Czech Republic: One of Europe’s most Prosperous Nations
Through the peaceful "Velvet Revolution" in November 1989, Czechoslovakia transitioned from communism back to a liberal democracy. The “Velvet Divorce” in 1993 peacefully divided Czechoslovakia into the Czech Republic and Slovakia. The Czech Republic joined the EU in 2004 which saw impressive growth rates and an increase in foreign investment. The Republic saw higher than 6% annual growth in the three years prior to the economic crisis of 2008. Like most EU countries economic recovery was slow but was ultimately revived through exports to Germany and rest of the EU. Automotive and engineering products remain the major exports from the region.
Economic recovery was reported in August 2015 when the GDP grew by 4.4% and today the Czech Republic continues to prosper. With a per capita GDP rate that is 87% of the EU average, it is the highest growing economy in Europe. The country also has the lowest unemployment rate in EU, at just 3.5%. The Czech Republic was ranked 27th globally amongst 149 countries by the inaugural CEE Prosperity Index study. The study also noted that the Czech Republic has a ‘prosperity surplus’ meaning that it delivers higher prosperity relative to its wealth levels. All factors considered the Czech Republic is arguably the most stable and prosperous nation to break away from communism.
The country has built strong foundations and most services now privatised, including the banks and telecommunications. The Monetary policy is conducted independently by the Czech National Bank. Officially the currency is the Czech koruna which gives the National bank control over currency inflation. When Czech Republic joined the EU, it committed to adopting the euro, however, a change-over date has not yet been determined.
The Czech Republic is an increasingly popular destination for foreigners, tens of thousands have happily settled there to enjoy a high standard of living due to a substantially lower cost of living compared to other European countries. Prague and many other cities have strong architectural heritage seen in, museums, theatres, cinemas, galleries and cafés. The choice of cultural events is on offer is abundant, the country embraces all types of music and theatrical presentations.
Business in the Czech Republic
Non-resident companies pay a 19% Corporation tax only on Czech-sourced income where residents companies are taxed on worldwide income. This is the same for branch and subsidiary companies. Both residents and non-residents can hold a Czech bank account and in any currency. There are no restrictions on the import or export of capital and repatriation can be made in any currency. The rate for basic investment funds is 5% and 0% for pension funds.
After setting up a business in the Czech Republic the following steps should be taken:
- Register for company tax within 15 days of being established
- Keep accounting records
- Prepare a company-tax return, due annually by the end of March
- Pay company tax within the deadline for submitting the return
- Submit a company tax return within the deadline
For more information on how to set-up a company in the Czech Republic or assistance with any of the above points, please contact the experts at Euro Company Formations. Contact us