The amendment to the Act on Investments Incentives (the “Incentives Act”) came into force on 1 May 2015 with an aim to maintain the attractiveness of the Czech Republic for foreign investors after the European commission reduced Czech investment incentives from 40% to just 25 % in July 2014. The amendment implements new types of incentives and eliminates various obstacles set out in the Incentives Act and related laws and regulation.
The most significant changes introduced by the amendment of the Incentives Act are as follows:
- Exemption from real estate tax was introduced in favoured industrial zones as a new form of incentive. The tax exemption may apply for up to 5 years;
- Increased financial support may be provided to investors for new positions created in the favoured industrial zones as well as to investment in areas where the rate of unemployment exceeds 25% (compared to average unemployment rate in Czech Republic);
- Support of strategic services is extended to cover data centres and customer support centres (such as call centres);
- Higher financial support of strategic investments was introduced for the acquisition of long-term movable and immovable assets; this may be provided up to the amount of 12,5% of the total eligible costs. The particular amount will be approved by the government;
- Reduced entry limits for technological centres and centres of strategic servicesregarding the number of newly created positions. The number of new positions for technological centres and software development centres has been reduced from 40 to 20 positions; and for repair centres and shared service centres has been reduced from 100 to 70 positions;
- The requirement of a minimum amount of investment to be financed from an investor’s own resources was removed;
- Individual exemption from the European Commission is now required for granting incentives to eligible investment projects with an expenditure of over 100,000,000 EUR.
The main aim of the amendment is to maintain an attractive investment environment in the Czech Republic that will help to increase its success and likelihood, whilst competing with other countries, of being selected as a place for high value-added investments.