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Czech Republic – Your Partner. Ministry of Industry and Trade www.mpo.cz Embassy of the Czech Republic in … www.aaa.bb. Basic Information. Czech Republic in General Cultural Heritage Czech Spas. Czech Republic in General. Area 79,000 km 2 Location in the very heart of Europe
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Basic Information Czech Republic – Your Partner Ministry of Industry and Tradewww.mpo.czEmbassy of the Czech Republic in …www.aaa.bb
Basic Information Czech Republic in General Cultural Heritage Czech Spas Basic Information
Basic Information Czech Republic in General Area79,000 km2 Locationin the very heart of Europe Population10.2 million (94% Czech) Political system parliamentary democracy Head of state president Václav Klaus Currency (CZK, koruna) 1 USD = app. 18 CZK; 1 EUR = app. 25.5 CZK State languageCzech Time zoneGMT +1 Transport excellent connection, 5 international airports Membership in organisations IMF, WB, WTO, OECD…
Basic Information Cultural Heritage Cultural Heritage 200 chateaux & castles, 12 UNESCO monuments historical towns Telč Kutná Hora Holašovice Lednice Zelená Hora
Basic Information Czech Spas Czech spa tradition – over 36 spas
Macroeconomic Data Overview of the Czech Economy Gross Domestic Product Industrial Output Inflation Employment Basic Information
Macroeconomic Data Overview of the Czech Economy… • Main characteristics • High economic growth in recent years – gradual catch up with the average EU GDP level (77% of EU 27 level in 2008) • Big share of manufacturing sector • Small, open economy • Strong trade and ownership links with EU
Macroeconomic Data …Overview of the Czech Economy • Fast and balanced real convergence • Low inflation • External balance – trade surplus and modest current account deficit • Fiscal prudence – reduced public deficit (1,2% GDP in 2008), moderated public debt (29,4% GDP)
Macroeconmic data Gross Domestic Product.. • Peak in the half 2006 (6.9% growth) • Still good results for 2008 with significant deterioration in 4.Q 2008 • 2.8% growth in 2008 • Czech economy in recession – contracting in two consecutive quarters: in the forth quarter 2008 (-0.1% q/q) and in the first quarter 2009 (-3.4% q/q)
Signs of recovery: 0.1% growth (q/q) in the second quarter 2009 The outlook for this year is influenced by weak demand in the euro zone with negative impact to the Czech exports Basic Information …Gross Domestic Product
Gross Domestic Product Macroeconomic data Gross Domestic Product Gross Domestic Product (constant prices, y/y change, %)
Macroeconomic Data Gross Domestic Product Gross Domestic Product in % (by sectors - 2008)
Industrial Output Flat growth in 2008: 0.4% y/y growth Important share of automotive industry (23%) Falling down since October 2008 (in 1st quarter 2009 -19.1% y/y, in 2nd quarter 2009 -18.8% y/y New orders falling dramatically down But signs of stabilisation in recent month Main reasons - poor external demand, decreasing domestic demand, slowdown in private investment Macroeconomic Data
Industrial Output Macroeconomic Data Industrial Production (y/y changes)
Industrial Output Macroeconomic Data New Industrial Orders (current prices index in %)
Inflation Higher inflation in 2008 - due to administrative reasons (hike in regulated prices) and high commodity prices Decreasing since September 2008 Macroeconomic Data
Inflation Macroeconomic Data Consumer Price Index (Change in %)
Employment Positive trend changed at the end of 2008 Since November raising unemployment due to negative development of the economy Macroeconomic Data
Employment Macroeconomic Data Unemployment Rate (in %)
Foreign Trade Overview Foreign Trade in Current Prices Foreign Trade by Regions 2008 - USD Foreign Trade by Regions 2008 - EUR Foreign Trade by Regions 2009 - USD Foreign Trade by Regions 2009 - EUR Exports in 2008 - 2009 Imports in 2008 - 2009 Basic Information
Foreign Trade Overview • Still good results for 2008 - 69.4 bill. CZK (2.7 bill. EUR) trade surplus • Export and import falling down since October 2008 • New foreign orders falling dramatically down - mainly in the car industry • Main reasons - in the first half of 2008 - extremely strong CZK, since the second half - decreasing external demand • Signs of stabilisation and improving external demand in recent months
Foreign Trade Foreign Trade in Current Prices Foreign Trade (current prices, y/y change in %, balance in bill. CZK)
Foreign Trade Foreign Trade by Regions 2008 -USD Foreign Trade by Regions (2008 – final data) *)China, North Korea, Cuba, Laos, Mongolia, Vietnam
Foreign Trade by Regions 2008 - EUR Foreign Trade Foreign Trade by Regions (2008 – final data) *)China, North Korea, Cuba, Laos, Mongolia, Vietnam
