As a business hub, Prague is becoming an increasingly popular target for investors… why should you be thinking about setting up your business in the city?
As the capital of the Czech Republic, the city of Prague has long stood as an important gateway to Europe, connecting East and West through historical, political and cultural bonds. Today, those connections are the foundations for Prague’s rise as a truly global destination. But while its Baroque and Bohemian heritage makes it a unique place for tourists to explore, the city is also a thriving hub for international business interests – and investors from across the world who arrive to take advantage of a spectrum of commercial opportunities.
If you’re thinking about setting up or expanding in Europe, there are plenty of reasons to make Prague your next business home.
Gateway to Europe
As the capital of the Czech Republic – a country bordered by Germany, Poland, Slovakia, and Austria – Prague is located in the heart of Europe and is a historical continental gateway. The Czech Republic’s EU membership offers Prague’s businesses valuable logistical advantages – not least the free movement of goods and people within the Schengen zone, a factor which permits easy access to a market of over 700 million consumers. Prague also offers road, rail, and air connections to markets further afield, in fact, most European locations lie within 2 hours’ flight time of the city, at prices of often less than €100.
Beyond its logistical advantages, Prague is also a hub for the Czech Republic’s most talented employees, so businesses in the city draw from a diverse, skilled, and well-educated labor pool. Three of Prague’s universities – the Charles University, the Czech Technical University, and the University of Economics – are ranked amongst the best in the world, and produce a high number of STEM graduates each year, most of whom have a proficiency in English. Adding to the strength of the Prague labor pool, is its affordability: employers should find labor costs in the city are lower than their Western European competitors.
The Czech Republic has shown remarkable resilience to the turbulent international economic climate, thanks in part to its decision not to adopt the Euro, and instead retain the Czech Koruna. As a capital city, Prague benefits directly from that economic strength, offering businesses a chance to participate in a stable, healthy local and national economies. In recent years, the Czech economy has actually been the fastest growing in Europe: it grew 2.5% in 2016, and an unexpected 4.5% in 2017. While predictions for 2018 indicate slower growth, the rate is still set to be above the Eurozone average.
The Set-up Process
For new businesses, setting-up in Prague is a relatively smooth and user-friendly process. Per standard legislation, investors will need to raise capital, decide on a legal structure, open a bank account, and register their business at the Trade Licensing Office before operations can commence in the city – all steps not significantly different to any international business location. Setting up payroll in Prague is also relatively simple: income tax is charged at a flat rate of 15%, with a 7% surcharge for higher-earners. Given the city’s international identity, foreign startups in Prague won’t have to look far for global service providers if they choose to outsource processes like payroll or HR until they’re up and running.
In addition to funds available from the European Union, Prague’s businesses also benefit from specific investment incentives offered by the Czech government, which passed an Investment Incentives Act in 2004. Consequently, some schemes exist to help new businesses, with a focus on helping ventures in the manufacturing industry, tech development, and the support services sector. These incentives include partial or complete corporate income tax relief, grants for training and job creation, and grants for businesses which invest sufficiently in technology and manufacturing.
Living in Prague
Setting up a business in Prague means living and working in one of Europe’s most fascinating cities. The Prague business community is exciting and diverse, and includes employees from every corner of the world, working shoulder to shoulder. The heritage and history of the Czech Republic are also on full display across the city: many buildings, landmarks, and attractions, such as the Charles Bridge, Prague Castle, and St Vitus Cathedral, dating back to the Bohemian era and earlier. Beyond the city itself, landscapes of stunning natural beauty, such as the Orlice Mountains and the National Parks of Krkonoše and Šumava, ensure that explorations of the wider Czech Republic are never less than memorable.