Everything you need to know about doing business in Europe.
Compiled by Metropolitan Media
Prague
Map
Overview
Prague is located on the banks of the Vlata River and is the capital city of the Czech Republic. The urban area is home to 1.3 million people (with a metropolitan population of 1.9 million) living within 496 km, making it the largest city in the Czech Republic. Prague has long been established as the central economic and commercial area for the Czech state.
The historical centre of Prague is over 1100 years old and has been listed as a world heritage site by UNESCO. The Czech Republic became a member of the European Union in 2004, with the country originally hoping to implement the Euro currency system in 2010, this date is unlikely, with a more realistic year said to be 2012. The current currency for Prague is the Czech Koruna (CZK).
Economy
Most of Prague's revenue is generated by the industrial sector. The majority of exported products are aircraft and automobile engines, chemicals, machinery and electronics. Partly due to the tax rate reduction, Prague has seen an increase in service sector businesses, particularly foreign financial institutes, IT companies and service centres.
Prague has also become an attractive location for film and television shoots from international production companies due to low costs compared to London or Hollywood. Tourism is also a major part of the economy; more then half of all money generated from tourism in the Czech state is from Prague, and the tourism sector employs over 100,000 people. The increase in low cost airlines has helped the tourist boom, with an estimated 4.1 million people visiting the city annually (2009). Prague currently contributes 21% of the Czech republics total GDP of $216 billion.
Infrastructure
Prague has an extensive transportation infrastructure, making it easily accessible from all major European countries as well as international destinations. The Prague Ruzyne Airport (PRG) is located 10km West of the city centre and serves over 12 million passengers annually, making it the busiest airport in the Czech Republic. Construction of a new rail system that will link the city centre to the airport is set to commence in 2011, with a 2014 estimated completion date. It has frequent flights to all major European countries, and services several international destinations such as Dubai, Seoul and Tel Aviv. A separate cargo terminal is a base for 5 freight airlines taking cargo to Paris, Abu Dhabi, Bangkok, Luxembourg and Taipei.
Roads are limited in comparison to to other western countries, but there are several highways which link to major cities in the Czech Republic. Prague has a problem with traffic congestion within the city centre, in an effort to relieve this a ring road is being constructed around the city centre, which is due to be completed in April 2010, this will greatly reduce the traffic load. Prague is at the centre of a railway network, Czech Railway (CD) offers passenger and freight services to Austria, Poland, Slovakia and Germany. Public buses also provide frequent services to numerous locations within the city.
Over 60% of Prague's energy needs are sustained by controversial nuclear power plants. Only a small amount of energy comes from renewable sources, much less then it's neighbouring countries; Prague is currently planning to make Its city more environmentally friendly by cutting carbon emissions. Prague has a strong telecommunications infrastructure, with 4% of the countries total GDP being invested back into improving existing networks.
Workforce
There are a high number of internationally accredited schools and universities within the Prague region. Charles University is the oldest educational institute in Central and Western Europe, it was originally founded in 1347. According to the academic ranking of world universities report, Charles University is the leading facility within The Czech republic. It now has over 50,000 enrolled students studying within 17 different faculties. Other notable educational institutes include, The University of Economics, The Anglo-American College, The Institute of Chemical Technology and The Academy of Fine Arts.
The high standard of education helps contribute to the cities continuous economic development, and produces a highly skilled and efficient workforce. The Czech Republic has a high literacy rate of 99% which is the same figure for both the United Kingdom and the United States. The national unemployment rate for the Czech Republic is 9.9%, but Prague has the lowest figure in the country which stands at 3.8%, according the the labour office website (2010).
Business costs
Prague has very favourable corporate and individual tax rates. Over the years the corporate tax rate has been reduced dramatically to encourage foreign business, in 1992 the rate was 45%, now corporate taxes are set at a fixed rate of 20%. Personal taxes are set at a flat rate of 15%. Foreign residents working within Prague are only charged on their income earned within the country, while permanent residents are charged tax on both monies earned abroad and within the country. Vat rates are fixed at 19% with a discounted rate of 9% for books, foodstuffs and medications. Financial and health-care institutions are not charged any VAT. Prague's social contributions are mandatory, with the employer paying 34% of their employees total wage towards social contributions such as health insurance and pension schemes.
Wages in Prague are an estimated 150% higher then the rest of the Czech Republic, yet minimum wage rates are extremely low in comparison to most western European countries. The current minimum wage rate is 8,000 CZK, the equivalent of $432 per month.
In the 2010 Cushman &Wakefield report, Prague ranked at number 27 on the list of the worlds most expensive office rental costs. An average office rental in the CBD costs $39.57 per square foot per year, much lower then many other major European cities such as Paris and London, costing $93.14 and $119.40 respectively. There has been a slight decrease in rental prices in 2009 due to slowing economic markets. Low office rental prices and corporate tax rates, a highly skilled workforce and excellent transportation links to Europe and the rest of the world make Prague a favourable city for new and established businesses.
