Investing In... 2024 Comparisons

Legal System

Legal regulation in the Czech Republic (similarly as in other countries in central and western Europe) is based on continental law with roots in Roman and German (Austrian) law traditions. The Czech Republic’s 20-year membership in the EU has significantly shaped its legal landscape. Specifically, laws and judicial practices in areas such as FDI regulation, merger control/antitrust regulation, capital markets regulation, and GDPR have been heavily influenced, unified and aligned with those of other Member States of the European Union.

The Czech legal system’s adherence to continental law principles and its harmonisation with EU standards make it a familiar and accessible system for businesses operating on the broader European market. This alignment facilitates cross-border transactions and investments, fostering a conducive environment for economic growth and development.

Judicial System

The Czech Republic’s judicial system is divided into three main tiers:

• general courts (civil law, criminal law, and related matters);
• administrative courts (administrative law and related matters); and
• the Constitutional Court.

The Constitutional Court stands outside the general court structure. The Czech Republic has a strong and independent Constitutional Court that safeguards individual rights and freedoms. The Constitution is the supreme law of the country, and all other laws must comply with its provisions. This ensures that the government cannot act in a way that violates fundamental rights.

The Czech judicial system is generally considered to be impartial. The courts are well-resourced and staffed by competent judges who are free from political interference. Nevertheless, the court proceedings in the Czech Republic often tend to be lengthy, which may obstruct effective enforcement of rights. In addition to the state court system, the Czech Republic has alternative dispute resolution regulations in place, providing avenues for dispute resolution outside of general courts.

Administrative Proceedings

The Czech Republic has made significant efforts to streamline its administrative procedures in recent years. Nevertheless, some areas, such as building procedures, remain time-consuming and cost-intensive.

Summary

The Czech legal system is renowned for its predictability and stability, providing a robust framework for businesses operating within the country. The strong constitutional protections, efficient judiciary, harmonisation with EU law, support for entrepreneurship, streamlined administrative procedures, and stable and predictable environment all contribute to the Czech Republic’s positive legal landscape.

The Czech Republic adopted its foreign investment regulation (Act No 34/2021 Coll.) in 2021 (“Czech FDI Regulation”). The regulation is based on the EU FDI regulation – Regulation (EU) 2019/452. Based on the legal regulation, foreign direct and/or indirect investments in certain critical areas may be examined by the state.

The critical areas being subject to the Czech FDI Regulation include, for example, companies operating in the field of military material production, certain dual-use goods, or companies operating other critical infrastructure or critical information infrastructure.

General Overview

The Czech Republic has emerged as one of the most open economies in the world and is a sought-after destination for investors thanks to its:

• stable and predictable political system, legal regulation and investment protection;
• well-developed infrastructure;
• well-educated workforce; and
• strategic location in Central Europe.

Investment Trends

In recent years, the Czech government has maintained a focus on developing innovative technologies, particularly in the areas of high-tech engineering, advanced materials, biotechnology, cybersecurity, and artificial intelligence. To support this goal, the government has implemented several state incentives aimed at encouraging investments in these fields. In 2023, the Czech Republic adopted the National Recovery Plan. The plan was approved by the EU, which will provide substantial financing. This plan aims to provide finances to improve education and make the labour market more flexible, digitise public administration, switch to renewable energy sources and reduce energy consumption in industry and buildings, increase energy independence, and support the resilience of the economy and the health of its citizens.

Risks

In 2022 and 2023, the Czech Republic experienced significant inflation due to the ongoing war in Ukraine, elevated energy prices, and soaring food prices. The Czech National Bank, in response to the rising inflation, raised interest rates several times in an effort to curb price increases. Inflation is expected to ease significantly in 2024 as energy prices stabilise. This easing of inflationary pressures is expected to prompt the Czech National Bank to lower interest rates in the coming months. The bank’s monetary policy will need to be carefully calibrated to ensure that inflation remains under control while not stifling economic growth. The Czech government is also taking steps to address the inflationary pressures. These measures include providing targeted support to vulnerable households and businesses and increasing investment in education and infrastructure.

Foreign investors often seek investments through share or asset deals or a transfer of business. This allows them to gain access to the company’s existing market share, customer base, and assets. Additionally, some foreign investors may choose to restructure Czech companies through demergers or mergers. It is strongly recommended to ensure proper due diligence of the target company/assets prior to implementation of the transaction.

