“Politics in Czech Republic is currently stable, even though we have several ongoing issues,” says Jiri Cerny, Partner at Peterka Partners in the Czech Republic. “The biggest controversy involves President Milos Zeman’s close relations with China. They promised a large amount of investment, but this has never been fulfilled, and that has led to some scrutiny. Apart from that, we hadn’t had any major political issues recently.”
“The government has recently proposed a Digital Tax which would apply to companies such as Google or Facebook,” Cerny reports. “The proposed tax is 7% of the income these companies generate in the Czech Republic. Although the Digital Tax could work, this percentage is much higher than expected and it might be difficult to implement.”
The Czech Republic, of course, is hardly the only country considering how – and whether – to tax the industry. “Currently, there is discussion across Europe about this issue,” Cerny says, “which is a very delicate question. Small changes might make a big difference. This proposal is yet to be challenged and I am sure that the final result will be different.”
“Other than that, the new law regulating construction is also generating some controversy,” Cerny says. “The law is supposed to make it easier to obtain building and zoning permits. Currently, getting those permits is incredibly hard. This leads to fewer construction projects, the effects of which are already visible in the country, especially in Prague, where we are lacking accommodation. The prices of apartments are high and there is an insufficient number of them, which is disastrous. The housing market is very cold. We need amendments to the existing laws, which would allow easier access to permits, seemingly the only way to fix the problem.”
That’s not the only legislative issue generating a lot of public attention, Cerny says. “Further discussion is based around legislation regarding class action, which, up until this point, has been almost untouched.” In Cerny’s opinion, new legislation is long overdue. “These discussions have been going on for more than three years and we would love to see some results.”
“The Czech economy is relatively stable,” says Cerny, turning to a new subject, “and we have had a low rate of unemployment, resulting in factories having no workers to employ.” Contributing to the competition for workers (and the real estate shortage) is the number of companies seeking entry. “ The market is quite attractive for investors,” Cerny says, “and we have recently witnessed multiple large deals, such as South Korean firms buying office buildings in Prague for almost EUR 250 million.”
The good times shouldn’t end any time soon, he believes. “Investors feel there are no specific concerns or obstacles, meaning that we don’t expect a decline of investment in the near future.” In conclusion, Cerny says that: “I just hope that the systems carries on functioning like it has and that our economic growth remains the same in the foreseeable future, as that is important for both lawyers and non-lawyers alike.”
