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Published: 30 Oct 2008 07:11:38 PST

Czech Republic

Business Environment

Business practices

For further information: Doing business in CR
For further information: Czech culture, customs and etiquets
For further information: Czech business culture
For further information: Guide to Czech Republique
Closed hours and days: A typical Czech working day is 8:00 am to 4:30 pm, with a break for lunch. Closing days are Saturday and Sunday.

Public holidays

New Year's Day	January 1
Easter Monday	Varies
Labor Day	May 1
Liberation Day	May 8
Cyril & Methodius Day	July 5
Jan Hus Day	July 6
Statehood Day	September 28
Czech Founding Day	October 28
Struggle for Freedom Day	November 17
Christmas Eve	December 24
Christmas Day	December 25
St. Stephen's Day	December 26

Compensation day: If public holiday is on Saturday or Sunday, there is no compensation for it.

Periods when companies usually close

No general closing periods

People prefer to take their holidays during school holidays to stay with their children : in the summer (July-August), one or two weeks during Christmas, one week in February or March during the spring holiday (he date is not fixed and depends on regions and change every year). But in most cases the office stays open.

Standards

National standards organizations

Czech Standards Institute (CNI)
Czech Office for Standards, Metrology and Testing (UNMZ)

Integration in the international standards network

The Czech Republic has harmonized its standards with European norms. Czech Republic is a member of:
- ISO - International Standard Organisation
- IEC – International Electrotechnical Commission
- ITU – International Telecommunication Union
- CEN - European Committee for Standardization
- CENELEC - European Committee for Electrotechnical Standardization
- ETSI – European Telecommunications Standards Institute

Classification of standards

Original Czech standards (10% of the overall annual production of technical standards), which can only be use in areas where European or international standards do not exist, are designated by : CSN + 2 numbers of the class + 2 numbers showing the rank under the class + 2 numbers showing only the sort order (CSN 73 4301)

European or international standards (90% of overall annual development of technical standards) are designated like that CSN EN 115, CSN ISO 1735 , CSN EN ISO 9001, CSN IEC 61713, CSN ETS 300 976

For more info see website of CNI.

Online consultation of standards

Online Standard Service of the Czech Standards Institute
Eshop Service of the Czech Standards Institute (in Czech)

Certification organizations

Czech and Slovak Testing Board
Institue for Testing and Certification (in Czech)
Look also on the website of the Czech Institute for Accreditation

Legal framework

Independence of justice

Yes

Equal treatment of nationals and foreigners

Yes

The language of justice

Czech

Having recourse to an interpreter

Possible

Sources of the law and legal similarities

Czech Republic being a member of the European Union, the national law in the country needs to comply with the conditions of the Community legislation. Czech Republic has not accepted compulsory ICJ jurisdiction.

Principial source of the law is a Constitution of the Czech republic with the Charter of Fundamental Rights and Basic Freedoms which is based on civil law system originating from Austro-Hungarian codes.
All international agreements adopted by czech parlament take priority over national legislation.
Written Codes
Findings of the Constitutional Court
Precedens

Consulting national laws online

Czech law in english
Czech codes on-line, Businesscenter.cz (in Czech)

Intellectual Property

National organizations: The body responsible for the protection of intellectual property is Ùrad Prùmyslového Vlastnictvi (Industrial Property Office).
Regional organizations: For the protection of patents: The European Patent Office.
T o register Community Trade Marks and Community Designs: The Office for Harmonization in the Internal Market.
International membership: Member of the WIPO
Signatory to the Paris Convention
Membership to TRIPS

National regulation and international agreements

Type of property	Law	Validity	International agreements signed
Patent	Act.No 527/1990 on Inventions and Rationalisation Proposals	maximum of 20 years	Patent Cooperation Treaty Strasbourg agreement concerning the International Patent Classification
Trademark	Act. No 441/2003 on Trademark	10 years	Trademark law treaty Nice agreement concerning the International classification of goods and Services for the Purposes of the registration of Marks Protocol relating to the Madrid Agreement concerning the International Registration of Marks
Design	Act. No 207/2000 coll. on Protection on Industrial Design	maximum of 25 years
Copyright	Law No. 121/2000 Coll. on Copyright, Rights Related to Copyright and on the Amendment of Certain Laws (Copyright Act)	Financial rights run for the life of the author and for 70 years after his death.	Berne convention for the protection of Literary and Artistic Works Convention for the Protection of Producers of Phonograms against unauthorized duplication of their phonograms Rome convention for the protection of performers, producers of phonograms and Broadcasting organizations WIPO copyright treaty WIPO performances and Phonograms treaty
Industrial Models	Act No. 478/1992 Coll. on Utility Models	4 years

