COMMISSION STAFF WORKING DOCUMENT 2026 Country Report - Czechia Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Czechia
Date: 2026-06-03
Institutions: European Commission, Reform and Investment Task Force
Subjects: Czechia, budget policy, defence policy, economic policy, economic recovery, economic reform, employment policy, energy policy, social policy, stability pact

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 3.6.2026  SWD(2026) 203 final  COMMISSION STAFF WORKING DOCUMENT 2026 Country Report - Czechia Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Czechia {COM(2026) 203 final}  
 
 
 
 
 
 
 
 
 
 
 
ECONOMIC DEVELOPMENTS AND KEY POLICY 
CHALLENGES 

Economic growth accelerates, 
driven by internal demand 

Growth  has  picked  up  thanks  to  higher 
private  and  public  consumption  and 
investments.  Following  two  years  of  low 
growth, GDP expanded by 2.6% in 2025 and is 
projected  to  increase  by  1.8%  in  2026  and 
2.4%  in  2027.  Economic  growth  has  been 
driven by internal demand, which recovered to 
pre-pandemic  levels  in  2025,  and  is set  to 
continue expanding, supported by the ongoing 
growth  in  real  wages,  improved  consumer 
loosening 
confidence, 
monetary 
Czech 
households  have  built up  large  precautionary 
savings in  recent  years,  recording  the  second 
highest  saving  rate  in  the  EU  in  2024,  at 
19.9%.  Public  and  private 
investments 
are projected to continue expanding, supported 
EU 
by 
of 
remains high, 
funds. Private 
recording 
of 
share 
GDP among EU countries in 2024, at 21.8%. 

lower 
conditions.  Moreover, 

and the 
investment 
highest 

inflation  and 

construction 

use 

the 

the  positive 

import  growth.  This 

Rapid  growth  in  imports  is  expected  to 
reduce 
trade  balance. 
Accelerating  internal  demand  is  projected  to 
is  only  partly 
push 
counterbalanced  by  an  increase  in  exports, 
supported  by  the  expected  fiscal  expansion in 
some  of  the  main  trading  partners.  Goods 
represent 83% of exports, with the automotive 
sector remaining the largest contributor. While 
reliance on trade brings ample benefits to the 
domestic  economy,  it  also  exposes  it  to 
uncertainty  from  trade  policy  and  economic 
developments  in  the  main  trading  partners. 
Energy  price  shocks  also  have  a  negative 
impact  on  net  exports.  Therefore,  net  exports 
are forecast to hamper GDP growth in 2026.  

Inflation  is  on  a  declining  trend  but  will 
be  impacted  by  energy  price  shocks. 
Inflation rates eased over the past two years, 
following  the  large  shocks  recorded  in  2022 
and  2023.  Salaries continue  growing faster 
than  inflation,  leading  to renewed  growth  in 
real  wages.  However,  the  recent  shocks  to 
global  energy  prices  are  expected  to  push  up 
energy  inflation,  impacting,  among  others, 
energy-intensive 
and 
industrial 
households. These developments are expected 
to  push  up  inflation  from  2.3%  in  2025  to 
2.7% in 2026 and 2.8% in 2027.  

sectors 

The  labour  market  remains  tight  despite 
slightly  easing.  The  weak  performance  of 
some  parts  of  the  industrial  sector  led  to 
the unemployment  rate  rising,  from  2.2%  in 
2022 to over 3% in the last quarter of 2025. 
However, the  rate remains the  lowest  in the 
EU.  Higher  female  labour  force  participation 
led  to  an  increase  in  the  overall  employment 
rate, which stood at 82.7% in the last quarter 
of 2025, well above the EU average of 76.3%. 
Therefore,  labour  market  shortages  remain  a 
major restriction on investment and economic 
growth. 

Significant spending pressures 
require increasing budget 
efficiency 

Public  debt  remains  relatively  low,  but 
the  budget  deficit  is  set  to  rise.  Gross 
government  debt  was  43.4%  of  GDP  at  the 
end  of  2025  and  is  forecast  to  rise  to  47.2% 
in  2027.  Czechia’s  government  balance  (the 
difference  between  government  revenue  and 
expenditure) recorded a deficit of 2.1% of GDP 
in  2025,  slightly  up  from  2.0%  in  2024.  On 
the  Council  adopted  a 
21 January 2025, 
the  national 
endorsing 
recommendation 

2 

 
 
The 

structural  balance 

medium-term  fiscal-structural  plan  for  2025-
2028.  Under  its  plan,  Czechia  committed  to 
limiting net expenditure growth. A fiscal effort 
of  around  0.5 percentage  points  (pps)  would 
be  needed  to  achieve  the  target  structural 
primary  balance  of  0.4%  of  potential  GDP  in 
2028. 
remains 
weakened  by  the  permanent  income  tax  cut 
introduced  in  2021  and  the  impact  of  tax 
expenditures.  The  economic  strategy  of  the 
newly  elected  government  includes  a  rather 
large stimulus package. While the final budget 
for  2026  suggests  only  modest  spending 
increases  compared  with  2025,  it  is  unclear 
how much overall spending will increase in the 
medium term. 

deficits 

structural 

Persistent 
and 
spending  pressures  underscore  the  need 
to  prioritise  public  finances. Czechia  faces 
low-to-medium risks  associated  with fiscal 
sustainability. However,  given  medium- 
to 
long-term  spending  pressures,  such  as  those 
coming  from  the  ageing  population,  climate 
change  and  challenges  to  the  way  the 
economy  currently  generates  growth,  further 
reforms are needed to boost  competitiveness, 
The 
productivity 
sustainability. 
to  prioritise  public 
government  struggles 
finances  and  put  expenditure to 
its  most 
productive  use, make the  tax  and  benefit 
the 
systems  more efficient,  especially 
in 
labour  market 
security, 
and 
and improve the  quality  of  services,  including 
in education and healthcare. 

social 

and 

The  potential  for better-quality  public 
finances remains untapped. On the revenue 
side,  the  taxation  system  contains  regressive 
elements and distorts the economic incentives 
in the housing and labour markets (see Box 4 
in  Section  4).  The  2025  country-specific 
recommendations 
addressed 
challenges  in  the  labour  market  participation 
of low-income earners and the need to reduce 
their  tax  burden,  including  health  and  social 
contributions.  No  substantial  measures  have 
been  adopted.  On 
the  expenditure  side, 
Czechia is one of the few Member States with 
no  practices  of  performance  budgeting  or 

(CSRs) 

the 

reviews (1). The  government  has 
spending 
committed to prioritise a responsible, efficient 
and  transparent  use  of  public  funds,  aligned 
with 
strategic 
state  budget  and 
investments.  Nevertheless,  there  is  no  plan to 
continue 
piloted 
the 
performance-based  budgeting  or  spending 
reviews.  Czechia  would  benefit  from  moving 
away  from  the traditional  input-based  budget 
structure  to  a  performance-oriented  system 
that  links  expenditure  to  policy objectives and 
measurable results.  

recently 

with 

Further  encouraging  older  workers  to 
stay  in  employment  would  help  decrease 
risks  to  fiscal  sustainability.  The  2025 
CSRs  highlighted  remaining  risks  to  fiscal 
sustainability and the need to encourage older 
workers  to  stay  in  employment  rather  than 
claiming their retirement pension; however, no 
substantial  measures  to  this  end  have  been 
adopted.  Further  policy  action  would  be 
needed,  based  on  a  proper  cost-benefit 
analysis  of  what  motivates  people  close  to 
retirement to work longer. 

to 

Fully  implementing  the  recently  adopted 
pension  reforms  will  be  crucial  for 
limiting  ageing-related  fiscal  pressures. 
In  2024,  Czechia  adopted  legislative  reforms 
addressing  the  long-running  CSR  on  pensions. 
The  reform  primarily  seeks  to  gradually  raise 
the  statutory  retirement  age  to  67  by  2056. 
However,  according 
the  programme 
statement  of  the  newly  elected  government, 
this increase in the statutory retirement age is 
no  longer  being  pursued.  In  addition,  the 
pension  formula  was  adjusted  to  slow  the 
growth 
pensions. 
Furthermore,  the  maximum  duration  of  early 
retirement  was  reduced  from  five  to  three 
years,  and  eligibility  conditions  for  early 
retirement were made  stricter. In combination 
with  the  penalty  system  for  early  retirement, 
these  measures  are  projected  to  increase  the 
effective retirement age and limit the increase 
in public pension spending in the long term by 
around 2 pps of GDP (see Annex  2). Czechia's 
old-age  dependency  ratio  (the  proportion  of 

granted 

newly 

of 

(1)  2023 OECD Survey on Performance Budgeting - Country 

Fact Sheets. 

3 

 
 
The Czech economic model faces 
significant structural challenges  

been 

Czech 

economy 

firms have 

The 
remains 
characterised by high trade openness and 
strong  industrial  output, but  productivity 
relies 
growth  has  slowed. The economy 
heavily on  imports  and  exports,  with  exports 
accounting  for  74.8%  of  GDP 
in  2025.  
This  is  due  to  the  significant  role  of  the 
industrial  sector,  which  makes  up  25.7%  of 
total gross value added, the second highest in 
the  EU,  despite  a  gradual  expansion  towards 
services.  A  high  percentage  of  firms  are 
foreign-owned, accounting for 40.1% of gross 
value  added,  the  seventh  highest  in  the  EU, 
even  though  this  trend  is  declining.  Since 
facing 
2022, Czech 
significantly  higher  energy  prices  and  higher 
nominal  unit  labour  costs.  Together  with  the 
appreciation  of  the  Czech  koruna  over  2025, 
this  led  to  an  increase  in  the  real  effective 
exchange  rate,  negatively  affecting  the  price-
competitiveness  of  the  country's  exports. 
These  developments 
increasingly  strained 
Czechia’s growth model, pushing for a gradual 
shift  from  energy-intensive  sectors  towards 
higher value-added services, such as in the ICT 
sector, which grew from 5% of national value 
added  in  2016  to  7.5%  in  2025.  In  this 
context, tight labour market conditions and the 
low  mobility of  workers  weigh  further  on 
economic  and  productivity  growth: 
labour 
was 
worked 
productivity 
negative every  year  between  2022  and  2024, 
and the labour  productivity  gap  with  the  EU 
average has stopped narrowing since 2020. 

hour 

per 

is 
older  people 
projected to deteriorate rapidly after 2030 (2). 

to  working-age  people) 

in 

role 

retirement 

income  sources. 

Supplementary  pensions  only  play  a 
income. 
minor 
Supplementary pension schemes can boost the 
system  by 
resilience  of 
the  pension 
diversifying  retirement 
In 
Czechia,  supplementary  pensions  rely  mostly 
on  voluntary  third  pillar  pension  schemes. 
However,  their  uptake  remains  limited.  The 
participation  of  young  employees  –  and  their 
average contributions – in third pillar pensions 
low.  Moreover,  the  statutory  cap  on 
are 
pension  fund  fees  seems 
in 
preventing  fees  from  eroding  pension  fund 
returns (see Annexes 2 and 6). 

ineffective 

for  Czechia (3).  The  country 

Czechia  has  announced  a  gradual 
increase  in  defence  spending  by  2030, 
partly  relying  on  EU  funds.  To  facilitate 
more  public  spending  on  defence,  the  Council 
activated the national escape clause (NEC) for 
is 
defence 
expected  to  increase  defence  expenditure  by 
0.3 pps  of  GDP  between  2021  and  2026.  It 
could  increase  defence  spending  by  another 
1.2%  of  GDP  (up  to  the  1.5%  of  GDP  cap)  to 
fully  benefit  from  the  NEC  for  defence. 
Following  an  assessment  by  the  Commission 
of Czechia’s national defence investment plan 
under  Security  Action  for  Europe  (SAFE),  the 
Council  adopted  a  decision  that  makes  up  to 
EUR  2.06  billion 
in  financial  assistance 
available  to  Czechia  for  strategic  defence 
in  2025-2030.  The  expenditure 
projects 
financed  by  loans  from  SAFE  instrument  will 
automatically benefit from the NEC flexibility.  

(2)  https://economy-

finance.ec.europa.eu/document/download/f6fd1e81-
2434-4729-bc36-
28f9e6a79eb9_en?filename=CZ_final_2025.pdf. 

(3)  The  activation  of  the  national  escape  clause  provides 
Member  States  with  budgetary  flexibility  to  increase 
defence  expenditure,  without  an  immediate  need  to 
finance  that  increase  with  spending  cuts  or  revenue-
raising measures. The flexibility therefore gives Member 
States  the  necessary  time  to  accommodate  higher 
defence expenditure within national budgets. 

4 

 
 
Box 1: 

Key achievements of the Recovery and Resilience Plan 

The Recovery and Resilience Plan (RRP) of Czechia represents a total envelope of EUR 8.75 billion, 
corresponding to 2.74% of GDP. It aims to support reforms and investments contributing to the 
green and digital transitions, strengthen economic resilience and address long-standing structural 
challenges identified in the European Semester.  

As of  8  May  2026, EUR 6.77 billion (around 77% of the total allocation) has been  disbursed to 
Czechia  following  the  satisfactory  fulfilment  of  217  milestones  and  targets  (of  which  EUR 232 
million is in loans). Implementation has progressed  steadily, with a growing number of reforms 
and investments already fulfilled and delivering tangible results on the ground.  

Thanks  to  its  strong  integration  into  EU  value  chains,  Czechia  has  the  third-highest  spillover 
effects relative to GDP in the EU, reaching 1.3 % of GDP (EUR 4.1 billion). These gains come from 
exports to other Member States, driven by their implementation of national plans.4 

Highlights and impact of the plan  

•  Energy  decarbonisation.  Reforms  enable  a  faster  roll-out  of  renewables  by  designating 
renewables  acceleration  areas,  simplifying  the  permitting  process  for  renewable  energy 
infrastructure and reforming electricity storage, aggregation and flexibility. 

•  Energy  efficiency  in  residential  buildings.  Through  investments  in  renovating  buildings 
and replacing heating sources, the plan has led to an annual reduction of over 9 PJ in primary 
energy consumption and annual CO2 emissions savings of 763 kt/year5.  

•  Digitalisation  in  schools.  During  the  COVID-19  pandemic, schools  were  equipped with 
laptops  and  other  digital  devices  to  enable  distance learning. Over  10 000 
74 000 
kindergartens and schools were equipped with digital technologies to promote digital literacy.  

•  Modernisation  of  healthcare  infrastructure.  This  involved  the  construction  and 
expansion  of  highly  specialised  facilities,  such  as  the  Centre  for  Cardiovascular  and 
Transplant  Medicine  and  the  Czech  Oncology  Institute,  as  well  as  measures  aiming  to 
increasing the capacity for rehabilitation care. 

•  Advanced  digital  transition.  Many  new  e-services  were  launched,  strengthening  the 
security  of  IT  systems  through  more  than  60  projects  and  linking  277  new  bodies  to  the 
National Data Catalogue, which can inform evidence-based policymaking thanks to the data 
management reform.  

Graph 1.1: Labour productivity growth and 
economic relevance of the industrial sector 

(1) Labour productivity is measures per hour worked and 
represents the cumulative growth since 2009; (2) The 
gross value added of industrial activity is measured as a 
share of GDP. 
Source: Eurostat, own calculations 

Since  joining  the  EU,  Czechia's  GDP  per 
head  has  been  catching  up  with  the  EU 
average,  but  regional  disparities  have 
widened. Although  all  regions  have  seen  an 
improvement  in  GDP  per  head  relative  to  the 
EU  average  since  2004,  progress  has  been 
limited  since  2020  with  only  a  few  regions 
keeping up a high level of growth, in particular 
Prague. Most other Czech regions have shown 
rather  moderate convergence  in  recent  years, 
while  Severozápad (the  North-West  region) 
faces  long-term  economic  stagnation.  These 
patterns  are  also  mirrored 
regional 
disparities 
labour  productivity,  human 
capital,  industrial  modernisation,  innovation 

in 

in 

4 Economic Imparts of the RRF: Czechia (link) 

5 State Environment Fund annual report 2025 (link) 

5 

0%5%10%15%20%25%30%2010201120122013201420152016201720182019202020212022202320242025CZ GVA of industry, % of GDPEU-27 GVA of industry, % of GDPCZ labour productivity growthEU-27 labour productivity growth 
  
 
 
capacity  and  infrastructure  development  (see 
Annex 18).  

Economic security challenges 
persist, particularly in the energy 
sector 

In 

in 

to 

this 

term 

shocks 

(Annex 9). 

Heavy  reliance  on  fossil  fuels  exposes 
Czechia 
the  energy 
markets (see Section 3 and Annex 9). The 
development  of  renewable  energy  production 
progressed  rather  slowly  in  recent  years,  and, 
in  2025,  renewables  made  up  the  second-
lowest  share  of  electricity  generation  in  the 
EU.  Czechia  is  planning  to  expand  nuclear 
energy  capacity,  but  this  will  not  compensate 
the  closure  of  coal-fired  power  plants in  the 
short 
context, 
heightened  price  volatility  in  global  energy 
markets,  amid  trade  disruptions,  feed  directly 
input  costs  and  overall 
industrial 
into 
(Annex  5  and  Annex  9). 
competitiveness 
Industrial  production  grew 
in 2025,  partly 
thanks  to  the  automotive  sector's  recent 
shift to  electric  vehicles.  However,  overall 
industrial  production  has  stagnated  since 
2021.  The  machinery  and  automotive  sectors 
present  opportunities 
transformation 
where  electrification  continues  to  accelerate, 
with spill-over effects in the manufacturing of 
other  clean  technologies  such  as  battery 
systems. Against this background, accelerating 
grid 
renewable 
investment 
infrastructure, storage and energy efficiency is 
to  strengthening  Czechia’s  economic 
key 
security 
competitiveness. 
RRP-supported reforms to 
Despite 
streamline  and  shorten permitting  procedures 
and 
of 
investments  into  large-scale  renewables  and 
grid  flexibility remains low.  The  designation  of 
renewable  acceleration  areas  will  help  to 
sustain  large  investments  in  wind  and  solar 
power  plants, contributing  to  lower  energy 
prices  and  supporting  competitiveness in  the 
medium term.  

connection, the roll-out 

and 
the 

industrial 

energy, 

grid 

for 

in 

dependence 

ageing 
Trade 
population  are  major  challenges  for 
economic  security. Czechia’s  heavy  reliance 

and an 

6 

on  trade  in  the  industrial  sector,  coupled  with 
strong geographical concentration, exposes the 
country  to  trade  disruptions  and  to  shocks  in 
its largest trading partners. The large share of 
value  added  from  foreign-owned  companies 
and  foreign  investments  may  support  growth, 
but  it  also  reduces  strategic  independence. 
Labour and skills shortages also remain a key 
trends, 
challenge.  Adverse 
existing  labour  shortages,  low  participation  in 
tertiary  education  and  skills  gaps,  challenge 
the  sustainability  of  the  Czech  growth  model 
(see Annex 4 and 13). The effective integration 
of  foreign  workers  could  help  alleviate  some 
of these shortages. 

demographic 

Housing shortages have negative 
spillovers effects on the whole 
economy  

and 

rental 

A  persistent  mismatch  between  strong 
housing  demand  and  limited  supply  is 
driving  rapid  price  increases,  reducing 
housing  affordability and  labour  mobility 
(see  Annex  16).  House  price  growth 
accelerated  in  2025  at  10.4%.  The  issue  is 
most  severe  in  the  largest  cities,  affecting 
both sale 
prices. These 
developments  have  widespread  implications, 
exacerbating  housing  affordability,  hindering 
labour  mobility,  deepening  inequalities  and 
complicating  access  to  finance  for  innovative 
companies.  Construction  activity  declined  over 
the  past  two  years  to  5.5%  of  GDP  but  is 
expected  to  pick  up  in  the  coming  years. 
However,  labour  shortages  in  the  construction 
sector, lower recorded productivity and lengthy 
administrative  procedures  delay  building  new 
housing  stock.  Adding  further  pressure  to  the 
market  are  the  significant  share  of  vacant 
dwellings, including in urban areas, and recent 
significant  population  growth  driven  by 
migratory  flows.  The  share  of  dwellings  in 
social  rental  is  well  below  the  EU  average. 
Expanding  the  supply  of public  housing  could 
make  housing  more  affordable,  especially in 
parts  of  the  market  with  lower profit margins 
(see  Section  4  and  Annex  16).  In  addition,  a 
lack of affordable housing, especially in cities, 
is  a  major  barrier  to  labour  mobility  (Annex 

 
Box 2: 

UN Sustainable Development Goals (SDGs) 

Czechia performs well in macroeconomic stability (SDGs 8) and poverty eradication (SDG 1), but 
it  needs  to  catch  up  with  the  EU  average  on  gender  equality  (SDG  5),  innovation  (SDG  9)  and 
global partnerships (SDG 17). While Czechia has made progress on environmental sustainability, 
it  remains  below  the  EU  average  on  climate  action  (SDGs  7,  12  and  13)  due  to  higher  net 
greenhouse  gas  emissions  per  capita  and  a  lower  share  of  renewable  energy  in  gross  final 
energy consumption. Challenges also remain in quality education (SDG 4), health and well-being 
(SDG 3) and sustainable cities, particularly in the housing cost overburden rate (SDG 11) (6). 

