(Last updated: 3 Mar 2011)

Business etiquette

Business tips

It is recommended that you conduct regular rounds of face to face meetings, and to maintain frequent telephone, fax and email contact in between visit.

Dress conservatively for official meetings.

Use surnames until you are invited to use first names.

Ask if a meeting can be conducted in English and provide an interpreter if necessary even though English is usually spoken in larger and international companies.

Be sensitive to the fact that the older generation tends to be quite conservative.

Please also note: Bribery of foreign public officials is a crime. Australian individuals and companies can be prosecuted in Australia for bribing foreign officials when overseas. For more information, go to the Attorney General's Department on foreign bribery.

Tariffs and non-tariff barriers

Tariff

The Czech Republic became a member of the customs union among the EU members after its accession to the EU in May 2004. The customs union allows the duty free exchange of goods free from other barriers to trade.

The customs rate is a two-column tariff based on the Harmonized System. Most duties are ad valorem (%), based on the GATT Valuation Code (approximately CIF value - Incoterms 2000). MFN rate applies to Australian goods.

Most imports from the non-EU countries are subject to rates of duty ranging from nil to 15 per cent, with the average rate around 5 per cent.

Customs authority contact details:

Director General de l’Administration
Central Customs Administration
Budějovická 7
CS-140 96 Praha 4
Tel: +420 2 6133 1111
Fax: +420 2 6133 2003

Non-tariff barriers

Import restrictions

All monopoly on foreign trade and all price controls have been abolished.

Any firm or individual that is registered may now import goods from any country.

Administration of import registration and licensing is controlled by the License Office of the Ministry of Industry and Trade of the Czech Republic.

Import licences are not required for most goods, although certain items are still subject to this requirement, these include electric power, steel, crude oil, natural gas and some other chemicals, firearms, narcotics.

Some agricultural and food products are subject to an automatic licensing system.

All import deposits have been removed.

The Czech Republic is a member of the European Union (EU), so EU rules and directives need to be respected.

Product certification, labelling and packaging

Product certification

Some products require certification before a declaration of conformity can be issued. Depending on the nature of the goods, a veterinary health certificate and/or a certificate of origin (for concessionary customs rates, if applicable) can also be required. Products containing genetically modified organisms require special approvals.

Labelling and marking

Instructions for use, description of a product and warranty must be written in Czech.

Special certificates

Health/veterinary certificates, issued by the appropriate authority in the country of origin, are required for shipments of animals and their products and plant and vegetable products (see 'Public health requirements').

In September 1997 Act #22/97 of Collection of Laws covering technical requirements for products was launched. The Act is completed by the Government Decree of Assumed Europe Duplicity to be applied for possible dangerous products (eg. electrical appliances, toys, fireworks and cosmetics). Importer is obliged to sign the Statement of Conformity (required from safety point of view of the product) with an appropriate certification authority using proper prescribed procedure based on Paragraph 12, Article 4 a-h of Act #22/97 of Coll. to be able to meet Czech standards.

Packaging

No general requirements. Any specific requirements will be stipulated in the contract.

Goods should be securely packed, having due regard to the nature of the goods, means of transport and likely climatic conditions during transit and delivery.

Outer containers should bear consignee's mark and port mark and should also be numbered (to accord with packing list) unless their contents can be otherwise readily identified.

Sales contract number and country of origin must be shown on containers.

Methods of quoting and payment

Quotations in Pound Sterling or US dollars FOB, C&F and CIF (Incoterms 2000). Method of payment will be stipulated in the contract. Credit terms may be requested.

Documentary requirements

Commercial invoice

Note: Documentation requirements are normally detailed in each individual contract.

No prescribed form and a minimum of three copies are required. The invoice must contain all details relevant to the shipment, including the sales contract number.

Bill of lading

The original is required for clearing goods through customs, to be issued in the number of copies requested by importer. 'To Order' bills are acceptable.

Packing list

Not obligatory, but it facilitates clearance.

Certificate of origin

May be requested within the terms of the contract - otherwise, only required for wine and wine distillates cleared under the MFN tariff.

Public health requirements

The Czech Republic is a member of the European Union (EU), so EU rules and directives need to be respected.

Imports of animals and animal products and of plants and vegetable products must be licensed by the Licence Authority of the Czech Ministry of Industry and Trade. The individual items are subject to the Notice #560/91, of the Law Digest and Act #147/96 of the Digest.

From import administration view, these products can be split into two groups. The first group covers live animals, foodstuffs and foodstuffs of animal origin and fodders, requires veterinary certificates by the State Veterinary Administration of the Czech Republic. The second group, including plants and seeds, requires phytopathological sanitary certificates and in some cases even additional declaration by FITO Service.

These certificates are issued by the approved authority in the country of origin, in Australia this is usually the Australian Quarantine and Inspection Service (AQIS), Commonwealth Department of Primary Industries or the State Department of Agriculture. Consignments undergo either a phytopathological or veterinary examination at the frontier station of entry.

Specific requirements are normally stated in the sales contract.

Pharmaceuticals require an import licence issued by the Ministry of Health. At the same time any pharmaceutical is subject to the registration by the State Institute of Pharmaceutical Control prior to import.

Electrical appliances, toys, fireworks and cosmetics must conform to safety regulations being identical with those of the EU.

Insurance

Depending on Incoterms (2000).

Weights and measures

The metric system.

Setting up in the Czech Republic

Setting yourself up to do business in the Czech Republic is a complex (but perfectly achievable) undertaking requiring plenty of planning and forward thinking. Obtaining the necessary permits and papers and setting up appropriate entities in the Czech Republic takes time, and people considering doing business in the Czech Republic should allow adequate time to be ready by their desired deadlines. Always check the legal, tax and accountancy regime well in advance, but get regular updates as the law can change frequently.

Austrade is prepared to advise you and search for adequate partner for your business activities. The partner search will depend on whether you are merely planning to export or trade in the Czech Republic or whether you are intending to establish a permanent presence or purchase a business or company there. You will need to find out what permits or licences are required, which may include work/residency permits, trade licences and industry-specific permits relating to financial services regulations or environmental regulations, for example.

Taxation

The current tax system was introduced in 2005. A value added tax (VAT) is levied on all sales of goods and services, through two rates – 19 per cent for goods and five per cent for certain selected goods and services (ie. some agricultural products, essential food, selected pharmaceutical products, construction works). Most of the products have 19 per cent VAT.

Excise (consumer) taxes are applied to hydrocarbon fuels and lubricants, spirits and distilled liquors, beer, wine and tobacco products that are produced in or imported to the Czech Republic.

The standard rate of corporate tax is 24 per cent and the personal income tax rate varies from 15 per cent to 32 per cent depending on the amount of annual income.

Banking and finance

Czech Republic's commercial banking sector indicate that the Czech Republic is home to a fairly large banking sector relative to those in most countries in Central and Eastern Europe.

The key players are: CSOB (owned by KBC of Belgium), Ceska sporitelna (owned by Erste Bank of Austria), Komercni Banka (owned by Societe Generale of France) and Reiffeisen bank.

Electronic banking and credit card cultures have developed fast.