The Czech Republic is one of the most stable and prosperous markets in central Europe, and with a GDP growth of 4.2% in the first half of 2015, the Czech Republic is also one of the fastest growing economies in Europe
If you’re thinking of exporting to the Czech Republic, here’s all you need to know…
The pros and cons of exporting to the Czech Republic
There are more than 300 British companies currently operating their central and eastern European headquarters from Prague, ranging from SMEs to major corporations such as BAE Systems, Marks and Spencer and Rolls Royce.
The 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
And if you’re thinking of exporting there, the advantages for UK business, are:
- 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
It’s not without its problems though, notably:
- Slow judicial process
- Lack of transparency in public procurement
The top UK exports to the Czech Republic are:
- Electrical, electronic equipment
- Nuclear reactors, boilers, machinery, etc
- Vehicles other than railway, tramway
- Chemical products
- Optical, photo, technical, medical, etc apparatus
- Articles of apparel and accessories
- Articles of iron or steel
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Tax and customs
A double taxation agreement exists with the Czech Republic, so tax isn’t paid twice – once in each country – on exported goods and services.
VAT is known by the acronym, DPH, and the following rates apply:
- Standard DPH is charged at 21% and is applied to most products and services
- Reduced DPH is charged at 15% and only to specific products and services
- 10% DPH is charged on books and medicines.
Excise duties are payable on hydrocarbon fuels, beer, spirits, wine, and tobacco products, and additional environmental taxes apply to gas, electricity and solid fuels.
Personal income tax is charged at a rate of 15%.
Corporation tax is charged at 19%.
The internal EU single market allows for the free movement of goods and services without any import duties being applied, and testing is mandatory for some imported goods, especially technical and electrical equipment.