11).  Lastly,  rapid  growth  in  house  prices 
motivates  households  to  invest  speculatively 
in  housing  rather  than  channelling  their 
savings  –  among  the  highest  in  the  EU  –  to 
more  productive 
This 
complicates innovative firms’ access to capital, 
hindering innovation (Annex 6). 

financial  assets. 

in 

the 

A  comprehensive  set  of  measures  is 
needed to curb excessive and speculative 
demand, put the vacant housing stock on 
the  rental  market,  and  encourage  long-
term rentals. On the demand side, the 2025 
tax 
CSRs  highlighted  challenges 
system's  growth-friendliness  and  the  need  to 
increase  revenue  from  recurrent  property 
taxes.  No  substantial  measures  have  been 
adopted.  Further  policy  action  would  be 
needed  to  put  in  place  a  property  tax  system 
based on property values aligned with market 
values.  Czechia  increased  recurrent  property 
taxes  in  2024  and,  from  2025,  property  tax 
calculations  can  be  increased  by  an  inflation 
coefficient.  This  coefficient  was  set  to  1  in 
2025 and in 2026, keeping tax rates constant. 
As a result, property tax revenue remains very 
low,  expressed  both  as  a  percentage  of  GDP 
(0.4% in 2024 compared with 1.8% in the EU) 
and  as  a  percentage  of  total  tax  revenue 
(1.1% in 2024 compared with 4.6% in the EU) 
(Annex  3).  The  new  government  announced  in 
its policy statement that it plans to abolish the 
inflation  coefficient.  The  taxation  framework 
supports  home  ownership,  creating  some 
barriers  to  a  more  efficient  distribution  of 
dwellings 
more 
well 
productive allocation  of  financial  resources. 
interest 
Deductible 

mortgage 

as to a 

as 

long-term  ones 

payments, capital  gains  tax  exemptions  and 
favourable  tax  treatments  for  short-term 
incentivise 
rentals  over 
speculative  behaviours  in  the  real  estate 
market.  This  is  driving  up  house  prices  and 
rents  faster  than  the  EU  average,  making 
housing  less  affordable  for  both  buying  and 
renting for a large part of Czech households, in 
particular in high-growth areas (Annex 16). 

The potential of innovation, 
finance and human capital in 
Czechia remains untapped   

innovation  environment. 

Stimulating innovation and improving the 
business  environment and  firms’  access 
to  capital  market  financing are  essential 
for  improving  Czechia’s  competitiveness. 
Despite its robust industrial and research base, 
Czechia’s competitiveness and productivity are 
hindered  by  high  energy  costs,  a  high 
administrative  burden and  a 
fragmented 
In 
research and 
addition,  insufficient  access  to  finance,  weak 
business-science 
subdued 
links 
digitalisation  limit  business  productivity  and 
spatial 
capacity.  Burdensome 
innovation 
planning 
permitting 
construction 
and 
processes  slow 
infrastructure  development 
and  housing  construction.  The  regulatory  and 
prudential 
institutional 
investors hold back the use of high household 
savings,  especially  in  channelling  them  to 
innovative firms. 

requirements 

and 

for 

the 

Limited tertiary education 
attainment 
constrains 
supply 
skilled 
of 
labour 
and 
professionals, 
participation  of  certain  groups  remains 
attainment 
education 
low. Tertiary 

the 

(6)  This indicator should be read together with the tenure 
structure (homeowner, tenants), that may differ across 
country and regions 

7 

 
 
 
flexibility 

in  Czechia 

for  students 

(36.0%) remains far  below  the  EU  average 
(44.8%),  in  particular,  because  of  high  drop-
out  rates. This  is  linked  to  Czechia’s  shortage 
of  general-education  secondary  schools  and 
to  move 
limited 
between  general  and  specialised  schools, 
leading  to  early  specialisation.  Furthermore, 
educational  performance 
is 
strongly dependent  on an  individual's  socio-
Czechia 
economic 
faces structural challenges 
teacher 
shortages,  particularly  in  science,  technology 
engineering and mathematics (STEM) subjects, 
which 
the  quality  of 
education.  The 
lack  of  early  childhood 
education  and  care  facilities  restrict  women's 
participation in the labour market: Czechia has 
the  fifth  highest  gender  employment  gaps  in 
the EU. 

background. Lastly, 

risks undermining 

with 

funding 

instruments 

competitiveness, 

provide 
EU 
considerable  resources  to  Czechia.  They 
support investments and structural reforms to 
environmental 
increase 
sustainability,  skills,  social 
fairness  and 
security,  while  helping  to  address  challenges 
identified in the CSRs. Key instruments include 
the  Recovery  and  Resilience  Facility  (see  Box 
1)  and  Cohesion  policy  funds  (see  Box  3).  In 
addition, the Common Agricultural Policy (CAP) 
provides  Czechia  with  an  EU  contribution  of 
EUR 5.6 billion under the CAP strategic plan for 
2023-2027 (7). A further EUR 261.7 million are 
available  under  the  Asylum,  Migration  and 
Integration  Fund  (AMIF),  together  with  the 
Instrument 
Border  Management  and  Visa 
(BMVI)  and  the  Internal  Security  Fund  (ISF). 
Other 
support 
competitiveness 
instance 
through  open  calls  under  Horizon  Europe  and 
the Connecting Europe Facility. 

programmes 

in  Czechia, 

also 
for 

EU 

(7)  An overview of Czechia’s formally approved strategy to 

implement the EU’s common agricultural policy 
nationally can be found at 
https://agriculture.ec.europa.eu/cap-my-country/cap-
strategic-plans/czechia_en. 

8 

 
 
Box 3: 

Contribution of cohesion policy funds 

is  supporting  Czechia’s  efforts  to  boost 
EU  cohesion  policy  funding 
competitiveness, environmental sustainability, skills and social fairness. In the 
2021-2027  programming  period,  EU  cohesion  policy  funds (8)  are  providing  EUR 21 
billion  (amounting  to  EUR 26.7  billion  paired  with  national  co-financing),  or  6.6%  of 
2024  GDP,  to  Czechia.  This  makes  cohesion  policy  one  of  the  main  sources  of  public 
investment in the country. The value of selected projects corresponded to 87.7% of the 
total allocation as of March 2026, with additional calls for projects in the pipeline. 

• 

Innovation,  business  environment  and  productivity.  Around  EUR 5.9  billion  is 
allocated to  research and innovation, to  SMEs’ competitiveness and  to the regions 
most  affected  by  the  transition  away  from  carbon-intensive  activities.  More  than 
4 500 firms have already seen their projects approved.  

•  Decarbonisation, energy affordability and sustainability. Nearly EUR 1 billion 
is dedicated to improving the energy efficiency of over 865 000 square metres of 
public buildings, and EUR 630 million is to support climate adaptation measures. To 
improve  the  quality  of  water  and  access  to  it,  more  than  EUR 573  million  is 
allocated to making the water supply system more robust.  

•  Skills, quality jobs and social fairness.  More than EUR 1.5 billion from the ESF+ 
is supporting employment and activation measures for disadvantaged groups, such 
as Roma, the modernisation of public employment services, skills development and 
lifelong  learning,  and  work-life  balance  and  equal  opportunities.  These  efforts  are 
complemented by EUR 972 million to support equal access to quality education and 
its  labour  market  relevance,  as  well  as  digital  transformation.  Over  500 000 
children, pupils and students will receive a better education.  

The  mid-term  review (9)  strengthened  cohesion  policy’s  contribution  to  emerging 
strategic  priorities,  reallocating  nearly  EUR 197  million.  Over  83%  of  reallocations  will 
support the development of key high value-added technology areas under the Strategic 
Technologies  for  Europe  Platform  (STEP),  which  are  crucial  for  industrial  resilience, 
technological sovereignty and the competitiveness of Czechia’s economy. The mid-term 
review has also strengthened water resilience by creating a new financial instrument to 
support  the  expansion  and  upgrade  of  existing  wastewater  treatment  plants,  helping 
Czechia  to  meet  the  energy  neutrality  target  under  the  EU's  new  urban  wastewater 
treatment  directive.  In  addition  to  cohesion  policy  funding,  Czechia  will  allocate  up  to 
EUR  1.56  billion  under  the  Social  Climate  Fund  between  2026  and  2032  to  help 
mitigate  the  social  impact  of  the  new  emissions  trading  system  (ETS2),  providing 
targeted support to vulnerable households and small businesses.  

(8)  The  European  Regional  Development  Fund, 

the 
European  Social  Fund  Plus,  cohesion  policy  funds  and 
the Just Transition Fund. 

(9)   The mid-term review is carried out halfway through the 
2021-2027 programming period. It is a formal process 
required  under  Article  18  of  the  Common  Provisions 
Regulation  that  aims  to  assess  the  implementation  of 
programmes 
propose 
adjustments to improve their performance, ensure their 
relevance in light of new and emerging needs and keep 
them aligned with other EU policies. 

and,  where 

necessary, 

9 

 
 
 
 
 
INNOVATION, BUSINESS ENVIRONMENT AND 
PRODUCTIVITY 

the 

firms 

(CSRs) 

through 

investments 

recommendation 

simplify 
the 

innovation, 
improve 

received  country-
In  2025,  Czechia 
specific 
to 
strengthen  its  capital  markets,  support 
the  creation  of  start-ups  and  spin-offs, 
spatial 
boost 
planning, 
construction 
permitting  process, 
incentivise  and 
simplify  cooperation  among  municipal 
administrations  and  strengthen  the  civil 
service.  Czechia  has  put  in  place  new  public 
initiatives  to  improve  financing  conditions  for 
national 
innovative 
development  bank,  the  Národní  Rozvojová 
Banka (NRB). However, there has been limited 
progress  in  strengthening  other  areas  of  the 
capital  markets,  particularly  in:  (i)  mobilising 
new 
long-term 
savings  product;  (ii)  increasing  institutional 
investors’  participation  in  shares;  and  (iii) 
promoting  household  investments  in  capital 
markets.  Some  measures  have  been  adopted 
to  support  innovation  and  entrepreneurship, 
including  reforms  to  the  rules  on  employee 
stock  options,  R&D  tax  deductions,  and  the 
Research,  Development,  and  Innovation  (RDI) 
Act,  which  aims  to  strengthen  the  R&D 
ecosystem.  Czechia  is  also  planning  a  new 
Start-up Act to facilitate the creation of start-
ups.  Preparatory  steps  have  been  made  in 
construction  permitting,  with  reforms  to  the 
legal  framework  and  the  digitalisation  of 
permitting.  The  recommendations  on  the  civil 
service and municipal cooperation have not yet 
been  addressed,  and  the  design  of  municipal 
tax  assignment  does  not  incentivise economic 
development (Annex 1). 

through 

the 

Strengthening innovation and the 
business environment  

framework 

2025  CSRs,  though  their  effect  remains 
unclear. Czechia reformed the employee stock 
option  plan  (ESOP)  legislation,  introducing  the 
‘no  tax  before  cash’  principle  and  limiting 
ESOPs  to  income  tax  only.  Czechia  is  also 
preparing  a  new  Start-up  Act  to  develop  a 
comprehensive 
for 
regulatory 
start-ups (due in 2027). A recent reform aims 
to  make  R&D  tax  deductions  more  attractive, 
for  instance,  by  extending  the  application 
period.  However,  uptake  remains  limited,  so 
further  improving  the  scheme's  predictability 
would be beneficial (10). With 167 start-ups per 
million inhabitants in 2025, Czechia falls short 
compared  with  the  EU  average  of  201  and 
Estonia’s 
these 
‘moderate 
challenges,  Czechia  remains  a 
innovator’  with  an  innovation  performance 
score of just above 80% of the EU average in 
2025,  with  pronounced  regional  disparities 
(Graph 2.3). 

impressive  843.  Given 

Czechia’s  research  environment  has  seen 
improvements in line with 2025 CSRs, but 
challenges  remain.  Czechia  adopted  a  new 
RDI  Act  (in  force  from  2027)  that  aims  to 
make  research  strategies  more  consistent, 
flexible,  and 
funding  more 
make  R&D 
encourage  knowledge  transfer.  However,  the 
Act  does  not  tackle  broader  governance 
inconsistencies  and  coordination,  and  the 
commercialise 
institutional 
research remain weak. R&D expenditure fell to 
1.8% in 2024, below the 2025 national target 
of  2.5%  (Graph  2.1).  The  weak  links  between 
businesses  and  academia  and  the  public 
research 
of 
degree 
fragmentation  hamper 
the  efficiency  of 
research  expenditure  –  EU  countries  with 
similar  public  R&D  spending  often  achieve 
better research outcomes (see Annex 4).  

incentives 

system’s 

high 

to 

Czechia  has  taken  steps  to  improve  its 
start-up  environment,  in  line  with  the 

(10)  In 2022, only 25% of businesses active in R&D claimed 
tax deductions, 40% less than in 2015 (see Annex 4). 

10 

 
 
 
Graph 2.1: R&D spending by source 

Source: Eurostat, rd_e_gerdcost 

be 

Czechia  has  made  some  progress 
in 
reducing  administrative  barriers,  but 
further  efforts  to  improve  the  business 
environment  would 
beneficial. 
Administrative  barriers  continue  to  weigh  on 
Czech  businesses,  partly  due  to  the  country 
imposing  stricter  national  rules  than  EU 
directives require (‘gold-plating’), particularly in 
view 
construction.  71%  of  businesses 
regulations as a barrier to investment (11), with 
most  obligations  coming 
from  national 
legislation.  Businesses  face  more  than  1 800 
obligations  stemming  from  171  legal  acts. 
Since  2022,  some  progress  has  been  made 
with  the  adoption  of  four  packages  aiming  to 
reduce  bureaucracy  and  the  launch  of  an 
online  one-stop  portal  to  help  businesses 
understand  their  legislative  requirements.  The 
situation could be  further improved through a 
more  systemic  implementation  of  the  ‘think 
small first’ and ‘digital first’ principles, coupled 
with 
impact  assessments  and 
regular evaluations of legislation with a strong 
focus  on  small  and  medium-sized  enterprises 
(SMEs).  

regulatory 

Single  market  barriers  persist  in  key 
areas.  Czechia  regulates  365  professions  – 
the  second-highest  number  in  the  EU.  Other 
significant challenges concern permit duration, 
family reunification and job mobility for highly 
In 
skilled  workers  from  outside  the  EU. 
addition,  easing  administrative  requirements 
for  posted  workers  could  reduce  regulatory 
fragmentation  within 
the  single  market, 
facilitate  cross-border  mobility  and  foster 
competitiveness,  without  undermining  worker 
protections (See Annex 5).  

(11)  In 2025, up from 57% in 2024 – EIB investment 

surveys. 

11 

and 

housing) 

planning 

and  make 

for  example, 

construction 
Spatial 
permitting  processes  are  significant 
administrative  barriers  as  highlighted  in 
the  2025  CSRs.  They  hold  back  businesses 
by slowing down commercial development and 
raising  costs.  They  also  indirectly  raise  the 
costs of energy (due to the slower construction 
of energy infrastructure), reduce the ease with 
which  people  can  move  for  work  (due  to  less 
affordable 
digital 
infrastructure  less  available.  Spatial  planning 
rules  are  particularly  burdensome  in  large 
cities, where updating an urban plan can take 
over  a  decade.  The  situation  could  be 
improved  by, 
reallocating 
responsibilities  for  spatial  planning  between 
the state and municipalities and differentiating 
planning  requirements  for  small  and  large 
settlements. On construction permitting, some 
progress has been made, particularly with the 
creation of the specialised authority for public 
infrastructure  and  on  digitalisation.  However, 
there is still little evidence of faster permitting 
approvals. Further improving digitalisation and 
the capacity and management of construction 
offices could accelerate the process. However, 
frequent  changes  to  the  legal  framework 
increase 
legal  certainty  and  can 
reduce 
administrative 
legislative 
proposal  to reform the permitting system has 
recently  been  tabled  in  Parliament.  As  no 
impact assessment is available, its effects are 
difficult  to  assess  at  this  stage.  While  the 
proposals 
streamline 
administrative  structures,  they  fail  to  tackle 
some  of  the  key  issues  highlighted  above, 
particularly the administrative burden linked to 
spatial planning. 

costs.  Another 

further 

aim 

to 

its 

infrastructure 

Complex  permitting  processes  are  a 
major  barrier 
to  deploying  digital 
infrastructure. Czechia has one of the lowest 
coverages  in  the  EU  of  very  high-capacity 
networks  (VHCN)  and  fibre  to  the  premises 
(FTTP),  and 
readiness 
consistently  ranks  below  the  EU  average 
(Graph  2.2).  Planned  amendments  to  the 
Construction  Act  and  the  adoption  of  the 
Gigabit Infrastructure Act have been identified 
as mechanisms that could potentially speed up 
deployment. However, these reforms and their 
impact on administrative capacity have yet  to 
yield tangible improvements.  