Share Deals

Share deals are a common form of corporate transaction in the Czech Republic. Share deals are usually appropriate where the buyer intends to acquire customers of the target company, its well-known business name or status on the local market, while also taking on the liabilities of the target company. The Czech Republic has a well-developed legal framework for share deals.

Asset Deals

Asset deals are another common form of corporate transaction in the Czech Republic, and they can be used to acquire specific assets of a target company, such as its plants, equipment, or intellectual property. Asset purchases can be attractive to buyers because they allow them to acquire the specific assets they need without having to take on the entire business, including its liabilities and employees.

Transfer of an Enterprise

For businesses seeking a comprehensive transfer, the Czech legal system allows for a special “transfer of an enterprise”. This type of asset deal encompasses a bundled transfer of assets, liabilities, employees, customer agreements, etc, effectively transferring an entire going concern in a single transaction.

See 1.2 Regulatory Framework for FDI regarding FDI regulation and 6. Antitrust/Competition regarding merger clearance regulation.

LLC

A limited liability company (společnost s ručením omezením or s.r.o.) is the most common type of private business entity in the Czech Republic. An LLC is a legal entity that is separate from its owners; therefore, the owners' personal assets are protected from the debts and liabilities of the company. Shareholders are liable for the LLC’s debts up to the amount of their unpaid registered capital. Once the registered capital is fully paid, shareholders are not liable. The minimum share capital for an LLC is CZK 1/per shareholder.

The supreme body of an LLC is the general meeting consisting of shareholders. The day-to-day management of the company is vested in the managing director(s), appointed by the general meeting. A supervisory body may also be established.

JSC

A joint stock company (akciová společnost or a.s.) is a type of business entity that is characterised by its limited liability and its separation of ownership from management, which is, however, not obligatory. A JSC must have a minimum share capital of CZK2,000,000 (approximately EUR80,000). Shareholders are not liable for the company’s liabilities unless they have not fully paid for their shares.

The supreme body of a JSC is the general meeting consisting of all shareholders. The day-to-day management of the company is vested in one or more executives which are appointed by the general meeting. A supervisory body may also be established.

With regard to the Czech FDI Regulation, there is no difference in case of LLCs or JSCs.

The legal relationship between a company and its minority investors is governed by the Act on Business Corporations (Zákon o obchodních společnostech a družstvech, Act No 90/2012 Coll., as amended). While the general principle of equal treatment of all shareholders is upheld, additional protective rights are granted to certain minority shareholders of LLCs and JSCs. These protective rights are extended to shareholders classified as “qualified shareholders”, as defined below.

LLC

Qualified shareholders are shareholders owning at least a 10% share or voting rights. Rights of qualified shareholders of LLCs include requesting the company’s statutory body to convene a general meeting.

JSC

Qualified shareholders are shareholders owning:

• a 5% share in a JSC with registered capital equal to or lower than CZK100,000,000 (approximately EUR4,080,000);
• a 3% share in a JSC with registered capital exceeding CZK100,000,000; or
• a 1% share in a JSC with registered capital equal to or exceeding CZK500,000,000 (approximately EUR20,400,000).

Rights of qualified shareholders include:

• Seeking compensation for damages: Qualified shareholders can initiate a lawsuit on behalf of the company to demand compensation for damages caused by a member of the statutory or supervisory body.
• Reviewing board performance: Qualified shareholders can formally request the supervisory board to evaluate the performance of the statutory body in exercising their powers.
• Requesting board meetings: Qualified shareholders can request the statutory body to convene a general meeting to discuss specific matters of concern, and can also propose the inclusion of specific items on the agenda of the general meeting.

See the summary of the Czech FDI Regulation in 1.2 Regulatory Framework for FDI.

The Czech capital market is rather small in comparison with capital markets in Western Europe. However, since the 1990s, it has been growing. The growth of the Czech capital market has been fuelled by growing investor confidence. As the country’s economic performance has improved and its legal and regulatory framework has matured, investors have become increasingly comfortable placing their funds in Czech companies and securities.

The securities regulation and regulation over capital markets in the Czech Republic are overseen by the Czech National Bank (CNB). The CNB’s primary objective is to ensure financial stability and the safe operation of the financial system in the Czech Republic, including the capital market. The CNB is responsible for issuing decrees and guidelines that specify more detailed conditions for entry to the capital market, prudential rules, rules of conduct towards investors and clients, and market transparency rules.

The Prague Stock Exchange (PSE) is the largest organiser of the securities market in the Czech Republic. Trading activities on the PSE are facilitated exclusively by licensed securities traders. These licensed traders typically comprise major banks and brokerage firms.

