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Setting up a company in the Czech Republic takes longer to leave the EU

Setting up a company in the Czech Republic takes up to 25 days, the longest in the whole of the EU. The European average is about 12 days. At the same time, to start a business here it is necessary to take more administrative measures than in other countries. It is therefore not surprising that there are a rather mediocre number of companies in the Czech Republic. There are 3,897 companies with ten or more employees per million inhabitants, while the EU average is 4,060.

There are also few startups, newly established innovative companies in the Czech Republic, or 131 per million inhabitants, which also corresponds to 21st place in the Union. At the same time, according to the authors of the index analysis, it is the startups that have great potential to transform the Czech Republic from an assembly plant to a “think tank”.

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The best conditions for business are found in the Nordic countries. “They have the most favorable business environment in Sweden and Finland. Among other things, these countries benefit from a large number of startups, effective VAT collection and low electricity prices,” said Milan Mařík. analyst of the data journalism portal Europe in Data.

On the contrary, the worst level of the business environment falls on the countries of the former Eastern Bloc. “It follows from the prosperity index that Czechia falls even more in Eastern Europe than in Western Europe in this respect,” added Mařík.

Corporate tax is one of the lowest

However, Czech entrepreneurs cannot complain about tax fixing in a pan-European context. For example, the Czech corporation tax set at 19% is the lowest tenth in the EU. At the same time, there are quite large differences between the individual states. While in Hungary, for example, corporation tax is only 9%, in France it is 25% and in Malta it is even 35%.

National companies are also among those in the Union that invest relatively significantly in research and development. These costs in our country correspond to 1.2% of GDP, which ranks the Czech Republic in 11th place in the EU. In Sweden, where, according to the results of this pillar of the Czech Prosperity Index, the business environment is the best in the entire EU, companies invest 2.6% of GDP in research and development.

Also last year, Czech companies with a consumption of 500-2000 MWh also had the third lowest electricity cost. But that has changed dramatically this year. “Energy has been very cheap here for many years. However, since the beginning of the Russian invasion of Ukraine, their prices have risen, in some cases several times. Not only for many households, but also for companies. prices are now in liquidation, “said Radek Špicar, Vice President of the Union of Industry and Transport of the Czech Republic.

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According to him, state support is now important, but the position of the EU will be crucial. “We now need a unified pan-European solution. Without it, Member States will start supporting their businesses in their own way. This would mean that richer states will be able to afford more generous support, which will reduce the competitiveness of Czech companies.” he stressed.

In addition to simpler regulation and greater support for businesses and startups, according to the creators of the index, it would help increase the added value created by national companies. Foreign companies account for 43% of all value added in the Czech Republic, while, for example, they represent only 19% in Germany and 17% in France.

“The Czech economy is largely subcontracted, when a number of companies act as suppliers for the final producer. As a result, we lose a higher margin and independence from customers,” noted analyst from Česká spořitelna Tereza. Hrtúsová.

According to her, the Czech economy is in dire need of transformation. “We will achieve this by supporting our end products, brands and investments in digitization and robotics,” she added.

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