1.90%1.95%1.93%1.89%1.82%1.82%2.24%0.00%0.50%1.00%1.50%2.00%2.50%201920202021202220232024EU27 (2024)Business enterpriseGovernmentHigher educationPrivate non-profit 
   
 
Graph 2.2: Digital infrastructure deployment in 
2024 

Source: Eurostat, isoc_cbt 

(vi) 

Overall, the business environment suffers 
because  of  the  public  administration’s 
low  capacity  as  indicated  in  the  2025 
CSRs.  As  summarised  by  a  recent  study 
funded  under  the  Recovery  and  Resilience 
Facility  (RRF),  Czechia's  civil  service  suffers 
from:  (i)  low  attractiveness;  (ii)  ageing;  (iii)  a 
lack  of  systematic  skills  development;  (iv)  a 
lack  of  focus  on  results;  (v)  fragmented 
inefficient  cooperation 
practices;  and 
between the political level and the civil service. 
Salaries in the public administration have been 
declining  both  in  real  terms  and  compared 
with the average salaries in the private sector 
for more than eight years. For managerial and 
expert positions in Prague, the difference with 
the  private  sector  is  around  46%.  The  Czech 
lacks  stability  when 
civil 
governments  change.  Over  40%  of  senior 
management  –  officially  apolitical  –  are 
replaced  with  each  change  of  government, 
indicating  insufficient  legal  protection (12)  for 
senior managers. A recent legislative proposal 
to  reform  the  civil  service  has  been  tabled  in 
Parliament.  As  no 
is 
available,  its  potential  effects  are  difficult  to 
assess  at  this  stage.  Based  on  a  preliminary 
analysis of the draft law, the proposed reform 
issues 
only  partially  addresses 
risk 
mentioned  above  and  may  even 
exacerbating 
them,  especially 
some  of 
stability. 

impact  assessment 

service  also 

the  key 

Fragmented  municipal  governance  and 
outdated  municipal  tax  assignment  rules 
fail to incentivise economic development, 

(12)  Státní služba 2.0 (Public service 2.0). 

12 

the 

developed, 

do  not  accurately  reflect  the  cost  of 
services  provided  by  municipalities  of 
large, 
different  sizes  and  generate 
uninvested  savings.  Czechia  has 
the 
amongst  OECD 
smallest  municipalities 
countries. This also includes Prague, the capital 
city,  which  is  responsible  for  more  than  25% 
of  the  national  GDP  and  splintered  into  57 
municipalities. This is the third-highest number 
among  EU  capitals  and  three  times  the  EU 
capitals’  average.  Additionally, 
legal 
framework  for  inter-municipal  cooperation  is 
blocking 
insufficiently 
from 
municipalities 
their 
delegating 
in  areas  such  as  spatial 
responsibilities 
planning 
to  municipal 
transport 
and 
associations. Czechia's municipalities also had, 
in 2024, the highest savings relative to GDP in 
the  EU,  almost  double  that  of  Spain,  the  next 
highest.  Besides  fragmentation,  this  is  caused 
by  tax  assignment  rules  (rozpočtové  určení 
daní),  which  allocate  funds  to  municipalities 
that  do  not  use  them.  Consequently,  the 
money is not invested and loses value instead. 
Additionally,  the  tax  assignment  rules  only 
therefore  weakly 
barely 
incentivise 
development 
(especially  construction).  Lastly,  they  also 
inaccurately  reflect  the  cost  of  services 
provided by regional centres (see Annex 18). 

reflect  –  and 

economic 

– 

kickstart  work 

In  e-government,  while  Czechia  made 
progress in expanding the range of public 
services  and  access  to  them,  some 
challenges  remain  in  achieving  system 
interoperability.  Thanks  in  part  to  funding 
from  the  RRF  and  cohesion  policy  funds, 
Czechia  has  launched  and  upgraded  digital 
platforms  and  services  (e.g.  improvements  in 
e-justice  and  e-health).  The  RRF  has  also 
helped 
the  Data 
Management  Act,  designed  to  create  a  legal 
basis  for  linking,  reusing  and  sharing  data 
between  public  authorities.  However,  despite 
this  progress,  challenges  persist  in  making 
systems 
In  2025,  Czechia 
scored  below  the  EU  Digital  Economy  and 
Society 
(DESI)  average  for  public 
services  digitalisation,  underscoring  the  need 
for  better  service  delivery  methods.  Essential 
components,  such  as  real-time  data  sharing, 
automated  decision-making  and  advanced 
analytics  remain  underused,  hindering  efforts 

interoperable. 

Index 

on 

82.5%69.2%53.9%40.6%0.0%20.0%40.0%60.0%80.0%100.0%Fixed very high capacitynetworksFibre to the premisesEU27CZ 
     
 
to develop a comprehensive and interoperable 
e-government framework.  

Graph 2.3: Summary Innovation Performance 
Index (EU-27 in 2018 = 100) 

Note: Praha and Severozápad are included as the best 
and worst regional innovation performers. 
Source: EIS interactive tool 2025 

Czechia’s  private  sector  struggles  with 
the  adoption  of  digital  tools,  challenging 
the  country’s  aspirations  for  increased 
business  competitiveness.  Overall,  only 
around  23%  of  businesses  report  using 
advanced  digital  solutions  or  AI,  significantly 
lower  than  the  EU  average  of  approximately 
35%.  The  digital 
intensity  of  businesses 
largely  stagnant.  Key  obstacles 
remains 
include  a 
identified  by  business 
shortage  of  digital  skills in  the  workforce  and 
a  lack  of  sufficient  training  opportunities. 
Additionally, 
and 
restricted  access  to  investment  capital  also 
hamper  companies’  ability  to  digitalise  their 
operations,  reflecting  broader  systemic  issues 
in  the  economy  that  affect  technological 
advancement.  

constraints 

financial 

leaders 

Unlocking funds to allow 
companies to thrive  

limited  progress 

the  2025  CSRs. 

Although  there  have  been  recent  efforts 
to  further  develop  its  capital  markets, 
in 
Czechia  made 
Czech 
addressing 
households  boast  a  saving  rate  of  19.9%  of 
disposable  income  (one  of  the  highest  in  the 
EU).  However,  they  invest  a  relatively  small 
share  of  their  wealth  in  financial  instruments 
compared with the EU average, which reflects 
and 
conservative 

investment 

patterns 

structural  constraints.  This  leads  to  a  shallow 
and  untapped  domestic  capital  market,  with 
the market capitalisation of listed Czech firms 
standing  at  13%  of  GDP,  compared  with  the 
EU average of 70% in Q3-2025 (see Annex 6). 
The 2024 long-term investment product (LTIP) 
provides a flexible, tax-advantaged investment 
account;  early  uptake  has  been  encouraging, 
roughly 
with  218 000  accounts  holding 
EUR 328  million  in  assets  at  the  end  of 
2025 (13). However, the LTIP shares similar tax 
relief  and  investment  incentives  as  existing 
savings  and  pension  products,  such  as 
voluntary  pension  schemes  and  life  insurance 
products. 
that 
investments  may  have  been  diverted  to  the 
LTIP  from  existing  voluntary  pension  and 
savings  schemes  rather  than  representing 
genuinely  new  household  savings.  This  could 
warrant  a  coherent  and  complementary 
redesign  of  available  voluntary  savings  and 
pension plans. 

Initial  evidence  suggests 

in 

Institutional  investment  in  risk  capital 
remains  very  limited.  Only  0.1%  of  Czech 
insurer’s  assets  are  invested  in  private  equity 
funds,  while  traditional  voluntary  pension 
funds  are  prohibited  by  law  from  investing  in 
these  asset  classes.  Pension  fund  assets 
represent around 7.8% of GDP, compared with 
the  EU  average  of  32.3%  (see  Annex  6).  The 
investment  strategies  of  many  pension  funds 
remain  conservative.  This  results 
low 
returns:  the  Czech  voluntary  pension  system 
had an average real  return of  -2.7% over the 
past decade, compared with the EU average of 
further  disincentivising  household 
1.4%, 
investment (14).  Parts  of 
regulatory 
framework continue to encourage conservative 
allocation  even  outside  legacy  transformed 
funds.  These  include:  (i)  conservative  default 
investment options; (ii) mandatory switching to 
conservative  sub-funds  in  some  cases;  (iii) 
restrictions  on  equity  investment  in  certain 
sub-funds; (iv) the absence of blended pay-out 
options; and (v) the design of the statutory all-
in-one  fee  cap,  which  may  weaken  incentives 
to pursue higher long-term returns. In addition, 

the 

(13)  See press release by AKAT. 

(14)  OECD, OECD Reviews of Pension Systems: Czech 
Republic, OECD Publishing, Paris, 2020, Table 9.3. 

13 

40506070809010011012013014020182019202020212022202320242025CzechiaEU27SeverozápadPraha 
   
 
contributions  to  voluntary  pension  schemes 
remain  modest  while  participation  in  them  is 
declining and is relatively low among younger 
age groups. Similar constraints also affect the 
insurance  sector:  Czech  insurers  are  relatively 
small,  with  assets  of  roughly  5.9%  of  GDP 
compared with the EU average of 55% of GDP. 
Their 
also 
conservative,  given  the  strict  asset-liability 
matching  rules  and  currency  risks  (see  Annex 
6).  Early  withdrawals,  facilitated  by  short 
minimum  notice  periods,  also  constrain  the 
investment  horizon  of  pension  funds  and 
insurers.  

investment 

strategies 

are 

This 

financial  products  under  the  RRF  to  support 
SMEs  confirm  the  need  for  more  capacity 
building. 
constraint  also 
capacity 
highlights  the  untapped  potential  of  co-
financed  instruments  to  mobilise  the  funding 
required for decarbonising and digitalising the 
Czech economy.  

More competition in public 
procurement and better 
governance of state-owned 
enterprises needed 

remains 

The  venture  capital  and  private  equity 
underdeveloped. 
ecosystem 
Venture capital investment amounts to 0.02% 
of  GDP  compared  with  0.06%  in  the  EU,  and 
private  equity  investment  stands  at  0.16%  of 
GDP  compared  with  0.49%  in  the  EU.  The 
venture  capital  and  private  equity  ecosystem 
is  fragmented  and  dominated  by  foreign 
investors  (see  Annex  6).  The  limited  domestic 
investor  base  and  the  relatively  small  size  of 
the Czech capital market further constrain exit 
opportunities.  This  reduces 
incentives  for 
venture  capital  investment,  which  limits  the 
development  and  scaling-up  of  innovative 
firms domestically (see Annex 4).  

The  NRB’s  potential  to  further  support 
innovation remains untapped. Recent public 
initiatives  aim  to  strengthen  the  innovation 
ecosystem,  including  a  venture  capital  fund-
of-funds  supported  by  the  RRF  and  managed 
by the European Investment Fund with a total 
envelope  of  EUR 55  million (15).  The  NRB  is 
also launching its own fund-of-funds in 2026, 
total 
targeting 
envelope  of  EUR 41  million (16).  Strengthening 
the  NRB’s  ability  to  develop  fund-of-fund 
structures,  including  the  use  of  de-risking 
mechanisms,  such  as  first-loss  protection  or 
guarantees,  could  help  crowd  in  domestic 
institutional investors. Delays and downscaling 
in  the  roll-out  of  new  NRB-backed  green 

firms  with  a 

innovative 

(15)  Supported through Component 1.4, Investment 9 of the 

Recovery and Resilience Plan. 

(16)  Czech Ministry of Industry and Trade (MIT), New 

DeepTech fund to support highly innovative start-ups, 
30 September 2025. Available at the MIT website. 

14 

and 

in 
its 

hampers 

competition 

public 
Limited 
cost-
procurement 
effectiveness 
efficiency. 
Implementation  of  the  RRF-funded  public 
procurement  strategy  and  its  action  plan, 
adopted  in  2024,  is  ongoing  (including  a 
training framework and minimal standards for 
limited 
strategic  procurement),  with  only 
impact  so  far  on  the  identified  shortcomings. 
These  include  a  low  number  of  companies 
submitting  tenders,  with  a  high  proportion  of 
single  bids  (41%  in  2025,  EU:  27%)  and 
insufficient  expertise  among  professionals 
involved  in  public  procurement.  This  is  also 
reflected  in  the  over-reliance  on  price-only 
award  criteria  (over  80%  of  contracts,  one  of 
the  highest  rates  in  the  EU).  Measures  are 
essential 
the  capacity  of 
professionals  involved  in  public  procurement 
and 
joint 
to  developing  centralised  or 
purchasing at regional level to support smaller 
contracting  authorities  (see  Annex  5).  The  risk 
of  collusion  and  conflicts  of  interest  persists, 
fuelling  companies’  perceptions  of  corruption 
(see Annex 7). Lastly, only 43% of businesses 
perceive  the  public  procurement  review  body 
(the  Office  for  the  Protection  of  Competition) 
as sufficiently independent.  

improving 

to 

The 

from 

suffer 
late 
Companies  also 
government-to-business 
payments. 
payment  period  increased  to  74  days  (the 
highest in the EU). Additionally, 69% of Czech 
businesses  faced  late  payments  from  private 
partners  in  2024.  More  transparency  and 
the 
setting  up  a  central  system 

for 

 
 
registration,  monitoring  and  payment  of 
invoices could be beneficial.  

State-owned  enterprises  (SOEs)  are  held 
back  by  suboptimal  governance.  Czechia 
has a significant number of SOEs, generating a 
total  annual  turnover  of  CZK 440  billion. 
However,  the  strategy  for  its  SOEs  is  not 
systematically  set  out  and  the  accountability 
and  oversight  of  SOE  management  is  limited. 
Increasing  transparency  and  setting  clear  key 
performance  indicators  would  improve  the 
management of the SOEs. 

15 

 
DECARBONISATION, ENERGY AFFORDABILITY AND 
SUSTAINABILITY 

(CSRs) 

recommendations 

received  country-
In  2025,  Czechia 
to 
specific 
reduce 
its  reliance  on  fossil  fuels, 
facilitate  the  expansion  of  renewables, 
increase  investment  in  electricity  grids 
and  fossil-free  flexibility,  and  accelerate 
the  process  of  decarbonising 
the 
buildings  and  transport  sectors.  Czechia 
adopted  framework  legislation on  renewable 
acceleration areas in July 2025, with areas to 
be  designated 
in  August  2026.  Czechia 
recorded  very  limited  progress  on  renewable 
auctions and no progress on purchasing power 
agreements,  while  the  Electricity  Data  Centre 
to  be  finalised.  Funding  for 
still  needs 
strengthened,  but 
electricity  grids  was 
progress in 
permitting 
streamlining 
remains slow.  No  significant  new  measures 
have  been  taken  to  support  energy  efficiency 
investments in public buildings (Annex 1). 

system 

electricity 

committed  to  phase  out  coal  from  electricity 
generation  by  2033.  It  aims  to  shift  to  a 
lower-carbon 
based 
primarily  on  nuclear  power  and  renewable 
energy  sources,  with  natural  gas  expected  to 
play  a  temporary  role.  Czechia  has  started  a 
new  large  project  to  increase  its  nuclear 
capacity  at  the  Dukovany  power  plant  and  is 
preparing  the  roll-out  of  small  modular 
reactors.  However,  no  new  nuclear  capacity  is 
expected  before  the 
In  the 
meantime,  Czechia  is  considering  a  state-
supported  mechanism,  including  auction  and 
capacity  mechanisms  for  natural  gas (18). 
However,  if  not  carefully  designed  to  be 
proportionate  and  temporary,  this  mechanism 
could risk locking in gas dependency and lead 
to  stranded  assets.  Given  the  long  lead  times 
associated with new nuclear capacity, the pace 
of  renewable  energy  deployment  over  the 
coming  decade  will  be  crucial  to  limiting 
reliance  on  natural  gas,  ensuring  energy 
security and affordability. 

late  2030s. 

Scaling up renewables and system 
flexibility to ensure affordable and 
competitive electricity prices   

an 

The  electricity  system  faces  the  dual 
challenge  of  replacing  coal  capacity  and 
further boosting the use of renewables to 
ensure 
low-carbon 
affordable 
electricity  supply.  Czechia  received  a  2025 
CSR  to  reduce  its  dependency  on  fossil  fuels, 
but  progress  has  been  limited  since.  Fossil 
fuels  remained  the  predominant  source  of 
electricity  generation  in  2025,  accounting  for 
around  40%  of  total  output.  Nuclear  power 
continued  to  provide  approximately  43%  of 
electricity 
renewables 
generation,  while 
accounted for 16.6% of the electricity mix, the 
second-lowest share in the EU (17). Czechia has 

Domestic  electricity  prices  remain  set  by 
expensive  fossil  fuels.  Due  to  continued 
reliance  on  fossil  fuels  and  limited  non-fossil 
flexibility, wholesale electricity prices averaged 
EUR 99 per MWh in 2025 (EU average: EUR 85 
per  MWh).  Natural  gas  retains  its  role  as  the 
marginal  price-setting  technology,  with  fossil 
fuels  setting  prices  in  74%  of  hours,  23 
percentage  points  above  the  EU  average. 
Czechia  remains  particularly  vulnerable  to 
price  spikes  during  peak-demand  hours 
because of its limited non-fossil flexibility and 
low wind generation, which leaves supply gaps 
in  the  evenings  and  early  mornings.  While 
average  wholesale  prices  mostly 
show 
regional  electricity 
the 
convergence  with 
prices,  spreads  with  neighbouring  countries 
have  increased  in  recent  years.  Without  rapid 
expanding renewables, Czechia risks electricity 

(17)  Eurostat (March 2026). 

(18)  Czechia: Country for the Future 2.0, February 2026. 

16 

 
 
 
 
prices 

households 

supply  gaps  or  greater  dependence  on  an 
expensive  and  volatile  supply  of  natural  gas, 
with  serious  implications  for  the  economy’s 
competitiveness and energy security. To lower 
and 
for 
electricity 
businesses,  the  POZE  levy  (a  surcharge  to 
support 
renewable  energy  sources)  was 
removed from electricity bills in January 2026, 
and the related  costs are now covered by the 
state  budget.  Although  this  measure  can 
provide  short-term  relief  for  energy  bills,  it  is 
essential 
renewables 
support 
continues  for  structurally  lower  energy  costs 
(Annex 9).   

that 

for 

Graph 3.1: Electricity production in 2024 by 
source 

Source: Eurostat, nrg_bal_peh 

With  wind  potential  largely  untapped, 
renewable  acceleration  areas  (RAAs)  are 
key to scaling up capacity in line with the 
2025  CSRs.  The 
installed  wind  capacity 
stagnated  at  339  MW  in  years  2019-2022, 
before  increasing  only  slightly  to  369  MW  in 
2025 (19), remaining far below Czechia’s 2030 
target  of  1 500 MW. 
wind  development 
Reforms  under  the  recovery  and  resilience 
plan 
streamlined 
permitting  procedures,  reducing  it  by  several 
years (see Graph 3.2) and laying down a legal 
basis for designating RAAs. The designation of 
RAAs,  expected  in  August  2026,  with  at  least 
3 GW  of  potential 
installed  capacity,  will 
enable  faster  developments  of  large-scale 
renewable 
lower 
installations,  resulting 
average  cost  of  electricity  generation.  The 

contributed 

(RRP) 

to 

in 

low 
addition  of  wind  energy,  which  has 
marginal  costs  and  delivers  in  peak  times 
(evenings  and  winters),  can  reduce  the  need 
for more expensive backup power sources like 
natural gas plants. 