While banks remain the primary sources of financing for businesses in the Czech Republic, the PSE has witnessed a growing number of IPOs in recent years, providing alternative avenues for companies to raise capital.

The legal framework for securities in the Czech Republic is primarily established by the Czech Civil Code (Act No 89/2012 Coll., the Civil Code, as amended). However, certain specific securities are relegated separately, such as bonds.

In addition, there is the Act on Investment Companies and Investment Funds (Act No 240/2013 Coll.), which governs the conditions for activities of investment funds and the offering of investment products. Additionally, the Act on Doing Business on the Capital Market (Act No 256/2004 Coll.) governs the provision of services in the field of capital markets and the protection of the capital market and investors.

As stated in 1.1 Legal System, the Czech legal framework for securities is harmonised with EU law.

Based on the Czech FDI Regulation, investment funds are also considered foreign investors.

The antitrust law (including cartels, abuse of dominance power and merger control) is governed by Act No 143/2001 Coll, on Protection of Competition, as amended. The authority overseeing the application of merger control legislation is the Office for the Protection of Competition (the “Office”). As stated in 1.1 Legal System, Czech antitrust regulation is similar to EU antitrust regulation and, therefore, similar principles apply in the Czech Republic and the EU.

Merger Control Criteria

A merger of undertakings triggers merger clearance if the following turnover thresholds are met:

• the combined turnover of the target companies and the purchaser (and its affiliates) exceeds CZK1.5 billion (approximately EUR60.2 million) on the Czech market, and concurrently (ii) the turnover of the target companies and the purchaser (and its affiliates) exceeds CZK250 million (approximately EUR10.2 million) on the Czech market; or
• the turnover of the target companies exceeds CZK1.5 billion on the Czech market, and concurrently (ii) the worldwide turnover of the purchaser (and its affiliates) also exceeds CZK1.5 billion.

The turnover means the revenue generated from the sale of goods and/or provision of services to companies (or individuals) not affiliated with the relevant company. The turnover figures are furthermore exclusive of VAT or similar direct sales taxes. Geographical allocation of turnover refers to revenue generated from the sale of goods and/or provision of services to customers having their seat in the Czech Republic.

The above merger clearance thresholds apply regardless of whether the undertakings concerned are established and registered in the Czech Republic.

In general, consummation of a transaction (which meets the specified thresholds) prior to merger clearance by the Office is prohibited and a penalty may be imposed. As a result, the signing of the transactional documentation may occur prior to the merger clearance, but the closing and/or any other act based on which the transaction would be (partially) consummated is prohibited (“standstill obligation”). Therefore, the parties may not align their business strategies, the purchaser may not appoint the statutory body of the target company, etc, prior to the merger clearance.

Process Overview

Informal pre-notification consultations

Strictly confidential pre-notification consultations are strongly encouraged by the Office to facilitate a smooth and quick notification review process. Usually, it takes 14 days for the Office to informally review all documents. During the pre-notification consultations, questions regarding the relevant market, scope of provided information or subject matter of the filling may be raised.

Notification filing

Once parties have demonstrated a mutual and firm commitment to conduct the transaction (SPA, LOI, or HOT has been signed), a merger filing request may be submitted. The request is accompanied by the necessary information and documentation based on the questionnaire published by the Office. The administrative fee is CZK100,000 (approximately EUR4,000).

Standard procedure

The standard procedure involves the Office issuing an approval decision within 30 days if the concentration does not raise substantial competition concerns. If serious concerns arise, the Office issues a decision within five months of initiating the proceedings.

Simplified procedure

A simplified procedure is available for cases where no substantial distortion of competition is anticipated. The Office issues an approval decision within 20 days. The majority of cases fall under the simplified procedure.

In deciding on an application for merger approval, the Office considers, in particular:

• the need to maintain and develop effective competition;
• the structure of all markets affected by the merger;
• the share of the merging competitors on these markets, their economic and financial strength;
• legal and other barriers to entry for other competitors on the markets affected by the merger;
• whether suppliers and customers will have fewer choices after the merger;
• supply and demand dynamics on the affected markets; and
• the needs and interests of consumers, and research and development that benefit consumers without hindering competition.

The Office will not approve a merger if it would have the effect of substantially distorting competition on the relevant market, in particular because it would create or strengthen the dominant position of the merging competitors or one of them. If the combined share of the merging competitors on the relevant market does not exceed 25%, it is presumed that their merger does not have the effect of substantially distorting competition, unless the opposite is proven during the assessment of the merger.