Tax rates

Consumption taxes

Nature of the tax

Value added tax (VAT)

Tax rate

19%

Reduced tax rate

9% (food, books, special healthcare products)

Other consumption taxes

Excise taxes are also perceived (on tobaccos, oil productions, beer, wines and liqueurs), applied according to the type and the quantities of products. They are payable under 10 days after announcement of Customs.
Energy tax on supplies of electricity, natural and other gases, and solid fuels with effect from 1 January 2008.

More detailed information on excise duties is available on the European Commission website.

Corporate taxes

Tax rate

Corporate tax

24% for the tax period ending in 2007,
21% for tax periods starting in 2008,
20% for tax periods starting in 2009 and
19% for tax periods starting in 2010 and afterwards
Reduced rate of 5% applying to income from investment and pension funds

Tax rate for foreign companies

All Czech tax residents are subject to these taxes on their worldwide income and capital gains, while Czech tax nonresidents are taxed only on their income from Czech sources.
The tax residency of a legal entity is its seat or place of effective management in the Czech Republic.

Capital gains taxation

Capital gains are taxed at the normal corporate income tax rate: 26%.

Main allowable deductions and tax credit

Tax deductible costs. Similar to that in other countries (if incurred in order to generate, assure and maintain the taxable income - tax depreciation on assets, purchased material and services, wages, salaries and social security and health contributions).

Tax deductible items: charitable donations, research and development costs allowance, acumulated tax losses carried forward from previous year, tax relief.

Other corporate taxes

withholding taxes
value added tax
real property tax
real estate tax

Individual taxes

Tax rate

Personal Income Tax

Till the end of 2007: progressive rates ranging from 12% to 32%.
Flat tax rate of 15% for calendar year 2008 and 12.5% from calendar year 2009.

Allowable deductions and tax credit

Employee's contribution to an old-age pension, a taxpayer's annual exemption, exemptions for non-working wife, disability allowance, high school / university students, contributions to the public benefit, to 10% of the tax, interest on mortgages , ...

Special expatriate tax regime

Taxable income includes earnings from dependent activities including benefits in-kind (e.g. housing
allowances, use of a company car for private purposes, etc.), income from business activities, and income from capital, leasing and other sources.

For more information please check the tax report of Czech Invest.

Double taxation treaties

Countries with whom a double taxation treaty have been signed: List of Treaties on Income and on Capital
Whithholding taxes
Bilateral agreement

Sources of fiscal information

Tax Authorities: Czech Tax Administration
Other domestic resources: f">Czech Invest - report of the Czech tax system; Taxation information on Czech.cz, the Official Website of Czech Republic

Accounting rules

Tax year

The Amendment to Law on Accountancy allows taxpayers to keep accounts in another fiscal period than the calendar year. The fiscal tax year must have 12 consecutive months.

Accounting standards

The Czech accounting system is based on double-entry bookkeeping and is largely consistent with the systems of other European countries with certain minor difference regarding, for example, financial leasing or depreciation of fixed assets. Czech accounting rules are determined by the Ministry of Finance. They come from the National Accounting Standards. Czech Republic tries to get accounting rules in accordance with IAS, IFRS.

Accounting regulation bodies

Ministry of Finance

Accounting reports

Companies have to establish a balance sheet, a profit and loss account and annexes. Those accounts must be published in Czech, in CZK. More, companies obliged to have an audit must prepare the statement of cash flows and the statement of changes in equity. Corporations limited and societes listed on Stock Exchange have to the management report.

Publication

The balance sheet and the profit and loss account must be prepared in accordance with the model which is on your disposal in the annexe of the Act. on Accounting.

Tax payers must file tax returns within three months following the end of the tax period. Czech legal entities that are required to prepare audited financial statements must file their tax returns within six months following the end of the taxable period.

Professional accountancy bodies