Graph 3.2: Permitting process duration in 
Czechia, before and after RRP reforms 

(1) The permitting process includes construction and 
zoning permits, and connection authorisation 
(2) Before the RRP reforms, the maximum reported time 
for permitting was 9.5 years. However, some capacity-
based thresholds were already allowed. 
(3) The RRP introduced binding times and increased 
capacity-based exemptions. 
- The RRP raised the threshold for permit exemptions to 
50 kW, and additional amendments to the law further 
raised the threshold to 100 kW. 
- For installed capacity below 100 kW, connection 
deadlines are up to 165 days (distribution system 
operator, DSO) or up to 255 days (transmission system 
operator, TSO). 
Source: The Council Implementing Decision of the Czech 
Recovery and Resilience Plan. 

on 

Progress 
structural  measures 
encouraging  the  roll-out  of  investments 
in  renewables  remains  very  limited.  In 
2025,  Czechia  launched  an  auction  call  to 
support  wind  energy  (in  addition  to  calls  to 
support combined heat and power generation), 
but  demand  was  weak  (20).  The  lack  of  long-
term  certainty  for investors  continues to  be  a 
structural 
investment 
decisions.  There  has  been  little  progress  in 
using  contracts  for  difference,  which  are 
currently  only  available  for  wind.  Power 
purchase  agreements  (PPAs)  remain  at  early 
stage  of  development  in  Czechia.  Despite 
market  interest,  several  factors  limit  their 

affecting 

barrier 

(19)  www.irena.org. 

(20)  See, for instance, www.mpo.cz. 

17 

0%10%20%30%40%50%60%70%80%90%100%EU27CzechiaOtherHydroSolarWindBiogasesNuclearNatural gasCoalsimplified permitting procedures for projects of public interest≤ 1 monthno permit required no permit required, only grid connection deadlines≤1 year (incl. grid connection)≤2 years (incl. grid connection)≈9.5 years0246810RES≥1MWSpecial case (solar  ≤ 100 kW)≤ 10 kWSimplification for ≤ 100 kWRES≤150 kWRES≥150 kWTypical permitting durationAfter RRPBeforeRRPYears 
   
 
 
   
 
 
uptake, such as bankability constraints, limited 
public-sector  demand  aggregation  and  the 
absence  of 
risk-mitigation 
state-backed 
instruments. Moreover, trading PPAs on market 
increase 
platforms  would 
standardisation and transparency. 

contribute 

to 

in 

investments 

the  modernisation 

Accelerating 
of 
Czechia’s  electricity  grids  would  enable 
higher  penetration  of  renewables  and 
further  electrification  in  line  with  the 
2025  CSRs.  By  2034,  new  grid-related 
investments to modernise around 1 700 km of 
transmission 
lines  are  expected  to  reach 
around  EUR 3.2  billion (21).  In  addition  to  RRP 
and  cohesion  policy 
the 
distribution  grids,  up  to  EUR 600  million 
(CZK 15  billion)  in  additional  subsidies  were 
announced to support the further expansion of 
grid  projects (22).  However,  despite  recent 
reforms  addressing  connection  bottlenecks, 
rejected 
challenges 
capacity 
connection 
in  grid 
reservations  and 
management.  Network  efficiency  could  be 
improved  through  measures  such  as  pooling 
cables,  releasing  unused  reservations  and 
prioritising  grid  connections  based  on  project 
readiness  and  system  benefits.  In  addition, 
further  improvements  in  spatial  planning  and 
administrative 
could  accelerate 
infrastructure project delivery.  

including 
unused 
inefficiencies 

persist, 
requests, 

capacity 

of 

has 

recently 

Czechia 
accelerated 
progress  to  enable  non-fossil  flexibility, 
while  the  tariff  structures  need  further 
reforms.  Legislative amendments adopted in 
2024–2025  enabled  standalone  storage, 
flexibility  and  broader 
aggregation 
participation  of  storage  assets  in  ancillary 
service markets. There has been an increasing 
number of solar photovoltaic (PV) installations 
in  both  residential  and  commercial  buildings, 
often  deployed  together  with  battery  storage. 
According  to  the  Association  for  Energy 
Storage (23), installed accumulation capacity in 
Czechia  stood  at  around  2 550 MWh  at  the 

end  of  2025,  with  21.4%  of  the  capacity 
connected that year. Following the adoption of 
Lex  RES  III  (24),  several  hundred  MWh  of  new 
storage capacity is expected to connect to the 
grid  in  2026.    However,  the  tariff  reform 
remains a critical missing piece to fully unlock 
the  benefits  of  domestic  flexibility.  Current 
tariff  structures  are  largely  static  and  do  not 
conditions,  which 
reflect 
dampens 
incentives  for  storage,  demand 
response and flexibility. 

real-time  grid 

for 

crucial 

sector  – 

The full and timely implementation of the 
Electricity  Data  Centre 
(EDC)  would 
facilitate the transition to a more flexible 
energy 
power 
management,  the  development  of  flexibility 
and  the  integration  of  new  technologies  (25). 
The  first  phase  of  electricity  sharing  has 
started  delivering  results.  Since  August  2024, 
80 GWh of electricity has been shared (roughly 
the  annual  consumption  of  a  town  with 
26 000  households)  and  more  than  40 000 
participants  registered.  The  second  phase  of 
the  EDC  will  launch  three  new  services  in 
August 2026: (i) electricity storage; (ii) support 
for  aggregation  of  technical  flexibility  for 
balancing  and  balancing  energy  service 
providers;  and  (iii)  a  ‘traffic  light’  system  to 
show 
and 
constraints  for  balancing  services.  The  third 
phase,  after  2026,  will  focus  on  commercial 
flexibility.  Czechia  has  one  of  the  lowest  roll-
out  rates  of  smart  meters  in  the  EU,  which 
does not incentivise consumer engagement. 

real-time 

capacity 

network 

Decarbonising buildings, industry, 
and transport and moving to clean 
technologies  

The  energy  efficiency  of  buildings  has 
improved,  and  Czechia  has  met  its  2030 

(21)  Plán rozvoje PS ČR 2025-2034 | eru.gov.cz. 

(22)  In 2024 and 2025, DSOs allocated about CZK 30 billion 

a year into grid upgrades, (CEZ, EG.D). 

(24)  An amendment to the Czech Energy Act No. 458/2000 
Coll. aimed at promoting renewable energy, flexibility 
and storage with most provisions taking effect on 1 
August 2025. 

(25)  Elektroenergetické datové centrum (EDC) – možnosti 

(23)  www.akubat-asociace.cz.  

sdílení elektřiny 

18 

 
 
 
in 

its 

the 

long-term 

subsidies); 

residential 

renovations, 

buildings. 
have 

reducing  building  energy 
target  of 
consumption by 8% compared with 2020, 
as  outlined 
renovation 
strategy. This  success has been mainly driven 
by popular  subsidy  programmes, like the New 
(NZÚ)  programme,  which 
Green  Savings 
support 
replacement  of 
heating  sources,  and  the  installation  of  solar 
These 
in 
PV 
improvements, 
primarily 
however, 
benefited  the  renovation  of  family  houses 
(around  70%  of  NZÚ 
the 
refurbishment of apartment buildings and low-
income  dwellings  has  seen  slower  progress 
and notable regional disparities persist. This is 
especially  troubling  given  that  district  heating 
remains  broadly  reliant  on  fossil  fuels.  In 
November  2025,  the  government  announced 
the  closure  of  applications  for  NZÚ  subsidies. 
In  March  2026, 
the  new  government 
announced  that  the  NZÚ  will  continue  from 
interest-free 
around  June,  but  with  0% 
renovation 
low-income 
(though 
loans 
households  will  still  have  access  to  subsidies 
under the ‘NZÚ Light’ variant). The removal of 
the  POZE  levy  and  the  subsequent  expected 
decrease 
in  electricity  prices  would  help 
encourage  households  and  districts  to  switch 
to  electric  heating,  further  decarbonising 
heating  and  cooling.  Sustained  investment  in 
energy efficiency (through the decarbonisation 
of  district  heating,  coupled  with  subsidies 
targeted  at  low-income  households)  is  still 
needed to further reduce energy use and ease 
the  burden  of  high  energy  prices  on 
households. 

The 
renovation  of  public  buildings 
remains  a  significant  challenge  as 
highlighted  in  the  2025  CSR  and  lags 
behind  improvements  in  the  residential 
sector.  Many  renovations  of  public  buildings 
do  not  result  in  high  energy  savings.  The 
complexity  of  renovation  projects,  particularly 
of  historical  buildings,  requires  substantial 
time, 
financial 
resources.  A  more  significant  roll-out  of 
innovative  financial 
instruments,  such  as 
energy performance contracts, has potential to 
activate and harness private capital for energy 
that 
saving 
renovations of public buildings achieve energy 
savings of 30%. 

technical  expertise  and 

investments 

ensure 

and 

Graph 3.3: Greenhouse gas emissions in 
industry per gross value added (kg CO2e/EUR 
in 2020 prices) 

Source: Eurostat, env_ac_ainah, nama_10_a64 

sectors 

intensity 

polluting 

Czechia  is  one  of  the  highest  carbon-
intensive  economies  in  the  EU,  with  its 
highest 
facing 
competitiveness pressures. The high carbon 
intensity  mainly  reflects  the  large  share  of 
high  carbon-intensive  industrial  sectors  in  the 
economy. The emissions intensity of domestic 
manufacturing production is about 25% higher 
than 
the 
the  EU  average.  Since  2017, 
of  manufacturing 
emissions 
production improved by 10%, but less than the 
EU  average  (20%).  The  most  cost-effective 
path  to  decarbonise  industry  would  be  to 
proceed,  as  a  matter  of  priority,  with 
investments  improving  energy  efficiency  and 
electrifying processes, where feasible. A higher 
share  of  renewables  in  the  electricity  mix 
would make the system less exposed to fossil 
price-setting and lower generation costs. Given 
that  wind 
energy, 
manufacturers  would  be  able  to  secure  long-
term  fixed  contracts  (such  as  PPAs)  amid 
predictable  electricity  prices,  reducing  their 
exposure to geopolitical fuel shocks.  

provides 

cheaper 

trading 

system. 

instruments,  with 

Efforts  to  decarbonise  the  economy  are 
supported by funding from the EU and the 
emissions 
Industry 
decarbonisation,  in  particular,  is  supported 
through  a  wide  range  of  EU  and  national 
funding 
EU’s 
Modernisation  Fund  serving  as  the  largest 
source.  It  allocated  up  to  EUR 1.78  billion  in 
2025  calls  to  investments,  including  also  in 
industry  renewables,  hydrogen  and  industrial 
emissions reduction. Between 2013 and 2022, 
around  EUR 5.16  billion  was  raised  in  auction 
revenues, with an average of 55% of revenue 
spent on climate and energy projects over the 

the 

19 

0.4010.3430.3270.3680.3310.310.20.30.40.5202120222023CzechiaEU27 
   
thanks, 

in  particular, 

The uptake of zero-emission mobility has 
improved 
to 
REPowerEU investments and reforms, but 
much more effort is required in line  with 
registered  zero-
the  2025  CSR.  Newly 
emission  passenger  cars  in  2024  represented 
nearly  5%  of  all  new  passenger  cars 
registered (27),  almost  double  compared  with 
2023.  However,  the  uptake  of  zero-emission 
vehicles  is  still  considerably  behind  the  EU 
average. Czechia should maintain the adopted 
REPowerEU reforms linked to highway vignette 
cost  structures  and  tax  incentives  after  the 
RRF  ends  and  explore  further  measures  and 
support  schemes 
to  boost  zero-emission 
mobility.  For  example,  Czechia  has  a  sizeable 
road  freight  sector  that 
is  struggling  to 
decarbonise  due  to  low  incentives  and  tight 
operating margins. Adopting specific measures 
could  incentivise  the  uptake  of  zero-emission 
heavy-duty  vehicles  (HDVs)  by  helping  reduce 
the  difference  between  the  total  cost  of 
ownership  of 
zero-emission  HDVs  and 
conventional  HDVs.  These  measures  could 
include  Eurovignette  Directive  exemptions, 
funding  schemes  for  HDV  public  charging 
stations  and  reforms  to  public  charging  cost 
structures.  

Czechia 

continues. 

Building  and  upgrading  road  and  rail 
infrastructure 
is 
advancing preparations for the high-speed rail 
network  as  part  of  the  TEN-T  corridors, 
particularly  the  Prague-Brno  and  Prague-
Dresden  lines,  as  well  as  the  deployment  of 
the  European  Rail  Traffic  Management 
System.  Meanwhile,  there  are  critical  gaps  in 
road  infrastructure,  especially  on  the  TEN-T 
corridor.  These  include  a  highway  connection 
to  Austria,  and  ring  roads  around  major 
cities (28). 

same  period.  In  2024,  Czechia  used  ETS 
revenues  mainly  for  railway  modernisation 
and  water  management,  complemented  by 
funding  from  the  Just  Transition  Fund,  the 
Innovation  Fund,  the  Recovery  and  Resilience 
Facility  (RRF)  and  national  State  aid  schemes. 
The 
‘domestic’  ETS  revenues  have  been 
assigned  to  the  state’s  environmental  fund. 
the  highest 
investments  with 
Prioritising 
energy  saving  potential  could  deliver  more 
effective support to industrial competitiveness.  

to 

to  contribute 

The  hydrogen  ecosystem,  which  has 
potential 
industry 
decarbonisation, is still at an early stage 
of development.  In  2025,  an  amendment  to 
the  Energy  Act  recognised  hydrogen  as  an 
energy  carrier.  Several  domestic  projects  and 
clusters are emerging, and regional  strategies 
aim  to  develop  infrastructure  and  use  cases. 
Czechia is positioning itself in future European 
hydrogen  corridors  by  developing  the  H2 
Backbone North project. Accelerating hydrogen 
in  particular,  by 
deployment 
expanding 
targeted  financial  support  for 
electrolysers  and  industrial  use,  developing 
infrastructure (including in dedicated clusters), 
through 
and 
incentives. 

is  required, 

demand 

creating 

stable 

driver, 

resilience 

transition 

to  clean 

The 
technology 
manufacturing  is  well  positioned,  with 
substantial  potential  to  scale  up  its 
production  capacity.  Czechia  ranks  third 
globally in clean tech exports (as a percentage 
of  GDP) (26).  The  automative  industry  is  the 
main 
and 
showing 
adaptability  amid  global  challenges  and  the 
transition  to  e-mobility.  The  newly  emerging 
‘battery  value  chain’  and  the  demand  for  its 
input  presents  an  opportunity,  together  with 
local  reserves  of  strategic  raw  materials,  for 
In  other  sub-sectors, 
domestic 
suppliers  of  railway  technology  and  brake 
systems are also making notable contributions 
to  clean  tech  output.  However,  there  is  a  risk 
that  these  suppliers’  production  processes 
could  become  heavily  reliant  on  imported 
critical raw materials. 

industry. 

(26)  Mapa příležitostí Česka.  

(27)  Eurostat, road_eqr_carpda. 

(28)  Ředitelství silnic a dálnic. 

20 

 
 
 
and 

improving 

agriculture  practices,  prioritising  organic 
farming 
agriculture’s 
adaptation to climate change. This would have 
a  positive  impact  not  only  on  water  pollution 
and  resilience  but  also  on  the  sector’s 
productiveness. 

Waste management is still a challenge in 
Czechia.  Landfilling  of  municipal  waste 
remains an issue, which puts Czechia at risk of 
not  meeting  the  2035  target  of  a  maximum 
10%  of  municipal  waste  landfilled.  A  new 
deposit  refund  scheme  for  plastic  bottles  and 
cans,  which  would  have  helped 
increase 
recycling  rates,  was  not implemented  and  put 
on  hold.  Total  environmental  tax  revenue  is 
below the EU average. Even though Czechia is 
finally  implementing  a  ‘pay  as  you  throw’ 
scheme,  it  only  covers  about  20%  of  the 
population,  with  a  minimal 
impact  on 
municipal  waste.  However,  the  reuse  of 
material  has  increased  considerably,  sitting 
above 
resource 
productivity is also improving.  

the  EU  average,  and 

The  agriculture,  healthcare,  construction 
and  food  sectors  are  threatened  by 
degrading  nature  ecosystems.  While  the 
threat  to  biodiversity  and  ecosystem  integrity 
declined  in  2024,  falling  from  99%  to  88%, 
habitat  degradation  is  still  widespread,  with 
80%  of  them  in  poor  or  bad  conservation 
status.  No  Czech  forests  are  in  a  favourable 
conservation  status,  compared  with  about 
22% at EU level. Agriculture also continues to 
be  a  large  source  of  soil  pollution,  with  over 
73%  of  soils  highly  contaminated  by  high 
concentrations  of  pesticides.  Czechia  has 
recently  aligned  with  the  EU  biodiversity 
strategy,  removing  long-standing  barriers  to 
river  connectivity  restoration  and  investing  in 
protecting 
RRP. 
Nevertheless,  with  44%  of  Czech  gross  value 
added  dependent  on  ecosystem  services 
(equal to the EU average), nature degradation 
poses  serious  risks  to  competitiveness  and 
economic security. To tackle this challenge and 
reduce  habitat  fragmentation,  it  would  be 
beneficial  to  create  permanent  incentives  for 
landowners  to  adopt  nature-based  solutions 
and  promote  sustainable  forest  management 
and sustainable agriculture practices. 

ecosystems 

under 

its 

Climate and resource resilience for 
long-term prosperity 

While  progress  has  been  made 
in 
developing  resilience  and  adaptation 
lack  of  administrative 
policies,  a 
coordinated 
hampers 
governance 
implementation.  Czechia  adopted  three  key 
documents  on 
resilience  and  adaptation 
policies: (i) the national adaptation strategy; (ii) 
the national action plan on adaptation; and (iii) 
the  climate  change  impact  and  adaptation 
assessment.  Nevertheless,  implementation  of 
these  policies  has  been  blocked  by  the 
systemic  lack  of  staff  working  on  climate 
resilience across ministries and all governance 
levels.  An  unclear  division  of  responsibilities 
among  different  ministries  and  among 
governance  levels  prevents  effective  policy 
implementation, exacerbated by the lack of an 
efficient coordination framework. Setting up a 
coordination  system  at  all  governance  levels 
could address this issue. Such a reform would 
ensure 
implementation  of 
adaptation policies and remove administrative 
inefficiencies.    

the  effective 

an 

quality 

Weak  water  resilience  and  deteriorating 
water 
increasingly 
is 
significant  challenge  for  Czech  industry, 
agriculture  and  energy. 
Low  water 
productivity,  standing  at  EUR 152  per  m3  of 
extracted  water,  far  below  the  EU  average  of 
EUR 195  per  m3,  is  a  competitiveness  risk  in 
the  event  of  water  shortages  in  the  public 
water supply, energy production and industrial 
manufacturing.  Czechia’s  surface  waters  are 
among  the  most  degraded  in  the  EU,  which 
limits  access 
for 
industrial  and  agricultural  use  and  has  a 
negative  impact  on  productivity  and  costs. 
Water  pollution  is  also  a  critical  issue,  with 
systemic 
pressures.  Nitrate 
pollution  of  groundwater  is  intensifying,  and 
pesticide  contamination  of  surface  water 
bodies 
This 
contamination  requires  long-term  additional 
efforts to ensure the safety of drinking water 
and the food chains. Tackling the main source 
of pressure – industrialised agriculture – could 
sustainable 
be  achieved  by 

to  high-quality  water 

agricultural 

supporting 

regulatory 

exceeds 

limits. 

