Doing business in Czech Republic: Czech Republic trade and export guide
Updated 22 December 2015
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Brexit
Learn about changes for UK exporters to Czech Republic if the UK leaves the EU without a deal.
Managing risk
Find out how UK companies can control risks when doing business in Czech Republic.
Export opportunities and advice
Find more export advice and explore opportunities overseas on great.gov.uk.
1. Czech Republic export overview
The Czech Republic is one of the most stable and prosperous markets in central Europe. The private sector accounts for about 80% of Gross Domestic Product (GDP). Gross domestic income per capita is currently around USD 27,191 – one of the highest in Central and Eastern Europe (CEE).
Contact a Department for International Trade (DIT) Czech Republic export adviser for a free consultation if you’re interested in exporting to the Czech Republic.
Contact UK Export Finance (UKEF) about trade finance and insurance cover for UK companies. You can also check the current UKEF cover position for the Czech Republic.
More than 300 British companies are present in the market. They range from large investors to smaller companies established by British entrepreneurs. Companies such as Rolls Royce, BAE Systems, Marks and Spencer and Allen and Overy run their central and eastern European operations from Prague.
Benefits for UK businesses exporting to the Czech Republic include:
- English widely spoken
- business culture similar to the UK
- location gives easy access into CEE and Russian markets
- UK products well received
- less than 2 hours flight from UK
Strengths of the Czech market include:
- European Union (EU) membership ensures no major constraints to doing business
- some of the best infrastructure in central Europe
- £23 billion worth of EU structural funds available for 2014 to 2020
Read the EU’s practical guide to doing business in Europe.
2. Challenges
As a member of the EU there are no major constraints on import and export. Challenges when doing business in the Czech Republic include:
- slow judicial process
- lack of transparency in public procurement
3. Growth potential
3.1 Economic growth
GDP grew by 4.2% in the first half of 2015, making the Czech Republic one of the fastest growing economies in Europe. Growth has been driven by a recovery in household consumption and fixed investment and supported by strong export performance. The Czech National Bank has forecasted growth around 3% in 2015.
The main challenges for the economy over the coming years will be:
- slow growth in eurozone markets
- constrained state spending to remain in line with the EU’s 3% of GDP deficit target
- structural reform, particularly in the health and pension sectors
3.2 Trade agreements
The Czech Republic is a member of the European Union (EU) and the World Trade Organization (WTO). Goods manufactured in the UK are exempt from import duties.
Contact the SOLVIT team if you have market access issues relating to the operation of the Single Market.
3.3 Emerging Europe
The Czech Republic is part of the ‘emerging Europe’ area in central and eastern Europe (CEE).
The region offers considerable potential for British businesses. UK exports to the region are worth over £16 billion, with goods exports doubling over the past decade, and services exports - over £4 billion - trebling. The Czech Republic can be a gateway to the 100 million consumers in these markets.
The region offers numerous opportunities, particularly in 6 main sectors:
- advanced manufacturing
- defence and security
- energy
- healthcare and life sciences
- infrastructure
- services
3.4 EU structural funds
The EU has allocated EUR 23 billion to the Czech Republic through the structural and cohesion fund programme. This will help maintain the Czech Republic as a market offering growth, stability and good prospects for UK business. The EU funds will contribute to investment in:
- infrastructure
- environmental and technology projects
- human development
- innovation and competitiveness
- research and development
- regional projects
4. UK and the Czech Republic trade
UK goods exports to the Czech Republic reached £2.1 billion in 2014, making the Czech Republic the UK’s 27th largest export market. Bilateral trade was worth £6.92 billion and has more than doubled since 2000.
The UK is the 12th largest exporter to the Czech Republic with a share of 2.3% of the market.
In some sectors, such as automotive, electronics and engineering, there has been a trend towards sourcing supply from or investing into the Czech Republic.
Top UK exports to the Czech Republic in 2014:
- electrical, electronic equipment
- nuclear reactors, boilers, machinery, etc
- vehicles other than railway, tramway
- pharmaceutical products
- miscellaneous chemical products
- plastics
- optical, photo, technical, medical, etc apparatus
- articles of apparel and accessories
- articles of iron or steel
UK investment in the Czech Republic has reached more than EUR 2.8 billion since the early 1990s.
