Investment Incentives

1. Tax relief on corporate tax for 10 years (newly established legal entities) or partial discount of corporate tax for 5 years (already existing legal entities)
2. Job-creation grants
3. Training grants
4. Provision of low-cost building land and/or infrastructure support
5. Transfer of real estate (agricultural land and other land) for price laid down by special act.

• The investment must be made into the acquisition or construction of a new producti­on plant or into the expansion or moderniza­tion of existing production facilities to launch a new production activity.
• The investment has to be made into manufacturing industry provided that at least 50% of the cost of the production line consists of machinery.
• Investment into machinery has to account for at least 40% of the total investment.
• The investor must invest at least CZK 200 million (approx. USD 12 million at least the amount of CZK 100 million (approxi­mately USD 6.5 million) must be covered by the capital of the legal entity or by the equity of the natural person.
• The proposed production must meet all Czech environmental standards.
• Acquisition of the long-term tangible and intangible property to be financed by investment incentive is allowed from the day of submission of the application for investment incentive.
• The investor has to fulfil the conditions 1,2,3 and 4 within the period of 3 years; the period can be lengthened for another 2 years maximum.

The Czech investment incentives scheme was from the outset designed as a scheme for both foreign and domestic investors under the sa­me conditions. Originally, the headline tax in­centive was available only for newly established legal entities without any prior business acti­vities in the Czech Republic, but the new Act on Investment Incentives has introduced the tax incentive for expansion projects.

The incentives are available for creation of new manufacturing activities. These in­clude acquisition of a new manufacturing plant or expansion or modernisation of an existing plan for new production, or ex­pansion or modernisation of an existing produc­tion. The investor must invest the specified minimum amount into the acquisition of tan­gible and intangible assets. Payments for the acquisition of these assets must be made within three years from the date when the in­centives are granted.

Applicants for investment incentives are re­quired to contact CzechInvest, the government agency charged with handling all applications for investment incentives. Upon receiving com­pleted application and registration forms, CzechInvest will within 30 days evaluate the application and present its proposal on the gran­ting of incentives to all other concerned go­vernment bodies via the Ministry of Industry and Trade. These bodies assess the proposal and issue their approval. The Ministry of Industry and Trade will, through CzechInvest, then issue an offer of investment incentives to the investor. Such offer is valid for 6 months. During this period the scope and value of incentives remain unchanged. Should the company agree with the offer made, it will inform CzechInvest in order to receive the final confirmation of the incentives offered.

CzechInvest

An autonomous agency set up by the Ministry of Industry and Trade in 1992, CzechInvest is char­ged with promoting and facilitating the inflow of direct investment to the Czech Republic.

CzechInvest is the sole body able to refer ap­plications for investment incentives to the ap­propriate government bodies for approval. The agency closely co-operated on the preparati­on of the national investment incentives sche­me and has in-depth knowledge of the scheme.

CzechInvest can provide data and various informati­on about the current business and investment environment in the Czech Republic, brochures on several industrial sectors and information on the region of the Czech Republic

Czechlnvest's extensive network of regional representatives maintains it with up to date in­formation on available industrial real estate, both greenfield industrial plots and buildings. It maintains our own database of over 150 suitable sites or buildings around the country.

Czechlnvest has built an extensive databa­se of Czech component suppliers. Profiles of these companies are available on a free access website at www.czechinvest.org.

Each project is assigned a project manager who stays with an investor throughout the li­fetime of their project from first enquiry through to post-investment follow-up. A key role of pro­ject managers is to organise visits to potential sites and/or partners.

Czechlnvest's staff can provide help to foreign investors in dealing with bureaucracy at both national and local levels to ensure that rapid decisions are made.