21 

 
SKILLS, QUALITY JOBS AND SOCIAL FAIRNESS 

by 

(CSRs) 

science, 

reducing 

participation 

recommendations 

received  country-
In  2025,  Czechia 
to 
specific 
improve  education  by  boosting  tertiary 
participation, 
dropouts, 
supporting  disadvantaged  and  Roma 
students,  expanding  secondary  access, 
and  promoting 
technology, 
engineering and mathematics (STEM). The 
country was also urged to increase labour 
market 
expanding 
childcare,  reducing  work  disincentives, 
addressing skills gaps, simplifying foreign 
qualification  recognition,  and  increasing 
participation 
under-represented 
groups.  On  education,  only  limited  progress 
in  secondary 
has  been  made,  particulary 
education,  by 
introducing  a  new  general 
education  ‘lyceum’  pathway  and  taking  the 
in  place  a  support 
first  steps 
schools  with  many 
programme 
disadvantaged  pupils.  On  childcare,  Czechia 
has taken some steps to increase capacity, but 
supply  still  falls  short  of  demand,  despite 
fewer  small  children.  On  employment,  there 
has been limited progress on labour shortages 
and  skills  mismatches,  largely  through  EU-
funded 
requalification  courses,  with  no 
substantial measures in other areas (Annex 1). 

to  put 
for 

of 

Increasing tertiary educational 
attainment by increasing 
participation and reducing dropout 
rates 

Tertiary 

Limited  tertiary  educational  attainment 
in Czechia constrains the supply of skilled 
professionals. 
educational 
attainment  (36.0%)  for  Czechs  aged  25-34 
remains  far  below  the  EU  average  (44.8%) 
(see  Graph  4.1).  This  gap  persists  despite  the 
demand  for  skilled  professionals  in  fields  like 
information  and  communications  technology 

earnings 

(ICT)  (see  Annex  12)  and  relatively  high 
compared  with 
employment 
secondary education (29). Although the share of 
students  enrolling  in  ICT  has  grown  since 
2015,  overall  tertiary  enrolment  dropped  by 
14%.  Enrolment  in  STEM  programmes  also 
remains  below  the  EU  average,  and  in  2023, 
only  11.8  women  per  1 000  people  aged  20-
29  graduated  in  STEM  fields  (EU  average:  15 
(30)). These challenges vary across the country: 
the  capital 
is 
considerably  above  the  EU  average,  while 
other  regions  lag  behind.  The  shortage  of 
education 
workers  with 
hinders  innovation  and  R&D  investment  in 
these regions (see Annex 18). 

region’s  graduate  share 

post-secondary 

Graph 4.1: Tertiary educational attainment (% 
of 25-34-year-olds) 

Source: Eurostat, sdg_04_20 

rates 

dropout 

rates  are  most  pronounced 

High 
contribute 
significantly  to  low  tertiary  educational 
attainment  as  raised  in  the  2025  CSR. 
Dropout 
in 
agriculture,  services  and  ICT (31).  Key  drivers 
include  limited  financial  support,  insufficient 
between 
guidance,  mismatches 
career 
programme  and  student  expectations,  and  a 
lack of affordable housing. Czechia is tackling 
these  challenges 
flexible 
learning pathways, including micro-credentials 

through  more 

(29)  OECD Education at a Glance 2025, Table A4.1. 

(30) Eurostat, educ_uoe_grad04. 

(31)  Education and Training Monitor 2025 Czechia. 

22 

43%44%45%34%34%36%0%10%20%30%40%50%202320242025EU-27Czechia 
 
   
 
and 

short-cycle 

programmes, 

by 
and 
strengthening  doctoral  education  through  a 
minimum  income.  Czechia  is  also  building 
university  facilities  for  medicine  and  related 
fields  supported  by  EUR 368  million  from  the 
Recovery  and  Resilience  Facility  (RRF),  and  by 
the  cohesion  policy  funds.  To  address  the 
2025 CSR, it would be beneficial for Czechia to 
take  further  measures  to  strengthen  student 
support,  improve  access  for  disadvantaged 
groups,  including  for  persons  with  disabilities, 
provide  career  guidance,  and  encourage 
participation in STEM fields. 

Broadening access to general 
secondary schools and reducing 
inequalities 

in 

interest 

limiting 

possibilities 

Czechia  has  a  shortage  of  general 
secondary  schools  and  limited  flexibility 
to move between general and specialised 
education, 
for 
students  to  successfully  pursue  tertiary 
education.  While 
general 
secondary education tracks has increased over 
time, the number of general secondary schools 
has not kept pace. Although close to two thirds 
of  vocational  education  and  training  (VET) 
students  are  eligible  to  apply  to  tertiary 
education,  their  success  rates  fall  behind 
general-track  graduates, 
to 
consistently  low  tertiary  attainment (32).  To 
address these challenges, Czechia introduced a 
‘lyceum’  pathway  combining  general 
new 
education  with 
in  the 
It  also  aims  to 
2025/2026  school  year. 
increase 
transparency,  permeability  and 
flexibility in VET with a new structure of upper-
secondary education programmes that reduces 
Further 
the 
improvements to address the 2025 CSR could 
include expanding work-based learning, easing 
school-to-work  transitions,  strengthening  the 
vocational 
general 
links 
secondary  education,  and  increasing  general 
secondary capacity. 

later  specialisation 

programmes. 

contributing 

between 

number 

and 

of 

Educational  performance  in  Czechia  is 
strongly  dependent  on  socio-economic 
background. Pupils in Czechia perform above 
literacy,  mathematics, 
the  EU  average 
in 
the 
science  and  digital  skills.  However, 
performance  gap  between  socio-economically 
advantaged  and  disadvantaged  pupils 
is 
among  the largest  in  the EU,  and  it  continues 
to grow. In mathematics, the gap was the fifth 
highest in the EU in PISA 2022. Early academic 
tracking,  differences 
in  pupil  performance 
between  school  types  and  the  segregation  of 
Roma  pupils  contribute  to  these  results. 
Regional disparities in access to education also 
persist,  reflecting  the  fragmented  municipal 
structure  of  service  provision  and 
the 
concentration of services in metropolitan areas 
(see  Annex  19).  To  address  these  challenges 
and the 2025 CSR, Czechia is implementing an 
for 
RRF-funded 
disadvantaged schools. The 2025 amendment 
to the Education Act, part of an RRF-supported 
reform of the school financing system, aims to 
increase  support  for  disadvantaged  schools 
and  to  reduce  administrative  burden  by 
merging  smaller  schools.  Further  measures 
could  include  better  support  for  teachers  and 
school  leaders  to  implement  the  revised  (and 
postponed) curricula. 

programme 

support 

to 

face 

Czechia  continues 
teacher 
shortages,  particularly  in  STEM  subjects, 
which  creates  risks  for  the  quality  of 
education.  These  shortages  remain  despite 
efforts to make the teaching profession more 
attractive,  including  a  strengthened  practical 
component  in  initial  teacher  training  and  the 
introduction of a new teacher skills framework. 
Significant  regional  disparities  also  persist  in 
the  share  of  underqualified  teachers.  The 
teacher salary ratio compared with earnings of 
tertiary-educated  workers  decreased  from 
0.74  in  2021  to  0.72  in  2024  and  remains 
below the EU  average of 0.85 (33). To address 
these 
is  expanding 
capacity  in  teacher  education,  including  in 
the 
high-demand  subjects.  Strengthening 
attractiveness  of 
remains 
the  profession 
crucial to ensuring sufficient supply,  

challenges,  Czechia 

(32)  OECD (2025), OECD Economic Surveys: Czechia 2025, 

(33)  OECD Education at a Glance, 2020-2025, Table D3.2, 

OECD Publishing, Paris. 

Table D3.3. 

23 

 
 
 
Box 4:  When work doesn’t pay: distortions and inequalities in Czechia’s tax system 

Czechia’s  tax  system contains  regressive  elements and  distorts  economic  incentives 
on  the  labour  market. Compared  with  EU  peers, Czechia  overtaxes  labour  and  under-taxes 
property  and  environmental  externalities. The relatively  high labour  taxation  (especially  in  the 
form  of  social  and health  contributions)  of  low-income  workers discourages employment,  fuels 
the grey economy and contributes to working poverty. Low-income earners often gain little from 
higher  wages  due  to  high  social  and  health  contributions  without  applicable  deductions,  and 
diminishing social benefits. 

Tackling this, in line with the 2025 CSR, would encourage more people to join the workforce and 
help  limit  poverty.  This  would  particularly  help  the  more  than  600 000  people  in  debt 
enforcement,  as  benefit  eligibility  is  calculated  based  on  income  before  any  money  is  taken 
away to cover what they owe.  

Additionally,  tax  treatment  for  different  types of  workers  doing  the  same  work  differ 
substantially  more  than  in neighbouring  countries.  This  is particularly  visible for self-employed 
people: a high-income self-employed office worker pays only a quarter of the taxes paid by an 
employee with the same labour costs, mainly because of lower social contributions. For budget 
neutrality, reforms to labour taxes  could be offset by making property taxes more progressive, 
abolishing exemptions for high-income earners, and increasing environmental taxes (34). 

particularly  in  STEM  fields,  and  to  supporting 
progress to address the CSR on education.  

High employment levels amid low 
wages and untapped labour 
potential 

certain 

population 

labour  market  boasts  high 
Czechia’s 
employment  levels,  but  wages  are  low 
and 
groups’ 
employment  levels  could  be  higher.  In 
2025,  Czechia’s  employment  rate  was  82.9% 
(EU:  76.1%),  and  its  unemployment  rate  was 
2.8%  (EU:  6.0%),  both  among  the  best  in  the 
EU.  However,  Czechia  remains  one  of  only  a 
few  Member  States  where,  as  of  2025,  real 
wages  had  not  yet  returned  to  their  pre-
pandemic levels. Similarly, the share of wages 
and  salaries  in  GDP  is  only  34%,  the  fifth-
lowest  share  in  the  EU (35).  This  may  also  be 
related  to  the  low  share  of  trade  union 
members  (only  9.4%  of  workers,  one  of  the 
lowest  in  the  OECD (36))  and  the  low  share  of 

(34) See Annex 3 and Chytřejší daně. 

(35)  Eurostat, doi.org/10.2908/NAMA_10_GDP. 

(36)  OECD, Membership of unions and employers' 

organisations, and bargaining coverage, 2025, Figure 1. 

coverage by collective bargaining (around 43% 
of  employees).  Despite  high  employment 
levels,  the  job  vacancy  rate  stood  at  1.9%  in 
Q4-2025  (EU:  2.0%).  Besides  investment  in 
automation and higher labour mobility, unfilled 
vacancies  could  be  filled  by  helping  more 
young  parents  and  people  from  other  under-
represented  groups  join  the  workforce,  in  line 
with 
the 
employment  rate  for  Roma  adults  is  55% 
(compared to 82.3% in the general population) 
and  almost  half  of  young  Roma  aged  16–29 
are  neither  in  employment  nor  in  education 
and training (against 8.6% nationally).  

the  2025  CSR.  For 

instance, 

Parents, especially mothers, face barriers 
to  working  due  to  a  lack  of  capacity  in 
early  childhood  education  and  care 
(childcare) and a tax and benefits system 
that  makes  work 
less  appealing,  as 
highlighted in the 2025 CSRs. In 2025, only 
7.9% of children under the age of three were 
in  childcare  (EU:  40.5%,  see  Graph  4.2).  As  a 
result, the gender employment gap for women 
aged  25-34  was  32.8  percentage  points  in 
2025  (EU:  25.0  percentage  points)  and  the 
gender  pay  gap  was  18.5%  (EU:  11.1%).  The 
social  situation  of  single  parents,  typically 
women, is deteriorating, with the rate of being 
at  risk  of  poverty  or  social  exclusion  rising 
from  30.8%  in  2022  to  34.1%  in  2025  (EU: 
34.1%).  Some  progress  was  made 
in 
expanding  the  network  of  childcare  services, 

24 

 
 
 
launching  more  than  1 000  children’s  groups 
with  the  support  of  EU  funds.  Czechia  also 
concluded  a  Technical  Support 
Instrument 
project  on  the  monitoring  and  evaluation  of 
childcare.  

Graph 4.2: Children aged less than three years 
in formal childcare (%) 

Source: Eurostat, tepsr_sp210 

Foreign  workers  still  face  administrative 
barriers  on  the  labour  market.  Czechia 
received  a  CSR  in  2025  to  simplify  the 
recognition  of  foreign  qualifications,  but  only 
limited  steps  were  taken.  This  also  concerns 
the  almost  400 000  Ukrainians  under 
temporary protection in Czechia: although 66% 
of  them  are  employed,  50%  reported  that 
their work did not match their qualifications. 

Easing job transitions to more 
productive jobs through affordable 
housing and other means 

The  Czech  labour  market  has  one  of  the 
lowest job transition rates in the EU.  The 
likelihood  of  workers  changing  jobs  is  around 
1.5% every quarter (EU: 3.1%) and transitions 
through  unemployment  are  also  low.  This  low 
transition rate is driven by factors such as the 
lack of affordable housing in cities (see Annex 
16),  low  short-term  unemployment  support, 
transport  poverty,  limited  skill  support,  a  high 
proportion  of  specialised education  and major 
professional 
barriers 
certifications.  The  benefits  system  also  holds 
back  job  transitions.  In  Czechia,  70%  of 
unemployed people are at risk of poverty, one 
of  the  highest  rates  in  the  EU.  Even  though 
recent  reforms  increased  initial  benefits  to 
80% of previous earnings, the safety net may 

obtaining 

to 

still  be  insufficient.  As  a  results,  workers  are 
incentivised to stay in their existing jobs rather 
than looking for a better job or retraining. 

the 

Over  the  past  decade,  house  prices  have 
surged,  while  Czechia  continues 
to 
grapple  with  a  shortage  of  affordable 
and  social  housing,  especially  in  cities. 
Since  2015,  Czechia’s  house price  to  income 
ratio  has  been  growing  at 
third-
highest pace  in  the  EU.  In  cities,  towns  and 
suburbs, people pay more for housing than EU 
average  (see  Graph  4.3).  For  people  earning 
less than 60% of the median income, the rate 
is 43.4% (EU: 29.1%). High housing prices are 
driven  by  both  supply  and  demand  factors 
discussed  in  the  previous  section  –  planning 
and  permitting,  municipal 
incentives  and 
taxation.  Additionally,  there  has  only  been 
limited investment in housing construction and 
the  public  and  non-profit 
renovation  by 
sectors. 
financial 
funds 
EU 
instruments,  but  funding  from  the  national 
budget is practically non-existent (37). Similarly, 
a  legal  framework  for  housing  support  was 
adopted  in  2025,  but  almost  no  funds  were 
allocated  to  implement  it,  putting  in  question 
its  real  impact.  Lastly,  there  is  no  legal 
framework for non-profit housing associations 
and  the  legal  framework  for  landlord-tenant 
relationships is underdeveloped. 

support 

Graph 4.3: Housing cost overburden rate, 2025 

Note: The housing cost overburden rate is the percentage 
of the population living in households where the total 
housing costs represent more than 40 % of disposable 
income ('net' of housing allowances).  
Source: Eurostat, ilc_lvho07d 

(37)  Public spending on support to social rental housing, 

OCED, Figure PH4.1.1. 

25 

37%39%41%4%7%8%0%10%20%30%40%50%202320242025EU-27Czechia9.6%7.1%5.6%11.2%8.5%5.3%0.0%3.0%6.0%9.0%12.0%15.0%CitiesTowns and suburbsRural areasEU-27Czechia 
   
  
 
even 

housing 
deeper 
face 
Roma 
challenges  and  high 
levels  of  social 
exclusion.  In  2025,  the  European  Committee 
of Social Rights (ECSR) found that Czechia had 
violated Art. 16 of the European Social Charter 
by  not  ensuring  adequate  safeguards  for 
vulnerable  groups,  particularly  Roma  families, 
as  regards  housing  and  eviction  protections. 
The  ECSR  raised  issues  such  as  insufficient 
social housing, ineffective legal remedies, and 
low-income 
obstacles 
and 
disadvantaged 
disproportionately 
Roma, from accessing housing benefits. 

preventing 

groups, 

limits 

labour 
Transport  poverty  also 
mobility,  particularly  for 
low-income 
households.  According  to  a  recent  study, 
every  fourth  person  in  Czechia  experiences  at 
least  one  aspect  of transport poverty (38). 
These  include  issues  with  transportation  to 
work,  school,  medical  care  and  shops, 
especially  in  rural  areas.  Better  and  more 
affordable 
improved 
interconnectivity  among  peripheral  parts  of 
neighbouring 
regions  as  well  as  more 
transport-on-demand  services  and  public 
transport capacity could help tackle this issue. 

transport, 

public 

Support  for  reskilling  and  upskilling 
remains limited. In 2025, Czechia received a 
CSR to ‘strengthen the competitiveness of the 
economy  and  reduce  labour  shortages  by 
addressing  skills  mismatches.’  Some  progress 
has  been  made  in  this  area  by  using  EU 
funding 
reskilling/upskilling 
database,  which  has  supported  over  150 000 
people so far. Overall, Czechia’s adult learning 
rate is below the EU average.  

create  a 

to 

Strengthening long-term care and 
care and healthcare outcomes 

long-term  care  system  remains 
The 
residential 
towards 
heavily  oriented 
services 
private 
discourages 
investment.  In  2022,  60.2%  of  public  long-

and 

care 

spending  was  allocated 

to 
term 
residential  care  (EU:  46.2%),  while  only  8.3% 
(EU:  28.8%)  went  to  home  care  (terénní 
služby).  Home  care  costs  are  one  of  the 
highest  in  the  OECD,  resulting  in  100 000 
informal carers, typically women, reporting not 
being  able  to  work  full-time  because  of  their 
caring  duties.  Maintaining  the  current  service 
require  35 000 
model 
additional beds by 2035, driven by population 
ageing.  Progress  will 
require  sustainable 
national, private and non-profit funding, with a 
stronger  focus  on  home  and  community  care 
(terénní  a  ambulantní  služby).  Currently,  there 
are still barriers to private investment, such as 
a  regulatory  price  cap  that  also  applies  to 
institutions that do not receive public funding. 

is  estimated 

to 

in 

the 

inefficiencies 

The low life expectancy and high levels of 
preventable and treatable mortality point 
overall 
to 
management  of  the  healthcare  system. 
Mortality  at  working  age  is  above  the  EU 
average,  and  healthy  life  expectancy  remains 
below  the  EU  average.  This  is  linked  to 
spending on prevention, which is below the EU 
average,  and  to  behavioural  risk  factors.  High 
alcohol  consumption,  high  obesity  rates,  low 
intake  of  fruit  and  vegetables  and  low  levels 
of  physical  activity  contribute  substantially  to 
the  burden  of  non-communicable  diseases. 
Overall,  the  health  system  relies  strongly  on 
hospital-based  care,  while  having  relatively 
low  occupancy  rates,  especially  for  acute 
care (39)  and  high  hospital  admissions  for 
chronic conditions. This points to shortcomings 
in the organisation and coordination of care.  

