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Foreign Exchange

With 6% GDP growth in 2005 – the highest in Europe – the Czech Republic is a hot spot of economic expansion and investment opportunities. Foreign direct investment (FDI) in companies, properties and other assets doubled to $11 billion in 2005 from $4.9 billion in 2004, according to the Czech National Bank.

FDI gives the investor control of an acquired asset and is distinct from portfolio investment, which doesn’t offer that control.

In the Czech real estate sector, investment volume hit €1.2 billion in 2005, up slightly from €1.1 billion invested in 2004, according to CB Richard Ellis. More than half of those acquisitions were office properties, with retail accounting for approximately 24%, the next-highest category. Across property types, the Republic garnered 17% of all real estate investments made in Central and Eastern Europe last year, CBRE reported.

When the Czech Republic joined the European Union in May 2004, the nation allowed residents of other EU countries to acquire Czech real estate. Under international treaties, U.S. residents can acquire Czech properties after obtaining a residence permit or visa for a stay of more than 90 days. Any foreign company with a Czech office that is authorized to do business in the country can acquire properties. (There are exceptions involving agricultural and forest land).

Treaties prevent double taxation on dividends, interests and royalties on foreign investment in the Czech Republic, covering all EU nations, the United States and several other countries, according to CzechInvest, the Czech Republic’s business and development agency.

CzechInvest, an agency of the Ministry of Industry & Trade, provides free assistance to public and private developers and has grants available for both greenfield and brownfield projects that meet economic development criteria. More information is available at www.czechinvest.org.

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