5. Opportunities for UK businesses in the Czech Republic
DIT provides free international export sales leads from its worldwide network. Search for export opportunities.
Access high value public procurement notices via Tenders Electronic Daily (TED). TED contains all procurement notices above a certain threshold from the EU and European Economic Area (EEA).
Read our publication ‘Emerging Europe - Central and Eastern Europe 2015/2016: The top 50 commercial opportunities’.
5.1 Advanced engineering
The UK exports around £600 million advanced engineering products and services, representing about 40% of total UK exports to the Czech Republic.
Stable growth in automotive and aerospace production in the Czech Republic is expected to continue.
Opportunities include:
- innovative engineering solutions
- advanced materials
- technology
- spare parts for the aftermarket
- garage equipment
- low cost sub-assemblies and components
- avionics
Contact the Trade and Investment Adviser gabriela.liparova@fco.gov.uk for information on opportunities in the advanced engineering sector.
5.2 Energy
The Czech government is currently working on a state energy strategy.
It continues to support nuclear energy from the country’s 2 nuclear power plants at Temelin and Dukovany. Although the original tender for Temelin expansion was cancelled, a new tender is expected in 2016.
The Czech Republic has committed itself to produce 13% of the total gross national energy from renewable resources by 2020. An increase to 15% is planned by 2030.
The Czech Republic is almost fully dependent on imports of natural gas. A number of interconnections are planned as well as better integration of storage unit facilities into the transmission system.
Opportunities exist in:
- consultancy and project management
- supply of all elements of the fuel cycle
- decommissioning and waste management
- consultancy services for energy efficiency and Carbon Capture Storage (CCS)
- environmentally compliant rehabilitation and modernisation of old coal power plants
- upgrading national power grid
- supply of knowledge, technology and equipment for renewable energy projects
- feasibility studies
- network design and planning
- optimisation of gas station operations and connection works
Contact Senior Trade and Investment Adviser eva.kopecka@fco.gov.uk for more information on energy opportunities.
5.3 Infrastructure
30% of the EUR 23 billion the Czech Republic receives in EU structural funding for projects (2014 to 2020) will be allocated to infrastructure projects, mainly transport.
Transport projects include:
- modernisation of motorway network eg between Prague and Brno
- creation of parallel rail tracks and increasing the maximum speed
- rail electrification and signalling upgrade
- modernisation of transit corridors and important railway junctions
- building new metro line D in Prague
- extending tram and trolley bus networks in regions
- plans for future high speed rail links
- liberalisation of rail passenger transport market
Opportunities include:
- consultancy
- cooperation on EU funded projects
- products and services for construction supply chain
- niche transport solutions
- flood protection and prevention systems
- waste management solutions
- ‘Smart Cities’ solutions
- urban regeneration and development
Contact the Senior Trade and Investment Adviser lenka.klaskova@fco.gov.uk for information on infrastructure opportunities.
5.4 Life Sciences
The Czech Republic’s healthcare system is still very much in the public sector. However, the majority of pharmacies and health spas are now privately owned. In 2013 26.4% of health expenditure (USD 13.83 billion) was spent on drugs.
Opportunities include:
- biotech sector cooperation with established clinical research industry through EU funds
- branded medicines and innovative treatments in the pharmaceuticals sector
- Over-The-Counter (OTC) medicine
- e-health
- medical equipment and supplies
Contact the Senior Trade and Investment Adviser svatava.majkova@fco.gov.uk or Trade and Investment Adviser dorota.rakowska@fco.gov.uk for information on opportunities in life sciences.
5.5 Security and defence
The Czech Ministry of Defence’s priority is modernisation. Investment in the renewal of crucial military equipment is planned between 2015 and 2020.
Public security priorities for the Ministry of Interior in are:
- tackling extremism and financial crime
- cyber security
- homeland security
A new law on cyber security effective from 1 January 2015 is expected to increase demand for secure solutions and also for training for the public sector.
Contact Export Control Organisation (ECO) to check your goods you are meeting legal requirements for export.