Regional  disparities  in  access  to  primary 
and specialised care and an ageing health 
workforce  add  further  pressure  to  the 
system.  To  support  healthier  working  lives 
and mitigate the impact of population ageing, 
it  would  be  good  to  strengthen  prevention, 
the  health  system’s 
primary  care  and 
efficiency 
better 
digitalisation),  and  increase  the  supply  and 
retention of health professionals. 

(especially 

through 

(38)  Institut 2050, Czech Transport Poverty – here and now, 

p. 73. 

(39)  https://www.efektivnizdravotnictvi.cz/post/studie-2025-

akutni-luzkova-pece-po-stopach-efektivity-v-
pretizenem-piliri-pece.  

26 

 
 
 
KEY FINDINGS 

In  areas  covered  by  existing  country-
specific  recommendations  (CSRs),  Czechia 
would benefit from:  

•  strengthening  capacity 
in 
the 
including 
public  administration, 
through  more  competitive  pay  for 
managerial and technical roles, greater 
stability  for  senior  civil  servants,  in 
particular in the central administration, 
and  a  better  legal  framework  and 
incentives 
inter-municipal 
for 
cooperation, including in Prague; 

•  supporting  housing  affordability 
by  streamlining  spatial  planning  and 
construction  permitting  procedures; 
making better use of existing land and 
housing stock, including through value-
based 
taxation; 
recurrent  property 
replacing inefficient support measures 
(e.g.  mortgage 
interest  deductions) 
with  more  effective  ones,  such  as 
public 
housing 
construction  and  renovation;  reducing 
tax  incentives  for  short-term  rentals 
and 
investment;  and 
increasing  the  availability  to  social 
housing,  in  particular  for  the  most 
disadvantaged groups; 

speculative 

non-profit 

and 

• 

• 

stimulating  R&D 

improving innovation  performance 
by 
investments, 
including  through  an  effective  use  of 
tax 
research 
system  fragmentation;  strengthening 
business–science 
and 
incentivising knowledge transfer; 

incentives; 

linkages; 

reducing 

by 

financing 

increasing  firms’  access  to  non-
bank 
promoting 
institutional  investors’  participation  in 
the  venture  capital  market  and  equity 
markets more  widely;  increasing  retail 
participation 
capital  markets; 
aligning  the  incentive  structures  and 

in 

improving  asset  allocation  and  real 
returns  of  voluntary  savings  and 
pension products; scaling up the use of 
financial 
and 
strengthening  the  capacity  of  the 
National Development Bank;  

instruments; 

removing 

decarbonisation 

•  accelerating  decarbonisation  to 
boost 
and 
competitiveness 
economic  security  by  enabling 
higher  investment  in  renewables  and 
connection 
grids; 
flexibility; 
bottlenecks;  accelerating 
incentivising 
of 
energy-intensive 
industries; 
strengthening  the  domestic  supply  of 
critical  raw  materials  throughout  the 
value chain; increasing uptake of zero-
emission  vehicles;  investing  further  in 
rail 
the 
buildings, 
energy 
especially  public  buildings;  and  better 
targeting 
to 
social needs;  

infrastructure; 
efficiency 

renovation  subsidies 

improving 
of 

•  promoting 

human 

capital 
development,  particularly  in  less 
developed  regions,  by 
improving 
educational  outcomes  and  access  to 
education;  facilitating  the  transition 
vocational 
between  general  and 
science, 
promoting 
education; 
technology, 
and 
mathematics  skills;  providing  more 
support  to  disadvantaged  and  Roma 
pupils;  and  stepping  up  efforts  to 
make  the  teaching  profession  more 
attractive; 

engineering, 

•  unlocking  labour  market  potential 
by  increasing  labour  mobility  and  the 
participation  of  certain  population 
groups,  in  particular  parents  of  young 
children  and  Roma,  by  improving  tax-
benefit  incentives  to  work,  increasing 
childhood 
the 

capacity  of  early 

27 

 
 
education  and  care,  and  supporting 
targeted  social 
inclusion  measures; 
and,  in  particular  for  Ukrainians,  by 
simplifying  the  recognition  of  foreign 
qualifications. 

In other areas, Czechia would benefit from:  

transport 

affordable 

•  promoting 
and 
accessible 
options, 
including  by  strengthening  public 
transport 
regional 
through  better 
connectivity,  greater affordability  for 
vulnerable 
on-
households, 
demand transport schemes. 

and 

• 

• 

fiscal 
ageing-related 
limiting 
pressures  by  fully  implementing  the 
recently adopted pension reforms;  

in 

increasing  the  quality  of  public 
finances  by  removing  distortions  and 
inequalities 
system; 
the 
integrating  performance  information 
into  budgetary  decision-making;  and 
tapping  the  full  potential  of  spending 
reviews; 

tax 

•  simplifying 

the 

cross-border 

business 
environment  by  reducing  regulatory 
and 
single  market 
barriers,  particularly  for  start-ups  and 
SMEs;  tackling  late  payments;  easing 
restrictions  in  regulated  professions; 
continuing  the  digitalisation  of  public 
services; and increasing competition in 
public procurement; 

• 

increasing  public  investment  and 
territorial  cohesion  by  reforming 
municipal tax assignment rules;  

improving 

•  strengthening  climate  and  water 
the 
by 
resilience 
governance  and 
implementation  of 
Czechia’s  climate  adaptation  and 
water policies, in particular in terms of 
coordination,  human  resources  and 
monitoring;  implementing  sustainable 
agriculture  practices;  and  prioritising 
the uptake of organic farming;  

• 

improving  health  outcomes  by 
strengthening prevention; shifting care 
from  hospitals  to  primary  and  home-
based  services;  removing  barriers  to 
investment in long-term care; reducing 
workforce  gaps;  and  increasing  the 
capacity  of  home  and  community-
based long-term care;  

28 

 
 
 
ANNEXES 

 
 
 
 
LIST OF ANNEXES 

A1.  CSR implementation 

Fiscal 

A2.  Fiscal developments and debt sustainability 

A3.  Taxation 

Productivity 

A4. 

Innovation to business 

A5.  Single market and industry 

A6.  Savings, investment and access to finance 

A7.  Effective institutional framework 

Sustainability 

A8. 

Industry decarbonisation, circularity and climate mitigation 

A9.  Affordable energy transition 

A10.  Climate adaptation, preparedness and environment 

Fairness 

A11.  Labour market 

A12.  Social policies 

A13.  Education and skills 

A14.  Social scoreboard 

A15.  Health and health systems 

A16.  Housing 

Horizontal 

A17.  Sustainable development goals 

A18.  Competitive regions 

A19.  Transport 

LIST OF TABLES 

A1.1. 
A2.1. 
A2.2. 
A2.3. 
A3.1. 
A4.1. 

Implementation of 2025 Country-specific recommendations 
Projected change in ageing-related expenditure in 2025-2040 and 2025-2070 
Supplementary pension schemes - scope for expansion 
Fiscal governance database indicators and public accounting maturity 
Taxation Indicators 
Key innovation indicators 

31 

34 

40 

40 

45 

50 

50 

56 

66 

74 

79 

79 

85 

92 

98 

98 

102 

106 

111 

112 

116 

121 

121 

123 

129 

34 
42 
43 
44 
46 
55 

 
 
 
Single Market and Industry 
Savings and Investments Union summary diagnostic 
Financial sector indicators 
Czechia. Selected indicators on better regulation practices for primary legislation 
Digital Decade key performance indicators: availability of digital public services 
Key clean industry and climate mitigation indicators: Czechia 

A5.1. 
A6.1. 
A6.2. 
A7.1. 
A7.2. 
A8.1. 
A10.1.  Key Adaptation Indicators 
A14.1.  Social Scoreboard for Czechia 
A15.1.  Key health indicators 
A18.1.  Key regional indicators (at NUTS 2 level) for Czechia 
A18.2.  Main development trends, challenges and the concentration of resources 

LIST OF GRAPHS 

Composition of non-financial corporations' funding 
Capital markets and financial intermediaries 
Composition of households' financial assets 
Trust in the justice system, regional / local authorities and in government 

Greenhouse gas emissions in the effort sharing sectors, 2005, 2023, and 2024 
Electricity and gas prices for household and non-household consumers, first half of 2025 
Low-carbon electricity generation vs. electricity wholesale prices, 2025 
Czechia’s installed renewable capacity vs electricity generation mix 

Contributions to the change in the general government balance (% of GDP) 
Public investment evolution and composition (% of GDP) 
Primary spending evolution and compositional change 
Investment composition, % of GDP 
Tax revenue by economic function in 2024, Czechia (outer ring) and EU-27 (inner ring) 
Tax wedge for single and second earners as a % of total labour costs, 2025 
Top 10% most-cited publications in relation to public R&D expenditure 

A2.1. 
A2.2. 
A2.3. 
A2.4. 
A3.1. 
A3.2. 
A4.1. 
A5.1.  Manufacturing industry production: total and selected sector, index (2021=100), 2015-2024 
A6.1. 
A6.2. 
A6.3. 
A7.1. 
A7.2.  Most time-consuming aspects of service delivery 
A8.1. 
A9.1. 
A9.2. 
A9.3. 
A11.1.  Employment rates by NUTS-2 region 
A12.1. 
A13.1.  Roma people aged 20-24 who completed at least upper-secondary education between 2016 and 2024 (in %) 
A13.2.  Students who have completed secondary education 
A15.1.  Treatable mortality 
A15.2.  Healthcare infrastructure investment by year 
A16.1.  House prices, rents and price-to-income evolution in CZ and EU27 since 2005 
A16.2.  House supply indicators in CZ since 2005 
A16.3.  Housing cost overburden rate by NUTS 2 region 
A16.4.  Housing affordability selected indicators 
A17.1.  Progress towards the SDGs in Czechia 
A18.1.  Labour productivity growth (2014-2024) and labour productivity (2024), Czechia (NUTS 2 regions) 
A18.2.  Share of employment in different sectors (2024), Czechia (NUTS 2 regions) 
A18.3.  Share of children with a primary school within a 15-minute walk and share of population with a hospital within a 10-

In-work at-risk-of-poverty rate by household type 

minute drive by car in rural areas, (NUTS 2), 2023 

LIST OF MAPS 

Incentive-based tax revenues as a share of local government budgets 

A18.1.  GDP per head compared with the EU average. 
A18.2. 
A19.1.  130 
A19.2.  TEN-T Cross-Border & National Priority Sections in Czechia. 

32 

65 
66 
73 
75 
76 
84 
97 
111 
113 
125 
126 

40 
40 
41 
43 
45 
47 
51 
63 
67 
67 
69 
74 
75 
81 
85 
86 
88 
99 
103 
107 
108 
112 
114 
116 
117 
119 
120 
121 
123 
124 

127 

123 
128 

130 

 
 
 
 
 
33 

 
 
ANNEX 1: CSR IMPLEMENTATION  

Table A1.1:  Implementation of 2025 Country-specific recommendations 

(Continued on the next page) 

34 

Czechia faces challenges in a wide range of policy areas, as identified in the country-specific recommendations (CSRs). Czechia was recommended, among other things, to support labour market participation of parents, low-income workers and people close to retirement, increase housing availability, strengthen its capital markets, support the creation of start-ups and spin-offs, boost innovation, simplify urban planning, strengthen the civil service and the cooperation among municipal administrations, reduce the reliance on fossil fuels, facilitate the deployment of renewables, increase investment into electricity grids, boost participation in tertiary education by reducing dropouts, support disadvantaged and Roma pupils, expand childcare, reduce work disincentives, simplify foreign qualification recognition, and increase participation of underrepresented groups. The Commission has assessed the degree of implementation of the 2025 CSRs considering the policy action taken by Czechia to date*. To do so, the Commission has considered the information provided by Czechia in its Annual Progress Report as well as other information sources. This annex provides summary information on the policy actions taken or planned by Czechia for each CSR. More detailed information on these actions is included in the relevant chapters and other annexes of the report. *CSR 2 is not assessed in CeSaR. RRP implementation is monitored through the assessment of RRP payment requests and analysis of the bi-annual reporting on the achievement of the milestones and targets, to be reflected in the country reports. Progress with the cohesion policy is monitored in the context of the Cohesion Policy of the European Union. Recommendation text Main measures adopted or implemented  By 30 April 2026  Preparatory steps/ credibly announced measures By 30 April 2026 Assessm. of progress  1.1 Reinforce overall defence and security spending and readiness while ensuring debt sustainability in line with the European Council conclusions of 6 March 2025. Total general government defence expenditure in 2026 is projected at 1.2% of GDP, corresponding to a decrease of 0.1 ppt. compared to 2024.  Total general government defence expenditure in 2027 is projected at 1.3% of GDP, corresponding to the same level compared to 2024. However, defence expenditure in nominal terms is projected to grow to levels higher than in 2024. Limited progress 1.2 Adhere to the maximum growth rates of net expenditure recommended by the Council on 21 January 2025, while making use of the allowance under the national escape clause for higher defence expenditure. Cumulated deviation in 2025 amounted to -1.4% of GDP. Cumulated deviation in 2026 projected at 0.1% of GDP but it is fully explained by the NEC flexibility (0.3 pps. of GDP). Full implementation 1.3 Reduce the tax burden on low-income workers. The recent reform to raise flat-rate payments was reversed in March 2026, maintaining the minimum pension assessment base at 35% of the average wage, for all self-employed, not targeted at low-income self-employed.  The work-related bonus embedded in the new social assistance allowance reformed in 2025 by Act No. 117/1995 Coll., on State Social Assistance may increase income of working poor families (earning up to 1.6 times the subsistence level).    Limited progress 1.4 Increase revenue from recurrent property taxes.     In its policy statement, the government announced plans to cancel the inflation adjustment for recurrent real-estate property Limited progress  
 
 
 
 
 
 
 
 
 
     
 
Table (continued) 

(Continued on the next page) 

35 

Recommendation text Main measures adopted or implemented  By 30 April 2026  Preparatory steps/ credibly announced measures By 30 April 2026 Assessm. of progress  taxes (indexation introduced for the first time from 2025). 1.5 Improve the incentives for people close to retirement to continue working.    As of 2025, working pensioners are entitled to a discount on social insurance. Government recently proposed to increase their earnings-related pension component.  Limited progress 3.1 Strengthen the capacity of Czechia’s public administration to attract, retain and develop talent, particularly to attract people with analytical, managerial and IT skills.   In December 2025, a new Act on Government Employees was proposed. The Act would replace the current Civil Service Act. The Act is currently in Parliament. Limited progress 3.2 Strengthen strategic steering capacities to improve consistency across policies.     No progress 3.3 Simplify urban planning and reduce administrative burden by improving digitalisation, capacity and the management of construction offices.  Only minor measures on the improvement to the construction digital systems such as the Builder's Portal. In December 2025, a new Construction Act was proposed. The Act introduces a wide range of changes, including centralisation and postponing digitalisation until 2030. The Act is currently in Parliament. Limited progress 3.4 Incentivise and simplify cooperation among municipal administrations.    Limited progress 3.5 Provide support for administrative capacity building and target this support to structurally affected regions.     Limited progress 4.1 Strengthen capital markets, business access to non-bank finance and the conditions for saving, investment and innovation by promoting household investments in capital markets   There is a planned proposal to reduce gold-plating for investment funds. Limited progress 4.2 and by improving existing long-term savings products’ effectiveness in mobilising new long-term investments.  An amendment, in force from May 2025, aims to improve the portability of the LTIP among different providers.  Limited progress 4.3 Encourage institutional investor participation in listed and unlisted shares, as well as venture capital and private equity.     Limited progress 4.4 Increase the use of financial instruments, including by strengthening the capacity of the National Development Bank to mobilise private - NDB launched the IPO Fund 2025+ with the Prague stock exchange to support IPOs and equity for SMEs; - NDB and Ministry of Industry and Trade launched an expanded NRB is planning for 2026 its own Fund of VC funds, with an overall envelope of CZK 1 bn from State resources. Some progress  
 
 
     
 
Table (continued) 

(Continued on the next page) 

36 

Recommendation text Main measures adopted or implemented  By 30 April 2026  Preparatory steps/ credibly announced measures By 30 April 2026 Assessm. of progress  funding to boost competitiveness and the decarbonisation of the economy.  OPTAK loans facility for SMEs offering interest-free investment loans, 5.13 bn CZK (212 mil EUR); - NDB launched a call for applications for a Kč 600m EU-funded “Guarantee 2024-2030” program for SMEs. Applications for guarantees of up to 70% for working-capital and investment loans of Kč 0.5-20m. 4.5 Support the creation of start-ups and spinoffs, for example by improving legislation on employee stock option plans. - A new regime for employee stock option plans was approved by the Chamber of Deputies on 27 July 2025 and came into force on 1 January 2026.   - As of 1/2/26, Deputy PM and Minister of Industry and Trade has appointed Martin Jiránek, chairman of the Czech Startup Association, as Government Commissioner for Startups. His role should focus on preparing a startup law (2027), improving ESOPs, incentivizing startup investment, and strengthening cooperation between the state, investors, and founders. The Ministry of Industry and Trade is preparing a new start-up law in cooperation with the start-up industry.  Some progress 4.6 Boost innovation, including by facilitating technology transfer from academia to business. The new law on research, development innovation and knowledge transfer was passed on 23 July 2025, it should enter into force on 1 January 2027. It contains specific provisions on knowledge transfer.    Some progress 4.7 Better tap the potential of R&D tax benefits to stimulate innovation in the private sector.  The Law on Income taxes was amended in September 2025 to make the tax deductions on R&D more attractive by increasing deduction rates and extending application periods from 3 to 5 years and simplifying administrative procedures. The change is effective from 1 January 2026. However, administrative hurdles in the implementation of R&D tax deductions remain.   Some progress  5.1 Reduce reliance on fossil fuels, notably for road transport, heating and power generation. The energy mix remains heavily reliant on fossil fuels. Despite the expected cutbacks in coal, the role of natural gas in power generation may increase due to concerns about the security of supply. The Lex Gas Amendment (August 2025) newly provided faster permitting for “energy security projects”), including natural gas  Limited progress  
 
 
     
 
Table (continued) 

(Continued on the next page) 

