Czech Republic
Investment IncentivesJan Fried | Director of East Coast Operations, USA
New York, October 2013
Investment Incentives
-- Act on Investment Incentives No. 72/2000 Coll., as amended
Supported activities
-- Manufacturing industry- Starting or expanding production facilities
-- Technology centres- Establishment or expansion of R&D centres
-- Business support services centres
- Establishment or expansion of shared service centres, SW development centres or high-tech
repair centres
Source: Act on Investment Incentives No. 72/2000 Coll.
General conditions
-- The project must be implemented in the Czech Republic
-- No work may be started on the Project before issuance of the
“Confirmation of Project Registration” by CzechInvest
-- Investment and new jobs must be maintained for a period
of 5 years
-- Environmentally friendly activities
Source: Act on Investment Incentives No. 72/2000 Coll.
Manufacturing industry - eligibility criteria
-- Starting or expanding production facilities
-- Min. investment into assets:
- Regions I: CZK 50 mil. (app. EUR 2 mil.), of which at least CZK 25 mil. into new machinery
- Regions II: CZK 100 mil. (app. EUR 4 mil.), of which at least CZK 50 mil. into new machinery
-- At least half of the above minimum investment must be
financed from own financial sources (not loans)
-- The conditions must be fulfilled within 3 years
Source: Act on Investment Incentives No. 72/2000 Coll.
Specification of regions
Source: Resolution of the Government of the Czech Republic No. 141 of 22 February 2010
Strategic investment in production
-- Minimum investment into assets CZK 500 mil., of which at least
CZK 250 mil. into new machinery
and at the same time
-- Creation of at least 500 new jobs
-- The conditions must be fulfilled within 3 years
Source: Act on Investment Incentives No. 72/2000 Coll.
State Aid Map (2007 – 2013)
Source: Government Order No. 194/2012 Coll.
Proposed regional aid guidelines 2014 – 2020
-- reduction of state aid intensity from current 40% to 25% for large enterprises
-- complication of eligible criteria for proving the motivation effect of incentives,
for documenting the compatibility of state aid with regional guidelines, etc.
Effectiveness of proposed guidelines
-- new guidelines shall be applied to all Decisions to grant investment
incentives issued from July 1, 2014
Manufacturing industry – state aid ceiling
-- Investment in Regions II and at the same time in low-tech sectors –
75 % of ceiling of state aid
-- Low-tech sectors = sectors that do not fall under codes 20, 21, 26
up to 30 or 32.50 of the branch classification of economic activities
(CZ-NACE)
Source: Government Order No. 194/2012 Coll.
Eligible costs
-- Long-term assets, of which at least half must be new
machinery
or
-- 2-years wage costs of employees on newly created positions
Investor can choose one option;
In case of investment in production – only long-term assets can be used
Source: Act on Investment Incentives No. 72/2000 Coll.
Types of Incentives
Following items summed up cannot exceed the ceiling of state aid
-- Tax incentive
-- Job creation grants
-- Discounted price of land
-- Cash grant on capital investment
(in case of strategic investment)
Granted above the ceiling of state aid
-- Training and retraining grants
Source: Act on Investment Incentives No. 72/2000 Coll.
Tax incentive
-- New companies: full corporate income tax relief for
max. 10 years
-- Existing companies: partial corporate income tax relief
for max. 10 years
-- Current corporate income tax rate = 19 %
Source: Act on Investment Incentives No. 72/2000 Coll.
Tax incentive – new company
Source: Act on Investment Incentives No. 72/2000 Coll.
Tax incentive – existing company
Source: Act on Investment Incentives No. 72/2000 Coll.
Job creation, training and retraining grants
-- Offered in regions with the highest rate of unemployment
only (regions A)
-- CZK 50,000 (app. EUR 2,000) per each new job created
-- 25 % of total training costs (35 % / 45 % for medium / small
enterprises)
Source: Act on Investment Incentives No. 72/2000 Coll.
Job creation, training and retraining grants
Source: Ministry of Labour and Social AffairsValid from: July 1 – December 31, 2013
Training and retraining grants – eligible costs
-- Services related to training and retraining
-- Material and energy consumption needed for (re)training
-- Travel expenses
-- Labour costs and on-costs of employees ensuring
the (re)training - instructors, teachersH
-- Accounting depreciation costs of the tangible and intangible
assets
-- Labour costs and on-costs of (re)trained employees
Source: Act on Investment Incentives No. 72/2000 Coll.
Cash grant on capital investment
-- Offered in case of Strategic investment in production
or in technology centre
-- Cash grant on capital investment up to 5 % of eligible costs
(max. CZK 1,5 bil. in case of investment in production,
max. CZK 0,5 bil. in case of investment in technology centre)
-- Cash grant on capital investment must be approved
by the Czech Government
Source: Act on Investment Incentives No. 72/2000 Coll.
Application process -
Applicant and Recipient are two different entities
Source: Act on Investment Incentives No. 72/2000 Coll.
Application process:
Applicant = Recipient
Source: Act on Investment Incentives No. 72/2000 Coll.
Ministry of Industry and Trade
CzechInvest AgencyForeign Offices – USA
Mr. Jan Fried
USA – East Coast – New York
Mobile phone: +1 (347) 216 9355
E-mail: [email protected]
Mr. Roman Horacek
USA – West Coast – California
Mobile phone: + 1 (415) 794 0665
E-mail: [email protected]
Thank you for your attention.www.czechinvest.org
Jan Fried | Director of East Coast Operations, USA
[email protected] @jan_fried