Contact Trade and Investment Adviser veronika.stepankova@fco.gov.uk for more information on defence and security opportunities.
5.6 Services
The financial services sector is one of the strongest in CEE. It accounts for 4.4% of GDP.
Opportunities in the financial services sector include:
- financial technology (Fintech) solutions focused on cyber security, big data analytics and predictive software, payment platforms
- insurance (private health insurance, specialised products)
- risk management
- asset management of private pension funds
- project and export finance
Contact Senior Trade and Investment Adviser jakub.lelek@fco.gov.uk for more information on opportunities in financial services.
5.7 Retail
The Czech Republic is ranked the 11th most attractive country for retailers in Europe and the 17th most attractive worldwide.
Prague is among the top 10 retail destinations in Europe and a number one destination for high-street and luxury brands in the CEE region. 13 new luxury brands and 15 high-end brands have entered the market since 2010.
The Czech Republic leads the CEE region in mobile phone user penetration (74.6%) as well as smartphone penetration among mobile phone users (58.7%). It has more than 37,000 e-shops.
More than 200 franchise systems and concepts currently operate on the Czech market. Czech concepts prevail, but the number of foreign ones is on the increase. Retail and services are the leading sectors.
Opportunities include:
- luxury and high-street fashion
- e-commerce
- franchising
Contact Trade and Investment Adviser aneta.zilvarova@fco.gov.uk for more information on retail opportunities.
6. Start-up considerations
Company legislation is governed by the Czech Civil Code.
The Czech Civil Code recognises the following types of companies:
- joint-stock company
- limited liability company
- general commercial partnership
- limited partnership
- co-operatives
A company has legal status and must be registered in the Commercial Register at the Ministry of Justice.
Foreign companies may establish a branch office in the Czech Republic. A branch is not a legal entity, but must be recorded in the Commercial Register. A branch is subject to tax on the same basis as a company.
The Commercial Code regulates the status and activities of both legal entities and individuals. An entrepreneur is also a person engaged in business activity on the basis of a trade certificate.
Direct sales into the Czech market can be difficult. For most UK companies it‘s more effective to approach the market through local business partners.
Commission agents are not very common and can be difficult to identify.
7. Legal considerations
The Czech legal system is largely harmonised with EU requirements.
Contact the DIT team in the Czech Republic to help find tax and legal advisers before entering into agreements.
7.1 Standards and technical regulations
Products and packaging should meet EU standards.
Local product law may vary.
Labels should be all in Czech. You should seek advice from the relevant registration or certification authority on the extent to which labeling should comply with Czech domestic legislation on advertising and health and safety.
The Czech Standards, Metrology and Testing Authority has responsibility for standards and technical regulations.
7.2 Intellectual Property (IP)
Trademarks, designs, patents and copyright are the principal forms of IP protection available to companies and individuals.
The Industrial Property Office has responsibility for IP in the Czech republic.
8. Tax and customs considerations
A double taxation agreement is in place between the UK and the Czech Republic.
8.1 Value Added Tax (VAT)
The Czech acronym for VAT is DPH. The following VAT rates apply:
- 21% standard VAT rate applies to most products and services
- 15% reduced VAT rate applies only to specific products and services
- 10% on books and medicines
Excise duties are payable on hydrocarbon fuels, spirits, wine, beer and tobacco products. Environmental taxes apply to gas, electricity and solid fuels.
Check with HM Revenue and Customs (HMRC) regarding VAT refund of business expenses incurred in Czech republic.
8.2 Income tax
The personal income tax rate is 15%.
8.3 Corporate taxes
The standard corporate tax rate for a Czech resident company is 19%.
8.4 Customs
The internal market of the EU is a single market which allows the free movement of goods and services. Therefore, no import duties are applicable.
Testing may be mandatory for some imported goods, particularly technical and electrical equipment.
9. Entry requirements
You don’t require a visa to enter the Czech Republic.
9.1 Travel advice
If you’re travelling to Czech Republic for business, check the Foreign and Commonwealth Office (FCO) travel advice beforehand.
10. Contacts
Contact the DIT team Prague for more information and advice on opportunities for doing business in the Czech Republic.