In most cases, the Office has approved merger clearance notifications. The rejection of such notifications is relatively uncommon.

The Office may condition the approval of a merger on the fulfilment of commitments proposed by the merging parties in favour of maintaining effective competition. These commitments may be proposed before the merger approval proceeding begins or during its course, but no later than 15 days from the day when the last of the parties to the proceeding receives its statement of objections. The Office will only consider later proposals for commitments or changes to their content in exceptional circumstances.

Sanctions

Should the transaction be implemented prior to issuance of merger clearance, the Office may impose a fine of up to CZK10 million or 10% of the net turnover of the group of companies in the last completed accounting period (whichever is higher).

Moreover, the Office may impose an obligation on the parties to divest the acquired business or annul the transactional documentation on the basis of which the transaction was implemented due to a violation of the above obligations.

A party may submit an appeal or, subsequently, file a lawsuit, against the Office’s decision imposing sanctions.

The Czech Republic has adopted the Czech FDI Regulation, which provides a framework for the examination and approval of foreign direct and/or indirect investments by the state.

Application of the Czech FDI Regulation

The Czech FDI Regulation is aimed at foreign investors whose ultimate owner comes from a country outside the EU. This means that regardless of whether the investment is consummated by an entity registered within the EU, if such entity has its ultimate owner outside the EU, the Czech FDI Regulation may apply.

Investments Affected by the Czech FDI Regulation

The Czech FDI Regulation will apply if the following conditions are met:

• (i) the relevant transactions result in a foreign investor acquiring effective control over a Czech target company, where “effective control” is defined as:
1. investments that represent more than 10% of voting rights in the Czech target company;
2. the acquisition of assets of the Czech target company;
3. membership of the foreign investor in a statutory body of the Czech target; or
4. any other form of control that gives the foreign investor access to information, technology, and/or systems essential for the protection of the security, public safety, or public order of the Czech Republic;
• (ii) the target company is active in a sector important for the security, public or internal order of the Czech Republic; if this company operates in the field of military material production, selected dual-use goods, or belongs to critical or critical information infrastructure, the investor will have to request approval for the capital entry before it is carried out.

Other investments that are not specifically mentioned in (ii) above may still fall under the Czech FDI Regulation if they are deemed to be a threat to the security, public order, or internal security of the Czech Republic. The state may review these investments ex officio within five years of the transaction’s consummation.

In order to provide legal certainty to investors, the Czech FDI Regulation allows for a voluntary consultation with the state. This consultation process allows the state to assess whether the approval of the foreign investment is necessary.

Additionally, under the Czech FDI Regulation, foreign investors are obligated to consult on foreign investments in Czech target companies that function as TV/radio broadcasters and/or publishers of periodic newspapers with an annual circulation exceeding 100,000 copies.

Who Decides and When

The Czech Ministry of Industry and Trade will examine the foreign investment application and render a decision within 90 days. In complicated cases, this timeframe may be extended to 120 days. Moreover, certain decisions of the Ministry of Industry and Trade, such as the rejection of a request, are subject to the prior approval of the Czech Government.

FDI Clearance Request Timeframe

The Czech FDI Regulation does not specify a timeframe for requesting FDI clearance. However, like merger clearances (see 6. Antitrust/Competition), the foreign transaction cannot be consummated until the FDI clearance has been granted (“standstill obligation”). Therefore, the signing of the transaction agreement can occur, but the closing of the transaction will be contingent upon the issuance of the FDI clearance.

See 7.1 Applicable Regulator and Process Overview.

If a foreign investment poses a threat to security, public or internal order of the Czech Republic, the Ministry of Industry and Trade may initiate negotiations to agree on conditions/commitments with the foreign investor. These conditions/commitments may include, for example, the obligation to consult with the Ministry of Industry and Trade in the event of a further increase in the ownership stake in the Czech target company. The Ministry of Industry and Trade will submit the pre-agreed conditions/commitments of the foreign investor to the Czech Government.

The government shall adopt a resolution within 45 days, stating whether a foreign investment may pose a threat to the security of the Czech Republic or internal or public order. In assessing the matter, the government shall take into account the potential impact of the foreign investment on the principles of the democratic state under the rule of law, the protection of life and health of the population, the defence of the state, the foreign policy or security interests of the state, the economic security of the state, and any other relevant facts from the perspective of the protection of the security of the Czech Republic or the internal or public order.

This decision may confirm the proposal to approve the investment with conditions/commitments or reject the proposal of the pre-agreed conditions/commitment if the foreign investment does not pose any risks (which would result in the approval of the foreign investment without conditions).

