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Investment Incentives - October 2013

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Investment Incentives - October 2013

  1. 1. Czech Republic Investment Incentives Jan Fried | Director of East Coast Operations, USA New York, October 2013
  2. 2. Investment Incentives -- Act on Investment Incentives No. 72/2000 Coll., as amended Supported activities -- Manufacturing industry - Starting or expanding production facilities -- Technology centres - Establishment or expansion of R&D centres -- Business support services centres - Establishment or expansion of shared service centres, SW development centres or high-tech repair centres Source: Act on Investment Incentives No. 72/2000 Coll.
  3. 3. General conditions -- The project must be implemented in the Czech Republic -- No work may be started on the Project before issuance of the “Confirmation of Project Registration” by CzechInvest -- Investment and new jobs must be maintained for a period of 5 years -- Environmentally friendly activities Source: Act on Investment Incentives No. 72/2000 Coll.
  4. 4. Manufacturing industry - eligibility criteria -- Starting or expanding production facilities -- Min. investment into assets: - Regions I: CZK 50 mil. (app. EUR 2 mil.), of which at least CZK 25 mil. into new machinery - Regions II: CZK 100 mil. (app. EUR 4 mil.), of which at least CZK 50 mil. into new machinery -- At least half of the above minimum investment must be financed from own financial sources (not loans) -- The conditions must be fulfilled within 3 years Source: Act on Investment Incentives No. 72/2000 Coll.
  5. 5. Specification of regions Source: Resolution of the Government of the Czech Republic No. 141 of 22 February 2010
  6. 6. Strategic investment in production -- Minimum investment into assets CZK 500 mil., of which at least CZK 250 mil. into new machinery and at the same time -- Creation of at least 500 new jobs -- The conditions must be fulfilled within 3 years Source: Act on Investment Incentives No. 72/2000 Coll.
  7. 7. State Aid Map (2007 – 2013) Source: Government Order No. 194/2012 Coll.
  8. 8. Proposed regional aid guidelines 2014 – 2020 -- reduction of state aid intensity from current 40% to 25% for large enterprises -- complication of eligible criteria for proving the motivation effect of incentives, for documenting the compatibility of state aid with regional guidelines, etc. Effectiveness of proposed guidelines -- new guidelines shall be applied to all Decisions to grant investment incentives issued from July 1, 2014
  9. 9. Manufacturing industry – state aid ceiling -- Investment in Regions II and at the same time in low-tech sectors – 75 % of ceiling of state aid -- Low-tech sectors = sectors that do not fall under codes 20, 21, 26 up to 30 or 32.50 of the branch classification of economic activities (CZ-NACE) Source: Government Order No. 194/2012 Coll.
  10. 10. Eligible costs -- Long-term assets, of which at least half must be new machinery or -- 2-years wage costs of employees on newly created positions Investor can choose one option; In case of investment in production – only long-term assets can be used Source: Act on Investment Incentives No. 72/2000 Coll.
  11. 11. Types of Incentives Following items summed up cannot exceed the ceiling of state aid -- Tax incentive -- Job creation grants -- Discounted price of land -- Cash grant on capital investment (in case of strategic investment) Granted above the ceiling of state aid -- Training and retraining grants Source: Act on Investment Incentives No. 72/2000 Coll.
  12. 12. Tax incentive -- New companies: full corporate income tax relief for max. 10 years -- Existing companies: partial corporate income tax relief for max. 10 years -- Current corporate income tax rate = 19 % Source: Act on Investment Incentives No. 72/2000 Coll.
  13. 13. Tax incentive – new company Source: Act on Investment Incentives No. 72/2000 Coll.
  14. 14. Tax incentive – existing company Source: Act on Investment Incentives No. 72/2000 Coll.
  15. 15. Job creation, training and retraining grants -- Offered in regions with the highest rate of unemployment only (regions A) -- CZK 50,000 (app. EUR 2,000) per each new job created -- 25 % of total training costs (35 % / 45 % for medium / small enterprises) Source: Act on Investment Incentives No. 72/2000 Coll.
  16. 16. Job creation, training and retraining grants Source: Ministry of Labour and Social Affairs Valid from: July 1 – December 31, 2013
  17. 17. Training and retraining grants – eligible costs -- Services related to training and retraining -- Material and energy consumption needed for (re)training -- Travel expenses -- Labour costs and on-costs of employees ensuring the (re)training - instructors, teachers -- Accounting depreciation costs of the tangible and intangible assets -- Labour costs and on-costs of (re)trained employees Source: Act on Investment Incentives No. 72/2000 Coll.
  18. 18. Cash grant on capital investment -- Offered in case of Strategic investment in production or in technology centre -- Cash grant on capital investment up to 5 % of eligible costs (max. CZK 1,5 bil. in case of investment in production, max. CZK 0,5 bil. in case of investment in technology centre) -- Cash grant on capital investment must be approved by the Czech Government Source: Act on Investment Incentives No. 72/2000 Coll.
  19. 19. Application process - Applicant and Recipient are two different entities Source: Act on Investment Incentives No. 72/2000 Coll.
  20. 20. Application process: Applicant = Recipient Source: Act on Investment Incentives No. 72/2000 Coll.
  21. 21. Ministry of Industry and Trade CzechInvest Agency Foreign Offices – USA Mr. Jan Fried USA – East Coast – New York Mobile phone: +1 (347) 216 9355 E-mail: newyork@czechinvest.org Mr. Roman Horacek USA – West Coast – California Mobile phone: + 1 (415) 794 0665 E-mail: california@czechinvest.org
  22. 22. Thank you for your attention. www.czechinvest.org Jan Fried | Director of East Coast Operations, USA jan.fried@czechinvest.org @jan_fried

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