Discusses pricing formula and other fees, value-added tax (VAT), etc.
Last Published: 10/19/2018

Czech consumers and firms are very price-sensitive and the market is dominated by cost-conscious consumers. Although Prague is the EU’s seventh wealthiest region (2016 - based on regional GDP per capita expressed in purchasing power standards) retailers complain they are unable to move goods unless they are on sale. There has been a subtle shift in the consumer market towards prestigious name brands over low-cost competitors for certain goods.
From a pricing perspective, U.S. firms face competition from European firms (which have lower transport costs and no import duties), Czech firms that have home field advantage, and low-cost imports from Asia. A number of larger U.S. firms have lowered costs and improved sales by doing some low-cost assembly or value-added production in the Czech Republic or Europe. Over the past year the dollar has averaged around 21 CZK per U.S. dollar which has improved the export competitiveness of U.S. firms.

Czech VAT law is harmonized with EU VAT law and is levied on goods and services from other EU countries and from third countries. The VAT rate is currently 21 percent on most manufactured goods and services, and 15 percent on selected goods, such as food products, hotel accommodation, public transportation, newspapers and periodicals, and medical and dental care, among other items. A reduced VAT rate of 10 percent applies to foodstuffs classified as essential for child nutrition, pharmaceuticals, and books.  VAT is based on the imported price plus applicable duties and is normally paid by the distributor or the importing company. A firm is obligated to register for Czech VAT once it starts to provide taxable good and services in the Czech Republic or establishes a permanent operation.
 

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