Insufficient co-operation of a foreign investor during negotiations on conditions may serve as a reason for prohibiting the implementation a foreign investment.

Should a foreign investor implement the relevant foreign transaction without prior approval of the state, a fine can be imposed up to 1% of the total net turnover of the foreign investor in the last financial year, or from CZK50,000 to CZK50,000,000, if the total net turnover of the foreign investor in the last financial year cannot be determined.

Should the foreign investor (i) fail to fulfil the obligation imposed by a decision prohibiting the continuation of a foreign investment, or (ii) fails to fulfil the conditions imposed by a decision authorising a foreign investment with conditions, a fine can be imposed up to 2% of the total net turnover of the foreign investor in the last financial year, or from CZK100,000 to CZK100,000,000, if the total net turnover of the foreign investor in the last financial year cannot be determined.

As provided for in 2.1 Recent Developments and Market Trends, the Czech Republic has adopted the National Recovery Plan. This plan has led to the creation of several investment incentive plans, even open to foreign investors, aimed at financing selected business plans.

Legal entities with their registered office in the Czech Republic are subject to taxation on both income from the Czech Republic and income from abroad. Legal entities with their registered office abroad, but operating in the Czech Republic, are subject to taxation only on income from sources in the Czech Republic. The Czech Act on Income Tax (Act No 586/1992 Coll., as amended) stipulates that all income and proceeds from activities, as well as transactions with property, are subject to taxation as income of a legal entity.

As of 2024, the corporate income tax will be 21%. The taxable income is calculated based on the adjusted accounting profit or loss. For partnerships, the income is passed through to the partners, who are responsible for paying taxes on their respective shares.

Dividend Taxation in the Czech Republic

Dividend payments made by Czech companies are generally subject to withholding tax in the Czech Republic. The standard withholding tax rate for dividends is 15%. However, the tax rate can be increased to 35% for dividends paid to non-residents from countries outside the EU and European Economic Area (EEA) that do not have a double-tax treaty with the Czech Republic or a bilateral or multilateral tax information exchange agreement.

Exceptions for EU Parent Companies

Dividends paid by Czech companies to their parent companies that are located in EU countries are exempt from withholding tax. This exemption applies if the following conditions are met:

• the parent company is a resident of an EU Member State;
• The parent company holds a minimum 10% ownership stake in the Czech company for an uninterrupted period of at least 12 months; and
• the parent company is registered as a specific type of corporation allowed in the EU, such as a JSC, LLC, trust or other permitted corporate structure.

Exemption for Dividend Distributions between Czech Companies

Dividend distributions between two Czech companies are also exempt from withholding tax, under similar conditions as provided for above.

Interest and Royalty Taxation

For Czech non-residents receiving interest and royalties from Czech sources, a 15% withholding tax applies unless an exemption is granted in accordance with Czech law, the EU Interest-Royalty Directive or double tax treaties. The withholding tax rate increases to 35% for interest and royalties paid by Czech residents to non-residents from countries outside the EU, EEA, or those with which the Czech Republic does not have a double tax treaty.

Companies commonly use strategies to limit the taxes paid. However, the Czech government has adopted several tax regulation changes to limit, at least to some extent, some tax breaks for companies. As of 2024, the most important new limitations are summarised as follows:

• Extraordinary depreciation can only be applied to zero-emission vehicles – ie, electric vehicles purchased from 1 January 2024 to 31 December 2028.
• Businesses will only be able to deduct depreciation calculated from a maximum amount of CZK2 million. The tax residual value of the car will also be limited.
• Under the new rules, non-cash benefits provided up to a certain limit will be tax non-deductible for the employer. Benefits provided above the limit will still be tax-deductible for the employer, but they will also be considered taxable income for the employee.

Czech or EU parent companies are exempt from tax on capital gains realised from the profit share and the sale of shares in subsidiaries located in the Czech Republic or any other EU country provided that the parent company has maintained a minimum ownership stake of 10% in the subsidiary for an unbroken period of at least 12 consecutive months.

Tax relief is also applicable to Czech or EU parent companies on capital gains realised from the sale of shares in subsidiaries located in countries that have a tax treaty with the Czech Republic if the following conditions are met:

• The subsidiary has a legal form equivalent to a Czech joint stock company, a limited liability company, or a co-operative society.
• The parent company has held an ownership interest of at least 10% in the subsidiary for at least 12 consecutive months.
• The subsidiary is subject to a corporation tax equivalent to the Czech corporate income tax at a rate of at least 12%.

