondary level and a proportionately higher number of tertiary-level science and technology graduates.
A skilled and disciplined Czech workforce is ready to help companies achieve higher productivity levels.
The upgrade and expansion of telecommunication networks and IT is a national priority.
There are particular opportunities in the following sectors:
- Advanced engineering - potential for manufacturing cooperation; niche export opportunities in the automotive and aerospace sectors
- Biotechnology - a priority growth area for the Czech government
- Consumer goods - increasing demand for clothing and fashion, furnishing textiles, accessories and toiletries
- Design and creative and media (film)- UK businesses can capitalise on the UK's international reputation
- Food and drink - Czechs' tastes are widening, high number of international visitors to the country
- Healthcare - healthcare management services, medical devices and lifestyle product
- Industrial textiles - an expanding sector
- Innovation - multi-sector, eg nanotechnology; growing network; opportunities to showcase UK excellence
- Training and education - demand is increasing as companies invest in human resources; availability of EU funds for projects; schools invest in ICT
Business in the Czech Republic
For several years now, the Czech Republic has been attracting the attention of investors from all over the world. The reasons for this are easy to see: a strong and growing economy, equitable and stable conditions, a qualified workforce and the low cost of doing business in the Czech Republic. Few other countries are currently able to offer a combination of such conditions. For that reason, the Czech Republic is showing consistent yearly growth of capital investments and a growing number of multinational, economically mature companies coming here to do business.
The Czech Republic has over the last two decades rapidly raised the country's standard of living, developed its service sector and concentrated on implementing important economic reforms. The country has also laid the groundwork for its continued development, particularly within the European economy.
What does the Czech Republic export and import?
After becoming a European Union (EU) member in May 2004, most barriers to trade in industrial goods with the EU fell in the course of the accession process which resulted into increased competition for Czech producers coupled with stronger regulations and rising labour costs. The country's top three export partners are: Germany, Slovakia and Austria. The commodities mainly exported are machinery, vehicles, electric & electronic equipment, and iron & steel. Its top three import partners are: Germany, Russia and Slovakia. Czech Republic mainly imports machinery, electric & electronic equipment, mineral fuels & oils, vehicles, and plastics.
Where should I base myself?
The capital Prague, is not only the cultural and tourist nexus of the nation but also the economic one and major international companies such as Hewlett Packard, McKinsey & Co., Allen Overy and Boeing have all got offices here.
Prague is at the geographical heart of Europe and offers some major advantages over most other European countries that are relevant to any business start-up - a solid infrastructure, a highly educated and skilled workforce, lower wage costs when compared to Western Europe (the average gross monthly salary is currently around CZK 20,000), tax rates which are comparable to western Europe and may go even lower especially with proposed plans to introduce a lower rate flat tax, favourable tax incentives for strategic services such as call centres, shared services centres, and others.
The strength of the economy owes a lot to the continuing high levels of foreign direct investment that flows into the country and this is testament to the growing importance of Prague as a central business location in Europe as a whole.
What is employment situation in the Czech Republic?
Overall, the workforce in the Czech Republic offers an above-average level of education and technical skills compared to its low cost. Unemployment varies depending on the region, but it is generally possible to find suitable candidates for open positions. Very high percentage of people is educated to University standard. Of the 200,000 students currently enrolled, about 40,000 are finance and economic students and 25,000 are IT students. According to the OECD, the Czech Republic ranks among countries with the highest percentage of science and engineering students.
The Czech Republic ranks among countries with the lowest average labour cost. It is still much lower than in western European countries and is lower or on par with those in many rapidly developing Asian economies. It is also competitive (especially in the IT sector) in comparison to neighbouring countries such as Poland or Hungary. The average monthly salary continues to grow at a steady pace.
What are the opening hours of shops and businesses?
In small towns most shops are open Mon - Fri, from 8 or 9am until 6pm, and only in the morning on Saturdays. In big cities shops may stay open until 9pm. Only a few small shops have a lunch break, usually between 12 and 1pm.
Shopping centres and department stores have longer opening hours, usually until 10pm even at weekends. Some large supermarkets are open 24 hours a day.
Tips for visitors
Should you find yourself in a place where there are no large shopping centres, there is sure to be a so-called "Vecerka" somewhere nearby, a small shop that stays open late and where you can buy basic foodstuffs.
Banks are only open Mon - Fri, usually from 9am until 5pm, though some days they may stay open until 7pm. Branch opening times differ from place to place. ATMs (cash machines) can be accessed 24 hours a day.
Offices in the Czech Republic have set opening days. (Monday and Wednesday), and are usually open until 5pm at the very least. On other days some offices are closed to the public.
Electricity AC in the Czech Republic is 230 volts. Neither current nor plug sizes are the same around the world. If you discover on arrival that an electrical device has a different plug to those used in this country, adapters are readily available.
The international dialing code for the Czech Republic is +420 (or 00420). When calling from abroad this must be dialed first, followed by the 9-digit number.
Three mobile phone operators provide mobile services in the Czech Republic. Almost 100% of the country is covered by the mobile signal. The network uses the GSM 900 and 1800 system. This is compatible with the rest of Europe and Australia. Problems can arise with handsets from North America and Japan.
Tips for visitors:
Find out before you leave home what type of telephone you have and activate the roaming service provided by your operator.
Mobile telephone operators in the Czech Republic
All these operators sell pay-as-you-go SIM cards charged with a certain amount of prepaid credit (300-2000 Kc). These are useful on medium length visits. In order to use a Czech SIM card you will need to have a telephone which has not been blocked by your operator.
Public telephone boxes
The Czech Republic has one of the densest networks of public telephone boxes in central Europe. The majority of these take telephone cards (150, 200 and 300 Kc) or Czech coins (though there are less of these).
An interesting fact - With a prepaid TRICK card it is possible to send text messages from a public telephone.
The Czech Republic enjoys good internet connections, so you will have few problems getting online. In recent years slow dial-up modems have been replaced by quicker broadband lines and Wi-Fi networks.
Internet connection - You can connect to the internet via Wi-Fi, ADSL, mobile access and high speed cable.
Internet access - A computer with internet access now comes as standard at every hotel. There are also internet cafes where you will pay around 60 Kc (2 euros) per hour.
Free internet access - In large towns and cities in particular, the number of places with free Wi-Fi hotspot internet access is on the increase. Restaurants and hotels very often provide their customers with free internet access, though some networks are operated by municipal authorities.
Internet services - In the Czech Republic practically anything can be done online these days. For example you can:
- Access an online bank account
- Communicate with various state offices and download necessary forms
- Book concert, theatre and cinema tickets
- Book various types of tickets including air tickets
- Shop online
Organisations that can assist with Starting a Business
Simplified Global Payroll Managing payroll in multiple countries is complicated with different systems, deadlines, and languages in each country, lack of reporting, and constantly changing laws and regulations. Trying to manage global payroll via fax and email with excel spreadsheets leads to data security issues, fines, and penalties for non-compliance. Blue Marble has solved global payroll challenges with cloud-based technology, customized aggregated monthly reporting, and a hybrid service model in 150+ countries around the world.
PEO Worldwide is an international PEO offering employer of record, payroll, employee benefits management, HR and compliance services throughout the world.