Foreign Direct Investment

According to UNCTAD's World Investment Report 2024, FDI inflows to the Czech Republic decreased to USD 7.7 billion in 2023, from USD 9.2 billion the year before (-15.8%). At the end of the same period, the total stock of FDI stood at USD 216.6 billion and the country continues to rank among the largest recipients of FDI inflows into Central Europe. EU member states are the most important foreign investors in the Czech Republic: according to the latest available data by the Czech National Bank, the largest investors in the country are the Netherlands (16%), Luxembourg (15%), Germany (14.2%), Austria (9.9%), France (6.7%), and Cyprus (4.5%). In terms of economic activity, the financial and insurance sector accounts for 31.6% of the total inward FDI stock, followed by manufacturing (26.3%), real estate (11.8%), wholesale and retail trade (9%), and professional, scientific and technical activities (6.2%). Concerning the geographical location of investment, the capital Prague has the highest share of stock of FDIs (more than 60%), ahead of Central Bohemia and Moravia-Silesia. Data by the OECD shows that FDI inflows to the country stood at USD 3.4 billion in the first semester of 2024, compared to USD 3.9 billion in the same period one year earlier.

According to the Government Agency for Foreign Direct Investment, the Czech Republic ranks first among central and eastern European countries in terms of FDI stock and per capita inflows. This is due to the introduction of investment incentives, the presence of skilled and inexpensive labour, and the geographical advantages of the Czech Republic, such as its location in the heart of Central Europe. The Czech Republic has an FDI screening mechanism in line with the EU guidelines. Under the current legislation, any non-EU investor must obtain a permit before acquiring more than 10% of the shares or voting rights of a company operating in a sector that is sensitive to the country’s safety or its internal or public order (e.g. energy, gas, heat and water management, food and agriculture, healthcare, transportation, communication and IT systems, financial markets, emergency services and public administration, military material, etc.). Incentives are available for foreign investments that require R&D activities and that create jobs for university graduates, as well as in certain specific sectors (e.g. aerospace, information and communication technology, life sciences, nanotechnology and advanced segments of the automotive industry). Czechia has expanded its traditional engineering investments into new areas of R&D and innovative technologies. EU structural funds have supported the establishment of several world-class scientific and high-tech centres. The Czech Republic is ranked 29th out of 67 countries in the World Competitiveness Ranking, as well as 30th among the 133 economies on the Global Innovation Index 2024 and 24th out of 184 on the latest Index of Economic Freedom.