Czech Republic: Amendment to Investment Incentives Law

The Chamber of Deputies has approved the amendment to the Investment Incentives Act which proposes a new system of investment promotion. One of the main changes is that the period in which incentives can be used as corporate income tax relief has been extended from five to ten years. The existing investment incentives will also include financial support for the acquisition of fixed assets in a “strategic investment” project.

For a project to qualify as “strategic” investment, a minimum investment of CZK 500 million and the creation of at least 500 new jobs are required. For this kind of investment a cash subsidy of up to 5-7% of the investments cost can be granted.

For projects in the manufacturing industry, the minimum investment amount remains unchanged at CZK 100 million. However, in regions where state support is concentrated investment incentives will be more accessible, with a minimum investment requirement of only CZK 50 million.

The required level of investment in machinery will be reduced from 60% to 50% of the total investment. This proportion could even be lower, because under the revised definition of eligible costs applicants can choose to include only a portion of their total investment in land and buildings.

The amendment to the Investment Incentives Law specifies more precisely what preparations can be made before filing an application, though the rule is maintained that the investment project must not have been initiated before the application is filed or rather before the project is certified as qualifying for further consideration.

The deputies have approved to extend the investment incentives to technology centres and strategic services centres. In the area of investment in strategic service centres, centres developing software solutions will have to create 40 new jobs to be granted the incentive. No minimum investment amount has been stipulated for strategic service centres.

The conditions for strategic investment projects in the area of technology centres have been relaxed. There it will be enough to create at least 120 new jobs and to invest at least CZK 200 million. In certain cases, support for a strategic investment will require government approval.

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