Foreign Trade by Regions 2009 - USD Foreign Trade Foreign Trade by Regions (2009 - preliminary data) *)China, North Korea, Cuba, Laos, Mongolia, Vietnam Source: Czech Statistical Office
Foreign Trade by Regions 2009 - EUR Foreign Trade Foreign Trade by Regions (2009 - preliminary data) *)China, North Korea, Cuba, Laos, Mongolia, Vietnam
Exports in 2008 – 2009… Foreign Trade Main Trade Partners
…Exports in 2008 - 2009 Foreign Trade Main Trade Partners Source: Czech Statistical Office
Imports in 2008 – 2009… Foreign Trade Main Trade Partners
…Imports in 2008 - 2009 Foreign Trade Main Trade Partners Source: Czech Statistical Office
Foreign Direct Investment Inward Foreign Direct Investment Investment Opportunities - Year 2009 Investment Incentives Scheme Foreign Trade
Foreign Direct Investment Inward Foreign Direct Investment Inflows of FDI (mill. EUR, mill. USD) Source: Czech National Bank
Foreign Direct Investment Investment Opportunities - Year 2009… • Traditional Sectors of Czech Industry • Automotive and Aerospace Industry • Electronics • Precision Engineering • Chemicals and Plastics • Sectors with High Potential for the Future • Nanotechnology • Biotechnology, Life Sciences and Medical Devices • Renewable and Alternative Energy
Foreign Direct Investment Investment Opportunities - Year 2009… • High-tech services • Information and Communication Technologies, Software Development • Strategic Services – Shared Service Centres, Expert and Solution Provider Centres, High-tech Repair Centres • Research and Development • Innovation Activities and Applied R&D
Foreign Direct Investment Investment Incentives Scheme • Manufacturing investors meeting the criteria may currently apply for all or any of the following incentives: • The corporate income tax relief (full or partial) for a period of up to five years • Training and retraining subsidies • Job creation grants • Transfer of state-owned land at a discount
Legislation Tax System of the Czech Republic Tax Rates in the Czech Republic The Main Indirect Taxes Legal Requirements Social Security and Health Insurance Property Market Foreign Trade
The tax system of the Czech Republic is similar to other European countries The corporate income tax has a rate of 20 per cent (2009) Each taxpayer may choose linear or accelerated depreciation The terms of depreciation range from 3 to 50 years The real estate tax is levied on land and building The taxation period is one calendar year Legislation Tax System of the Czech Republic
Legislation Tax Rates in the Czech Republic
Legislation The Main Indirect Taxes… • The VAT has a basic rate of 19% and reduced rate of 9% • The basic rate is levied on the majority of goods and services • Exported goods are exempt from tax with possibility of claiming a VAT refund paid on input • The tax is paid monthly or quarterly depending on the turnover of the taxpayer • Excise duties are levied on mineral oils, liquors, wine, beer and tobacco products
Legislation …The Main Indirect Taxes • The tax is paid when goods are released for consumption, i. e. when they leave a registered tax warehouse. Excise duty on tobacco product is paid through buying stamps.
Starting up a business A foreign person‘s authorization to carry on a business activity on the territory of the Czech Republic takes effect on the day as of which that person, or that person‘s organizational component, is recorded in the (Czech) Commercial Register Exempt from this are individuals (natural persons) who have a permanent residential address in a member state of the European Union Incorporation or establishment of a Czech legal entity is another option Legislation Legal Requirements
Legislation Social Security and Health Insurance Contributions (of gross salary)
Legislation Property Market Office Market (avg rent EUR/m2/month) Business and Logistic Parks (avg rent EUR/m2/month)
Anti-recession Measures Part one Part two Foreign Trade
Lower taxes for businesses (corporate tax) Use of money from reserve funds of ministries EGAP (Czech ECA) and Czech Export Bank facilities support Support to businesses in agriculture Increase of the financing of the infrastructure Anti-rerecession Measures Part one
Reduction of social insurance contributions Faster write off periods Remission of advance income tax payments for small businesses Guarantees for loans from CMZRB bank Thermal insulation for buildings Investment into R&D Reduction of administrative loading of corporate sector Anti-recession Measures Part two
Sources Foreign Offices - Investment Support Sources of Useful Information The Most Important Websites Basic Information
Sources Foreign Offices - Investment Support
Sources Sources of Useful Information
Sources The Most Important Websites…