Capital gains other than those specified above are included in the taxable income and are subject to the standard corporate income tax rate.

The Czech Republic follows the OECD’s Transfer Pricing Guidelines for Multinational Enterprises. While there is no legal requirement for companies to prepare transfer pricing documentation in the Czech Republic, it is highly recommended to ensure compliance with these guidelines and avoid potential tax or other disputes.

In line with the Anti-Tax Avoidance Directive, the Czech Republic has implemented anti-tax avoidance measures into its legal regulation.

Legal Framework

In the Czech Republic, trade unions are, for historical reasons, strong and widespread across most industries. Moreover, the establishment of trade unions is firmly protected by the Czech Constitution. As a result, neither the government nor employers may restrict or prohibit the establishment of trade unions. Trade unions may exist as individual company trade unions, multi-company trade unions, or industry-wide trade unions, and these trade unions may coexist. In lieu of trade unions, works councils may be established, but they are relatively uncommon.

With regard to collective bargaining, only trade unions can engage in collective bargaining. It can occur at both the industry level and the company level. While collective bargaining is not typically seen in smaller businesses, it cannot be ruled out.

Forecast

Based on the Czech Ministry of Finance’s projections, the labour market in 2024 is expected to continue to face a shortage of workers, potentially putting upward pressure on wages. Consequently, the demand for foreign workers is likely to increase in 2024. This demand is particularly evident in the skilled labour segment across various industries.

Moreover, the Ministry of Finance emphasises that the shortage of employees is a significant impediment to production growth, especially in the construction sector. However, the influx of refugees from Ukraine has been easing labour market pressures. Ukrainian refugees have not experienced significant difficulties finding employment on the Czech labour market. Legislative changes aimed at simplifying administrative procedures for employing foreigners have also contributed to this trend. The successful integration of Ukrainian refugees and the full utilisation of their human capital could significantly bolster economic growth in the coming years.

Employees are most frequently compensated in cash together with other voluntary benefits provided by employers. In general, most employers provide highly skilled employees with voluntary benefits in order to retain skilled workers due to the labour shortage on the market. Moreover, employees may be compensated based on collective agreements.

Additionally, the Labour Code also establishes statutory benefits for all employees, such as:

• minimum wages (the Czech Government regularly (at least once a year) prescribes minimum wages, which will be CZK18,900 (approximately EUR770) in 2024, however, it represents less than 50% of the average wage);
• paid holiday (minimum of four weeks);
• termination, notice periods and severance;
• working hours and overtime (maximum 40 hours/week);
• maternity allowances; and
• sick leave.

Usually, employers provide employees with the following benefits (at least some of them):

• allowances for food;
• allowances for sports or culture;
• allowances for life insurance or pensions;
• extended paid holidays; and
• allowances for education/education at the workplace.

Transfer of Business

A specific regime applies in the event of a transfer of business. The Labour Code provides that, in a transfer of business, employees, trade unions or work councils (where applicable) need to be consulted prior to the transaction. Moreover, employees are transferred from the seller to the buyer as at the consummation of the transaction without further obligations of the parties. However, as a result of the transfer of business, employees are entitled to terminate employment within two months from consummation of the transaction with the right to statutory severance.

Rights and obligations from individual employment relationships shall pass to the successor employer (the buyer) in their entirety. Rights and obligations from a collective agreement shall pass to the successor employer for the duration of the collective agreement (but no later than the end of the following calendar year after the consummation of the transaction).

Other Transactions

In case of a share deal and/or asset deal, there are no specific obligations vis-à-vis employees.

IP rights are considered one of the most important aspects of FDI screening in the Czech Republic. Based on the Ministry of Industry and Trade, protection of IP rights is one of the reasons for the adoption of the Czech FDI Regulation.

As provided for in 1.1 Legal System, IP rights regulation is closely aligned with EU law/IP international treaties. Therefore, Czech law provides strong protection for IP rights and there are no specific sectors in which IP protection is not provided and/or difficult to obtain.

In the Czech Republic, the law permits the issuance of a compulsory licence to a patent under certain circumstances, one of which is when an important public interest is at risk.

Additionally, the Czech Civil Code also protects business secrets and know-how.

As stated in 1.1 Legal System, data protection/data privacy is closely aligned with EU law. In particular, the EU General Data Protection Regulation, which unifies data protection/data privacy within the EU, is directly applicable. In the Czech Republic, there are no significant differences in data protection practices and enforcement compared to other EU Member States.