Guidance

Overseas business risk: Czech Republic

Updated 26 April 2023

1. Political and economic

The Czech Republic is amongst the most stable and prosperous markets in Central Europe.

GDP per capita (PPP) stood at £36,700 in 2021, one of the highest in Central and Eastern Europe. Over 80% of Czech exports go to the EU, with Germany alone accounting for around one third of all exports. The UK is the Czech Republic’s fifth largest export market, and its exports to the UK were worth roughly 156 billion CZK (around £5.2 billion) in 2020, dominated by Skoda cars and other manufactured goods.

The Czech economy grew by 2.4% GDP in 2022 and predictions for 2023 economic growth are around zero. Unemployment remains the lowest in the EU. Inflation is expected to have culminated in the first quarter of 2023 and should start falling. The Czech National Bank expects return to the 2% inflation target in 2024.

Czech infrastructure development has not kept pace with the country’s economic growth or indeed the growth in transit traffic. Improvements are coming through but slowly and new investment will take time to show results.

The country has been successful at attracting foreign direct investment (FDI) in recent years. It stands as regional champion in terms of total inward FDI stock, much of it in the financial services sector and automotive industry. The primary sectors for investment are manufacturing, financial institutions, real estate, transport and communication.

The country was the UK’s 29th largest trading partner in the four quarters to the end of Q2 2020 accounting for 0.6% of total UK trade. The outward stock of foreign direct investment (FDI) from the UK in the Czech Republic was £2.1 billion accounting for 0.1% of the total UK outward FDI stock.

UK companies with major operations here include Vodafone, Tesco, John Crane, GSK, Mott MacDonald, Brush SEM, Ricardo, Astra Zeneca and others. A range of high-street names are also present, often through franchises (e.g. Body Shop). The UK is also represented in the financial services sector (e.g. Provident Financial, HSBC and Barclays), and most of the UK’s major law firms have offices here, for example Allen & Overy, Bird & Bird or CMS. Companies such as BAE Systems and Marks & Spencer run their Central and Eastern European operations from Prague.

While most UK companies generally find the legal-business climate conducive, some issues are frequently raised, such as a slow judicial system, complex bureaucracy, ongoing changes to the tax system, and the language barrier. Public procurement is usually done in Czech, so help from local agents could be needed to undergo the process and submit relevant documentation.

Following general elections, the current government was appointed on 17 December 2021 under Prime Minister Fiala of the Civic Democrats (ODS) leading a coalition government with four other parties - TOP09, Christian Democrats, Mayors & Independents (‘STAN’) and the Pirates, all previously in opposition. The government is committed to fiscal responsibility, aiming to slow down the pace of public debt growth caused by the previous government (but the size of public debt itself is not a concern), is in favour of free trade, and EU-oriented.

In summary, the Czech Republic remains an attractive market for UK exports and investment. The Department for Business and Trade (DBT) team at the British Embassy in Prague stands ready to help.

Read the DBT Czech Republic team page on how you can seek further help.

The government can provide finance or credit insurance specifically to support UK exports through UK Export Finance, the UK’s export credit agency. For up-to-date country specific information on the support available see UK Export Finance’s country cover policy and indicators.

More information on political risk, including political demonstrations is available in FCDO Travel Advice.

2. Human rights

As a member of the European Union, the level of respect for human rights in the Czech Republic is generally very high. As the standard of living in the country continues to rise, the Czech Republic has found itself increasingly the target of traffickers of forced labour. The Czech police are working closely with other national police forces to crack down on organised gangs.

3. Bribery and corruption

Bribery is illegal. It is an offence for British nationals or someone who is ordinarily resident in the UK, a body incorporated in the UK or a Scottish partnership, to bribe anywhere in the world.

In addition, a commercial organisation carrying on a business in the UK can be liable for the conduct of a person who is neither a UK national or resident in the UK or a body incorporated or formed in the UK. In this case it does not matter whether the acts or omissions which form part of the offence take place in the UK or elsewhere.

In 2022 the Czech Republic ranked 41st out of 180 countries surveyed in Transparency International’s Corruption Perception Index (CPI) and corruption remains an issue here, notwithstanding an Act on Criminal Liability of Legal Entities approved in 2012; and an Act ensuring transparency of bearer shares passed in 2013. Successive corruption scandals, principally involving public procurement, have ensured that the issue has remained on the public agenda, but British businesses have not recently complained to the Embassy of any direct experience of demands for bribes or of corrupt practices.

The British Chamber of Commerce have published reports on this subject (available on request) and organised several seminars on the UK Bribery Act. They are very active on Corporate Social Responsibility.

Visit the Business Anti-Corruption portal page providing advice and guidance about corruption and some basic effective procedures you can establish to protect your company from them.

Read the information provided on our bribery and corruption page.

4. Terrorism threat

Read the information provided on our terrorism threat page.

5. Protective Security Advice

Read the information provided on our Protective security advice page.

6. Intellectual Property

Intellectual property issues are not a constraint to doing business. The Czech Republic operates quite a strict policy; it is a difficult and lengthy procedure to secure a patent, but once obtained interests are usually safeguarded and infringement enforced. The Industrial Property Office of the Czech Republic has further information.

The Czech Republic adheres to all EU laws regarding intellectual property. Patents, trademarks, industrial designs, copyrights, confidential information and trade secrets are the rights of intellectual property which enjoy protection under Czech law.

Read the information provided on our Intellectual Property page.

7. Organised crime

Organised crime is limited to low key, low impact instances that are usually confined to inter-gang rivalry, and which rarely affects business and everyday life.

Read the information provided on our organised crime page.

8. Contact

Contact the DBT team in Czech Republic for further information.