37 

Recommendation text Main measures adopted or implemented  By 30 April 2026  Preparatory steps/ credibly announced measures By 30 April 2026 Assessm. of progress  power and RES plants. The district heating remains broadly fossil fuelled. On transport, Czechia has advanced with infrastructure investments but struggles to maintain a conducive approach towards zero-emission mobility.  5.2 Provide further incentives for the roll-out of large-scale renewable energy capacity, notably by running renewable power auctions and by promoting the use of long-term power purchase agreements. The progress in RES rollout remains limited. Czechia adopted the legislation on renewable acceleration areas (RAAs, July 2025). In 2025, the government launched two larger RES auctions, though with no progress on PPAs. As from August 2025, the new Building Code aims to facilitate the roll-out of investments into PV in industrial and commercial properties, but the impact remains to be seen. In 2025, Czechia adopted legislation which allows PVs to be installed on agricultural land. The digitalisation of the permitting process still has not materialised. RAA designation commitment under the RRP. Czechia has proposed to designate 94 acceleration areas covering 474 km2 (April 2026).  Limited progress 5.3 Increase investment in electricity grids to enhance fossil-free flexibility  In Autumn 2025, Czechia approved an increase of funding support to both DSO and TSO networks (at additional CZK 15bn), partly financed by the EU Modernisation Fund. Czechia is pursuing the electricity interconnection projects with Germany and Slovakia, though these lines still need to be strengthened. The progress regarding streamlining of permitting for energy infrastructure remains slow.   Some progress  5.4 and enable the electrification of transport and industrial processes.   The industry decarbonisation is notably financed from the EU (the Modernisation Fund), though Czech economy remains highly carbon intensive. The removal of POZE levy aims at lower electricity prices for consumers and should promote further electrification by alleviating a disproportionate tax burden on electricity consumption which had been distorting price signals. No new substantial reform measures on electrification of transport were adopted.   Limited progress 5.5 Ensure the swift implementation of the full functionalities of the Electricity Data Centre  Preparation of the EDC is still in the pipeline under the RRP reform. The first stage of the EDC implementation regarding The second stage of the EDC will be assessed as an RRP reform in August 2026. Implementation of all functionalities is not expected Limited progress  
 
 
     
 
Table (continued) 

(Continued on the next page) 

38 

Recommendation text Main measures adopted or implemented  By 30 April 2026  Preparatory steps/ credibly announced measures By 30 April 2026 Assessm. of progress  electricity sharing is operational since August 2024.  before Q2 2027. 5.6 Enact measures to reduce energy consumption and the carbon intensity of the buildings sector, especially of the public building stock  No new measures were adopted. Czechia made continuous progress in energy efficiency in buildings with the EU funding. The decrease in final energy consumption in the residential sector has been mostly driven by energy savings including through structural measures such as deep renovations. Czechia has already met its 2030 target of reducing building energy consumption by 8% compared with 2020. The popular New Green Savings subsidy programme was paused in November 2025 due to exhaustion of the funds in the calls. The New Green Savings programme is expected to reopen in April, but it will only offer zero-interest loans. Some progress 6.1 Lower the tax and benefit disincentives for parents to return to work  ‘Flexi-amendment’ of the Labour Act, in force from 1 June 2025, introduced (i) guarantees of return to original position for parents returning to work by the 2nd year of age of the child, and (ii) the possibility to continue working during the parental leave on short-term contracts.    Limited progress 6.2 and improve the supply of childcare and care services to encourage more women to enter the labour market. The capacity in child groups has grown by several hundred since July 2025. However, it is unclear whether this is sufficient or not, as the original gap estimates were in the tens of thousands, but current demographic cohorts are significantly smaller.   Some progress 6.3 Strengthen the competitiveness of the economy and reduce labour shortages by addressing skills mismatches,    Only minor measures were adopted such as Education Act amendment (in force from 1 January 2026) establishing the possibility of practical education at the workplace of an accredited instructor and short-term programmes in tertiary education.   Limited progress 6.4 simplifying the recognition of foreign qualifications  No specific measures identified.   Limited progress 6.5 and increasing the labour market participation of underrepresented groups.   The adopted ‘Flexi-amendment’ to the labour code provides some incentives to parents to return to work.   Limited progress 6.6 Boost educational outcomes by increasing participation in tertiary In 2025, CZ Ministry of Education allocated an additional CZK 71 million to higher education   Limited progress  
 
 
     
 
Table (continued) 

Source: Czechia's reporting and Commission assessment. 

39 

Recommendation text Main measures adopted or implemented  By 30 April 2026  Preparatory steps/ credibly announced measures By 30 April 2026 Assessm. of progress  education, reducing dropout rates and providing more student support.  institutions in the Ústí nad Labem, Liberec and Plzeň regions, where tertiary attainment is comparatively lower. Also, the funding formula for Higher Education Institutions was adjusted, incentivising institutions to address early dropout. Some measures were taken to increase the completion rate of doctoral candidates and retain talents in doctoral studies.  Minor adjustments were made to accommodation scholarships and subsidies for student meals, improving support for students facing rising living costs.  6.7 Increase the number of students and graduates in science, technology, engineering and mathematics, especially women.     Limited progress 6.8 Expand access to general secondary education,  The new Lyceum programme has been launched in the school year 2025/26.   Limited progress 6.9 enable students to transition between general and vocational education,   In 2025, National Pedagogical Institute published a new structure of upper-secondary education programs that reduced a number of programs from 283 to 186 aiming to increase transparency, permeability and flexibility in VET. No other major measures were adopted.   Limited progress 6.10 and provide more support for disadvantaged schools and pupils, including Roma.   The amendment of the Education Act (in force from 1 January 2026) introduces school indexation which aims for a more efficient use and better targeting of funds, reflecting the different degrees of complexity of providing education in schools.    Some progress   
 
   
 
FISCAL 
ANNEX 2: FISCAL DEVELOPMENTS AND DEBT SUSTAINABILITY 

in 

developments 

This annex discusses selected topics in public 
finance  and 
fiscal-
structural  country-specific  recommendations 
(CSRs)  addressed  to  Czechia  in  July  2025. 
These  CSRs  include  a  call  to  strengthen  defence 
spending  and  readiness  while  implementing  a 
the  Council 
fiscal 
Recommendation  of  21 January 2025.  Czechia 
also received a recommendation in 2025 to reduce 
its  tax  burden  on  low-income  workers,  increase 
taxes,  and 
revenue  from  recurrent  property 
improve  the 
incentives  for  people  close  to 
retirement to continue working. 

line  with 

strategy 

in 

Union 

adopted 

endorsing 

On  21 January 2025,  the  Council  of  the 
European 
the 
Recommendation 
Czechia’s 
medium-term  fiscal-structural  plan  (40).  The 
plan  includes  a  fiscal  adjustment  over  four  years. 
At  the  same  time,  the  Council  also  activated  the 
national escape clause for Czechia to facilitate the 
transition  to  higher  levels  of  defence  spending 
(41)(42).   

Developments in the government 
balance, debt and public 
expenditure (43) 

Czechia’s  government  deficit  was  equivalent 
to 2.1% of GDP and the government debt-to-
GDP  ratio  was  44.3%  at  the  end  of  2025. 
Based  on  the  Commission  Spring  2026  Forecast, 
Czechia’s  government  deficit 
is  projected  to 
increase to 2.8% of GDP in 2026 and 2.9% of GDP 
in  2027.  Government  revenue  is  set  to  decline  to 
39.5% of GDP in 2027, around 7 pps below the EU 
average.  Expenditure  is  expected  to  decline  to 

(40)  OJ C, C/2025/666, ELI: 

http://data.europa.eu/eli/C/2025/666/oj 

(41)  OJ C, C./2025/3962, ELI: 

http://data.europa.eu/eli/C/2025/3962/oj   

(42)  Compliance by Czechia with the maximum growth rates of 
net expenditure recommended by the Council is assessed in 
COM(2026)200. 

(43)  Figures underpinning fiscal surveillance (net expenditure 
growth) are provided in the Fiscal Statistical Tables 
(SWD(2026)200) providing background data relevant for the 
assessment of the budgetary policies of the Member States. 

42.4%  of  GDP  in  2027,  8pps  below  the  EU 
average. 

Graph A2.1: Contributions to the change in the 
general government balance (% of GDP) 

Source: Commission Spring 2026 Forecast 

High  public  investment  is  sustaining  the 
quality  of  expenditure  in  Czechia.  In  contrast 
to the approach adopted following previous shocks 
that  led  to  significant  cuts  in  public  investment, 
public investment in Czechia was increased during 
the  COVID-19  pandemic  and  is  expected  to  reach 
5.0% of GDP in 2026, up from 4.3% in 2019. It is 
set  to  decrease  in  2027,  as  the  Recovery  and 
Resilience Facility (RRF) expires. In 2026 and 2027, 
Czechia  is  projected  to  spend  more  on  nationally 
financed investment than it did before the COVID-
19 pandemic. 

Graph A2.2: Public investment evolution and 
composition (% of GDP) 

Source: Commission Spring 2026 Forecast 

40 

-2-1-10112232021202220232024202520262027RevenueExpenditureChange in budget balance% of GDP0123456201920202021202220232024202520262027% of GDPDefenceRRF grants and other EU fundsOther nationally-financed 
 
 
 
  
  
 
 
The  type  of  expenditure  that  has  a  greater 
impact  on  GDP  had  remained  broadly  stable 
in  Czechia  over  three  decades,  but  has 
slightly  increased  since  2019.  This  may  be 
related  to  the  impact  of  the  RRF,  which  possibly 
facilitated  a  more  quality-based  fiscal  strategy. 
Zooming  in  on  the  composition  of  spending  in 
2024,  social  protection  accounts  for  the  largest 
share of total expenditure (around 30%), followed 
by  health  at  21%  of  total  spending.  Economic 
affairs  (44),  general  public  services,  and  education 
each  constitute  at  least  10%  of  total  spending. 
Since  2019,  public  expenditure  on  health  and 
interest  has  increased  significantly  (See  Graph 
A2.3).  Spending  on  housing,  social  protection  and 
defence has risen more modestly since 2019, with 
the  rise  in  defence  spending  reflecting  recent 
security  developments.  By  contrast,  spending  on 
R&D,  transport  and  education  expenditure  has 
declined.    This  trend  deserves  attention,  as  these 
three categories are generally considered growth-
friendly  spending  categories  (although  growth-
friendly spending overall has increased in Czechia 
since  2019,  see  Graph  A2.3). 
In  education, 
outcomes  in  Czechia  remain  relatively  strong. 
However, significant challenges persist in the area 
of  education,  particularly 
form  of 
pronounced  inequalities in  educational  attainment 
and persistent skills shortages and mismatches in 
the  labour  market,  which  pose  risks  to  long-term 
productivity  growth.  In  addition,  while  tertiary 
educational attainment in Czechia is below the EU 
average,  tertiary  education  remains  relatively 
underfunded,  at  0.8%  of  GDP  (including  R&D)  vs 
0.9%  in  the  EU-25  (2022)  (For  more  details,  see 
Annex 13). 

the 

in 

(44)  This  refers  to  the  set  of  government  activities,  policies,  and 
expenditures aimed at regulating, supporting, and developing 
economic  activity  across  major  sectors,  including  general 
economic  and 
labour  policies,  agriculture  and  natural 
resources, energy, industry, construction, and other economic 
functions  not  elsewhere  classified.  Although  transport  and 
communication,  as  well  as  research  and  development 
activities, are normally considered part of this function, they 
are treated separately in the graph presented.  

41 

Graph A2.3: Primary spending evolution and 
compositional change 

Source: Eurostat 
Note: Based on economic literature, the categories considered 
to have a greater growth impact include education, R&D, 
health, transport and communication (See Barbiero and 
Cournede (2013), Gemmel et al. (2016), Lupu et al. (2018), 
Cepparulo and Mourre (2020) and OECD (2025)).   

Czechia has relatively low tax revenues as a 
share  of  GDP  and  has  a  relatively  high  tax 
burden on low earners while growth-friendly 
taxes are underused. In 2025 Czechia’s total tax 
revenues  as  a  percentage  of  GDP  (including 
compulsory  social  contributions)  amounted  to 
35.2%  compared  with  an  EU  average  of  39.9%. 
Total  tax  revenues  are  projected  to  fall  to  34.7% 
of  GDP  in  2026  and  34.4%  of  GDP  in  2027 
(45). 
according  to  the  Spring  2026  Forecast 
Although  tax  revenues  from  labour  taxation  are 
relatively  low,  the  tax  burden  on  low  earners  is 
high  in  comparison  with  other  EU  countries. 
Meanwhile, tax types that are considered the least 
detrimental  to  growth  (such  as  recurrent  property 
or environmental taxes) are underused (see Annex 
3).  Czechia  has  not  adopted  any  substantial 
measures to reduce the tax burden on low-income 
workers  or 
increase  revenue  from  recurrent 
property taxes. 

(45)  Data retrieved from the AMECO database (https://economy-

finance.ec.europa.eu/economic-research-and-
databases/economic-databases/ameco-database_en)  

8131823283236404448200720082009201020112012201320142015201620172018201920202021202220232024a) Evolution (% of GDP)Primary expenditureSpending with higher impact on GDP (rhs)-1.8-1.4-1.0-0.6-0.20.20.61.01.41.82.22.6Other economicGeneralservicesPublicorderEducationCultureR&DTransportEnvironmentCommunicationSocialprotectionHousingDefenceInterestspendingHealthb) Compositional change (% total spending) since 2019 
  
 
 
 
 
 
  
 
Table A2.1:  Projected change in ageing-related expenditure in 2025-2040 and 2025-2070 

Source: 2024 Ageing Report (EC/EPC). 

The costs of ageing 

Total  ageing-related  spending  in  Czechia  is 
projected  to  rise  by  around  2 pps  of  GDP 
between  now  and  2040  to  around  22%  of 
GDP, with a further 2.5 pp. increase between 
2040  and  2070  (see  Table  A2.1).  The  overall 
increase is mainly the result of a projected rise in 
pension  and  long-term  care  spending,  with  a 
smaller  contribution 
from  healthcare.  These 
projections  take  into  account  the  pension  reform 
adopted by Czechia in 2024. 

Public pension spending as a share of GDP is 
projected to increase by about 1 pp. between 
now  and  2040  and  to  continue  to  rise 
thereafter.  In  2024,  Czechia  reformed  the  first 
pillar  of 
its  pension  system,  substantially 
decreasing  its  long-term  public  pension  outlays. 
Overall,  annual  public  pension  outlays  are  now 
expected  to  rise  by  2.5 pps  of  GDP  between  now 
and 2070, reaching around 10.5% of GDP, which is 
set  to be  lower than  the projected  EU  average  of 
around 12%. 

Risks to fiscal sustainability remain. The 2025 
CSRs  highlighted  Czechia’s  need  to  support  the 
employability  of  older  workers  not  claiming  a 
retirement  pension.  The  country  has  not  adopted 
any  substantial  measures 
the 
incentives  for  people  close  to  retirement  to 
continue  working.  Further  encouraging  older 
workers  to  stay 
in  employment  would  help 
decrease risks to fiscal sustainability. 

improve 

to 

Supplementary  pension  schemes  can  make 
the  pension  system  more  resilient  by 
diversifying  retirement  income  sources.  In 
Czechia,  however,  the  uptake  of  supplementary 

42 

pension  schemes  remains  limited.  At  the  end  of 
2024, private pension assets amounted to around 
8%  of  GDP,  while  participation  in  these  schemes 
the  working-age 
covered  around  52%  of 
population (46). This coincides with rising medium-
term  spending  pressures  on  the  public  pension 
system  and  a  projected 
the 
replacement  rate  by  6.9 pps  between  2025  and 
2040 (Table A2.2 and A2.3) (47).  

increase 

in 

structural 

by 
and 

challenges 

management, 

Public healthcare expenditure is projected to 
be  5.9%  of  GDP  in  2025  (below  the  EU 
average of 6.6%) and is expected to increase 
by  0.4  pps  of  GDP  between  now  and  2040 
and  by  a  further  0.3  pps  between  2040  and 
is 
2070.  Czechia’s  public  healthcare  system 
in 
characterised 
organisation 
which 
compromises its efficiency. Although the projected 
overall increase in public healthcare expenditure is 
set  to  be  driven  by  an  ageing  population,  it  also 
reflects 
to 
improvements 
preventive  and  mental  healthcare  (48).  Public 
expenditure  on  long-term  care  is  projected  to  be 
1.5%  of  GDP  in  2025  (slightly  below  the  EU 
average  of  1.7%)  and  is  expected  to  increase  by 
0.5 pps of GDP between now and 2040 and by a 
further  0.8  pps  of  GDP  between  2040  and  2070 
(49). 

in  access 

recent 

(46)  Source: OECD Pension Market in Focus 2025. The highest 

participation rate in at least one supplementary pension plan 
is reported.   

(47)  The (gross) replacement rate refers, depending on data 

availability, to both public and private pensions. It is based 
on projections from the 2024 Ageing Report.  

(48)  Key performance characteristics, recent reforms and 

investments of the Czech healthcare system are discussed in 
Annex 15 ‘Health and health systems’.  

(49)  The adequacy and quality of the Czech long-term care 
system are covered in Annex 12 ‘Social policies’.    

CZ19.61.20.40.50.02.121.7CZEU24.30.50.30.4-0.30.925.2EUCZ19.62.50.71.30.14.624.3CZEU24.30.20.60.8-0.31.325.6EUageing-related expenditure change in 2025-2040 (pps GDP) due to:ageing-related expenditure pensionshealthcarelong-term careeducationtotalageing-related expenditure change in 2025-2070 (pps GDP) due to:ageing-related expenditure pensionshealthcarelong-term careeducationtotal 
 
 
 
   
 
Table A2.2:  Supplementary pension schemes - scope for expansion 

Source: European Commission. 

National fiscal framework 

to 

finances 

budgeting 

Czechia 
and 

There is wide scope to improve the quality of 
through 
public 
in 
performance 
spending 
reviews.  Czechia  struggles  to:  (i)  prioritise  public 
finances  and  put  expenditure 
its  most 
productive  use;  (ii)  make  its  tax  and  benefit 
systems  more  efficient;  and  (iii)  improve  the 
quality of public services (OECD, 2025; IMF, 2026). 
Czechia 
recently  piloted  performance-based 
budgeting  and  spending  reviews  (through  public 
investment  management  and  support  for  small 
through  EU 
and  medium-sized  enterprises) 
technical  support 
instrument  projects.  Moving 
beyond  pilot  projects  and  building  institutional 
capacity  to  create  a  performance-oriented  public-
finance  system  that  regularly  evaluates  spending 
would  improve  the  efficiency  of  public  spending. 
The  government’s  policy  statement  of  5  January 
2026  references  several  priorities  in  the  area  of 
public-finance  management: 
(i)  managing 
taxpayers'  money  responsibly;  (ii)  ensuring  the 
efficiency and transparency of state spending; and 
(iii)  ensuring  that  action  in  key  economic  areas  is 
consistent  with  the  state  budget  and  strategic 
investments (50).  Nevertheless,  there  is  no  plan  to 
build  on  recent  pilots  for  performance-based 
budgeting  or  spending  reviews.  Czechia  would 
benefit  from  moving  away  from  a  traditional 
input-based  budget  structure  to  a  performance-
oriented  system 
to 
policy objectives and measurable results. 

links  expenditure 

that 

Overall,  the  Czech  Fiscal  Council  (CFC)  is  a 
well-resourced  independent  fiscal  institution 
(IFI)  with  a  relatively  narrow  mandate.  Up 
until now, this mandate has focused on monitoring 

(50)  https://vlada.gov.cz/cz/vlada/programove-

prohlaseni/programove-prohlaseni-vlady-224629/   

analysis. 

strategy, 

sustainability 

communication 

compliance  with  national  fiscal  rules  and  long-
term 
Staggered 
appointments  of  CFC  members  ensure  gradual 
renewal, even though the effective staggering has 
been  reduced  in  2022.  The  CFC  has  a  well-
developed 
with 
specialised  staff  and  frequent  media-impact 
analyses.  However,  it  reports  that  it  has  had 
difficulties in accessing information, and it has not 
been 
reviews. 
any 
Macroeconomic  and  budgetary  forecasts  (so  far 
only for revenues) are evaluated by the Committee 
on Budgetary Forecasts (CBF), which is not an IFI, 
and the role of the CFC in the CBF’s work is limited 
to nominating its members. 

external 

subject 

to 

Graph A2.4: Investment composition, % of GDP 

Source: Eurostat 

43 

4.74.321.821.5051015202530202410-y averages% of GDPgovernmentnon-governmentAssets in 2024 (% GDP)Participation in 2024 (% working-age population)CZ7.86.952.2CZEU32.4-2.855.9EUGross replacement rate at retirement: (pps change 2025-2040)  
 
 
  
 
 
 
 
 
 
 
      
 
Table A2.3:  Fiscal governance database indicators and public accounting maturity 

(1) The Country Fiscal Rule Strength Index (C-FRSI) shows the strength of national fiscal rules aggregated at the country level 
based on: i) the legal base; ii) how binding the rule is; iii) monitoring bodies; iv) correction mechanisms; and v) resilience to shocks. 
The Medium-Term Budgetary Framework Index (MTBFI) shows the strength of the national MTBF based on: i) coverage of the 
targets/ceilings included in the national medium-term fiscal plans; ii) connectedness between these targets/ceilings and the 
annual budgets; iii) involvement of the national parliament in the preparation of the plans; iv) involvement of independent fiscal 
institutions in their preparation; and v) their level of detail. A higher score is associated with higher rule and MTBF strength. 
The score for public accounting reflects the degree of maturity in relation to the International Public Sector Accounting Standards 
(IPSAS). Countries with an accounting maturity of 70% or more in relation to IPSAS are deemed to apply accrual accounting. For 
more information, see the report on public accounting in the EU (COM(2025)746 and accompanying Staff Working Document 
SWD(2025)396). 
Source: Fiscal Governance Database, European Commission 

44 

2024CzechiaEU AverageCountry Fiscal Rule Strength Index (C-FRSI)12.3514.81Medium-Term Budgetary Framework Index (MTBFI)0.570.722025 Public accounting maturity of general government81%65% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
ANNEX 3: TAXATION 

This  annex  provides  an 
indicator-based 
overview  of  Czechia’s  tax  system.  It  includes 
information  on  the  tax  mix,  on  competitiveness 
and fairness aspects of the tax system, and on tax 
collection and compliance. In the area of taxation, 
the  2025  country-specific  recommendations  for 
Czechia recommended: reducing the tax burden for 
low-income  workers;  lowering  the  tax  and  benefit 
disincentives  for  parents  to  return  to  work; 
increasing  revenues  from  property  taxation;  and 
supporting private-sector innovation. 

Graph A3.1: Tax revenue by economic function in 
2024, Czechia (outer ring) and EU-27 (inner ring) 

Source: Taxation Trends Data, DG TAXUD 

(pp.)  compared 

representing  an 

Tax revenues in Czechia are relatively low in 
relation  to  its  GDP.  In  2024,  tax  revenues 
(including  social  security  contributions)  reached 
increase  of 
35%  of  GDP, 
the 
to 
1.1 percentage  point 
previous  year.  This  is  4.4 pps  below  the  EU 
average (down from 5.1 pps and 33.9% of GDP in 
2023). In 2024, the below-average share of labour 
taxes in the tax mix (1.2 pp below the EU-average) 
was  characterised  by  a  high  reliance  on  social 
security  contributions,  accounting  for  15.7%  of 
GDP  (against  13%  in  the  EU-27).  Despite  recent 
reforms, including the lowering of the threshold to 
apply the second 23% tax bracket  from 48 to 36 
times the average wage as of 1 January 2024, the 
personal income tax (PIT) as a percentage of GDP 
remains  significantly  below  the  EU-average  in 
2024 (3.9% of GDP against 9.6% in the EU-27, up 
from 3.6% of GDP in 2023, see Table A3.1). 

At  the  same  time,  revenues  from  corporate 
income  taxes  (CIT)  increased  and  exceeded 
the  EU  average  by  1.4 pp.  in  2024  (4.5%  of 
GDP), reflecting a steady upward trend since 2019. 
Revenues  from  consumption  taxes  were  also 
above  the  EU-average  (30%  of  tax  revenues,  see 
Graph  A3.1).  The  share  of  capital  taxation  in  the 

45 

tax  mix  has  increased  in  recent  years,  driven  by 
rising corporate income tax revenues, even though 
it  is  still  1.9 pp.  under  the  EU  average.  Finally, 
Czechia 
from 
environmental  taxes  (1.4%  of  GDP),  suggesting 
scope  to  better  leverage  taxation  to  support 
environmental policies. 

revenue 

reports 

level 

low 

from 

recurrent 

Despite  recent 
legislative  reforms,  the 
property 
contribution 
taxation  to  growth-friendly  revenue remains 
limited. 
  Several  key  measures  aiming  at 
increasing  revenues  from  property  taxation  were 
enacted  as  part  of  the  fiscal  consolidation 
package (51).  The  reform  included  increases  of 
property  tax  rates,  expansion  of  the  tax  base.  It 
also introduced an inflation coefficient, in addition 
to  the  existing  local  coefficients  capped  at  5, 
which  enable  municipalities  to  adjust  taxation  to 
local specificities. Despite a slight increase against 
2023,  revenues  from  property  taxation  remain 
significantly below the  EU  average  in  2024  (from 
0.3%  of  GDP  in  2023  to  0.4%  in  2024,  1.4  pp 
below  the  EU-27).  In  practice,  municipalities  have 
local 
not  made  much  use  of 
coefficients,  and  the  inflation  coefficient  was  not 
used in 2025. There are no plans to shift towards 
a  value-based  property  taxation  aligned  with 
market  values.  This  drives  low  collection  and  also 
has degressive effects in practice. 

the  highest 

Tax  incentives  and  exemptions  may  have 
implications  for  affordability  and  revenue 
potential. Since  2025, the  VAT treatment of  real 
estate  transfers  has  been  revised,  aligning  more 
closely  with  the  framework  established  under  EU 
law,  whereby  VAT  applies  primarily  to  the  first 
supply  of  new  or  substantially  altered  buildings, 
 ()(52) 
while  subsequent  supplies  are  exempt 
Furthermore,  existing  tax  incentives  (including  the 
mortgage  deductibility  of  interest  payments  and 
more favourable deductibility  rules for short-term 
than 
to 
effectively  support  the  provision  of  affordable 
housing (See Annex 16). 

rentals)  do  not  appear 

long-term 

Czechia  has  strengthened  public  support  for 
private  sector  innovation.  To  address  the 
country-specific recommendation to better tap the 

(51)  Approved as Act No.349/2023 Coll. of 8 November 2023, 
which entered into force on 1 January 2024. See: National 
Reform Programme of the Czech Republic. 

(52)  Act No. 461/2024 Coll. 

51.526.821.650.330.019.7Taxes on labourTaxes on consumptionTaxes on capital 
 
     
 
 
 
Table A3.1:  Taxation Indicators 

(1) Forward-looking effective tax rate (KPMG). 
(2) A higher value indicates a stronger redistributive impact of taxation. 
(*) EU-27 simple average. 
(**) Forecast value for 2024. EU-27 refers to the median value. For more data on tax revenues as well as the methodology 
applied, see the Data on Taxation Trends webpage. 
Source: European Commission, OECD, ISORA. 

for 

the 

rate 

deductibility 

potential  of  R&D  tax  benefits  to  stimulate 
innovation  in  the  private  sector,  as  of  1 January 
2026 
eligible 
expenditures  up  to  CZK 50 million  under  the  R&D 
tax  deduction  regime  increased  from  100%  to 
150%,  while  expenditures  above  this  threshold 
continue to qualify for a 100% deduction (53). The 
period to use the deduction has been extended up 
to five years. The fiscal reform has also simplified 
administrative  requirements.  The  effect  on  the 
innovative capacity of new and small enterprises is 
expected as of 2027 at the earliest. 

Low tax rates boost competitiveness. Overall, 
low rates of business taxation (a statutory CIT rate 
of  21%  and  an  effective  average  CIT  rate  of 
20.3% 
in  2024)  seem  to  contribute  to  the 
competitiveness  of  the  Czech  economy,  but  the 
complexity  of  the  tax  system  could  be  reduced 
further. In that respect, Czechia ranks 17th out of 
the  27  Member  States  in  the  Tax  Complexity 
Index (54).  New  rules  for  taxation  of  qualified 
employee  stock  options  entered  into  force  on 
1 January 2026 (55). Designed to support start-ups’ 
competitiveness,  this  measure  exempts  qualified 

(53)  Act No. 360/2025 Coll. 
(54)  See: https://www.taxcomplexity.org/  
(55)  Laws No. 84/2025 and 360/2025 amending Sections 6a and 

7b of the Income tax Act No.586/1992 Sb. 

Simultaneously, 

incomes  from  health  and  insurance  contributions 
and defers taxation to the time of the shares’ sale 
or 15 years after their acquisition (extended from 
accelerated 
10 years). 
depreciation  regime  over  two  years  encouraging 
sustainable  corporate 
investments  applies  for 
company  fleets’  emission-free  vehicles  acquired 
and  put  in  use  between  1 January 2024  and 
31 December 2028 (56). 

an 

on 

tax 

labour 

is 
burden 
Czechia's 
comparatively high at low levels of earnings. 
Czechia’s  labour  tax  burden  is  less  progressive 
than the EU average. The tax wedge (57) for single 
workers earning 50% of the average wage (37.7% 
in  2025)  was  much  higher  than  the  EU  average 

(56)  Section 30a of the Income Tax Act Act No. 586/1992 Coll. 
(57)  The  tax  wedge  is  an  indicator  of  the  tax  burden  on  labour 
that  can  be  assessed  at  various  levels  of  earnings.  It  is 
defined as the sum of personal income taxes, employee and 
employer  social-security  contributions  and  other  mandatory 
contributions,  expressed  as  a  percentage  of  total  labour 
costs  (the  sum  of  the  gross  wage  and  social-security 
contributions  paid  by  the  employer).  Tax  wedge  data  in  the 
2026  country  reports  are  calculated  by  the  Joint  Research 
Centre  of  the  European  Commission  and  based  on  the 
EUROMOD model, while in the past country reports they were 
based  on  the  OECD  tax  and  benefit  model.  While  the 
underlying  methodology  is  very  similar,  differences  in  the 
assumptions  can  lead  to  different  results  between  both 
models.  

46 

2019202220232024202520192022202320242025Tax structureTotal taxes (including compulsory actual social contributions) (% of GDP)35.334.033.935.039.939.739.039.4Taxes on labour (% of GDP)18.917.217.117.620.620.119.920.3of which, social security contributions (SSC, % of GDP)15.215.315.215.713.012.712.713.0Taxes on consumption (% of GDP)11.310.810.310.511.210.910.510.6of which, value added taxes (VAT, % of GDP)7.47.67.57.37.17.47.17.1Taxes on capital (% of GDP)5.16.06.56.98.18.78.58.5Personal income taxes (PIT, % of GDP)4.93.53.63.99.69.49.39.6Corporate income taxes (CIT, % of GDP)3.34.04.24.52.63.23.23.1Total property taxes (% of GDP)0.50.30.30.42.22.11.91.8Recurrent taxes on immovable property (% of GDP)0.20.20.20.31.21.00.90.9Environmental taxes (% of GDP)2.01.41.61.42.62.12.12.1Effective carbon rate in EUR per tonne of CO2 equivalentsnana65.0nanana84.8naTax wedge at 50% of average wage (single person) (*)40.035.636.237.237.732.431.631.531.531.6Tax wedge at 100% of average wage (single person) (*)44.340.240.541.241.440.139.739.939.940.0Corporate income tax - effective average tax rates (1) (*)18.318.318.320.320.019.219.019.3Difference in Gini coefficient before and after taxes and cash social transfers (pensions excluded from social transfers) (2) (*)6.76.16.25.97.88.07.97.8Outstanding tax arrears: total year-end tax debt (including debt considered not collectable) / total revenue (in %) (*)30.020.415.9na31.832.630.7naVAT gap (% of VAT total tax liability, VTTL) (**)14.68.28.0na10.57.38.2naEU-27CzechiaProgressivity & fairnessTax administration & complianceBy tax baseSome tax types 
 
 
 
     
 
(31.6%),  while  it  was  close  to  the  EU  average  at 
high  earnings levels (see Graph  A3.2 ).  The  ability 
of  Czechia’s  tax-and-benefit  system  to  reduce 
income  inequality  (measured  by  its  ability  to 
reduce  the  Gini  coefficient (58)  has  decreased  in 
recent  years  and,  at  5.9 pps  in  2024,  was  clearly 
below  the  EU  average  (7.8 pps,  see  Table  A3.1), 
despite  the  2021  introduction  of  a  second  PIT 
bracket. As from 1 January 2026, the threshold for 
the  application  of  this  higher  rate  is  adjusted 
upward following an inflation-based valorisation. 

The  tax  system’s  effect  on  work  incentives 
for  second  earners  has  improved.  The  tax 
wedge  for  second  earners  earning  67%  of  the 
average wage was at 39.6% and remains equal to 
that  of  single  earners  and  slightly  above  the  EU 
average (38.5%; see Graph A3.2). A more targeted 
use  of  tax  incentives  and  benefits  may  be  an 
effective  policy  lever  for  strengthening  labour 
market  participation  among  underrepresented 
groups (See Annex 11). The reform of the parental 
allowance  may  have  a  positive 
impact  by 
improving access to childcare facilities for children 
under the age of 2 and reducing the time limit for 
parents to claim the benefit from 4 to 3 years (59). 
Conditions for benefiting from the tax credit for a 
dependent spouse remain unchanged in 2026. 

The 
taxation  for  self-employed  people 
remains  significantly  lower  than  taxation  of 
incentivising 
employment, 
traditional 
reliance  on  bogus  self-employment  or 
temporary  work  arrangements.  The  standard 
tax  method  allows  self-employed  individuals  to 
deduct from 40% to 80% of gross annual income 
as  business  expenses,  while  the  remainder  is 
subject to PIT. Alternatively,  self-employed people 
earning up to CZK 2 million a year may opt to pay 
a  flat  tax  grouping  their  income  tax,  pension  and 
health  insurance  liabilities.  This  lump  sum  is 
significantly lower than the tax that a conventional 
employee  earning  a  similar  amount  would  pay.  In 
increase  of  the  flat-rate  monthly 
2026,  an 
payment  was  set  to  affect  the  first-tier  group  of 
taxpayers.  However,  this  measure  is  likely  to  be 
abolished  following  the  approval  on  25  March 

2026  of  a  parliamentary  bill  reversing  the  rise  in 
the  minimum  assessment  base  of  the  self-
employed for pension insurance from 35% to 40% 
of  the  average  wage,  with  retroactive  effect  as 
of1st January (60). 

Graph A3.2: Tax wedge for single and second 
earners as a % of total labour costs, 2025 

Note: The second earner tax wedge assumes a first earner at 
100% of the average wage and no children. For the 
methodology of the tax wedge for second earners, see 
OECD, 2016, Taxing Wages 2014-2015. 
Source: European Commission 

Czechia  promotes  individual  investments  in 
securities through favourable tax conditions. 
As  of  1 January  2026,  the  annual  monetary 
threshold  (set  at  CZK  40 000  000)  for  exempting 
incomes from the sale of securities and shares in 
corporations 
is  abolished,  providing  that  the 
securities  are  held  for  3 years  and  the  shares  for 
5 years (61).  This  threshold  remains  applicable  to 
incomes in cryptocurrencies (See Annex 12). 

level  of 

TEs  amounting 

The use of tax expenditures (TE) in Czechia is 
relatively broad and mainly directed towards 
PIT  and  VAT.  In  2023,  national  authorities 
reported  a 
to 
(about  EUR 36.84 billion) (62), 
CZK 892.1 billion 
equivalent  about  29.1%  of  the  total  government 
revenues  for  2022.  Most  TEs  concern  PIT,  where 
they  amount 
(roughly 
EUR 23.14 billion).  While  75%  of  these  overall 
expenditures have a social aspect, the main drivers 
lie  in  the  basic  tax  credit  (almost  28%),  tax 
exemptions linked to gambling activities, pensions 

to  CZK 560.5 billion 

(58)  The  Gini  coefficient  measures  the  extent  to  which  the 
distribution  of  income  within  a  country  deviates  from  a 
perfectly  equal  distribution.  A  coefficient  of  0  expresses 
perfect equality where everyone has the same income, while 
a coefficient of 100 expresses full inequality where only one 
person has all the income. 

(59)  Act No. 117/1995 Coll., on State Social Support 

(60)  Paragraph 14 of Act No. 589/1992 Coll. As amended by Act 
No. 349/2023 Coll and Parliamentary Bill amending Act No. 
589/1992 Coll. 

(61)  Paragraph 4 of Section 3 of the Income Tax Act Act No. 
586/1992 Coll. as amended by Act No. 360/2025 Coll. 
(62)  Tax expenditures estimation in the Czech Republic for 2023, 
Annex No.3 of the Report on the Draft Law on the State 
Budget of the Czech Republic, 14 November 2025 

47 

37.739.641.442.939.62025303540455050100150Tax wedge, % of total labour costsEarnings as % of the average wageSingle earner - CZSingle earner - EU averageSecond earner -  CZSecond earner -  EU average 
 
     
 
and  public-health  insurances  benefits,  as  well  as 
the  child  tax  credit  (nearly  8%).  VAT  expenditures 
account  for  second  highest  volume  of  TEs 
(CZK 298.4 billion / EUR 12.32 billion), mainly from 
exemptions  related  to:  renting  property;  financial 
and insurance services; and reduced VAT rates. 

However, 

responsibility (63). 

Czechia monitors the use of tax expenditures 
as part of the annual budgetary cycle. The tax 
administration  has  developed  a  publicly  available 
methodological  framework  to  monitor  and  assess 
the use of TEs, as required by the national rules of 
this 
budgetary 
framework  suffers  from  a  limited  coverage  and 
only  applies  to  expenditures  whose  individual 
potential 
impact  on  public  budgets  exceeds 
CZK 100 million (roughly EUR 4.12 million) and for 
which  data  are  available.  The  Czech  authorities 
have  flagged  administrative  burden  behind  data 
collection 
to 
significantly 
availability issues. However, the implementation of 
the  single  monthly  employer’s  report (64)  as  from 
April 2026 is expected to enhance the set of data 
directly available to the tax authorities. 

contributing 

as 

However, the monitoring of compliance gaps, 
except  for  VAT,  needs  further  refinement. 
Czechia  is  still  working  on  developing  a  robust 
approach to monitoring compliance gaps related to 
CIT,  PIT,  and  other  taxes  such  as  employment 
taxes, social and health contributions. Nonetheless, 
2018  estimates  from  the  European  Commission 
show  that  CIT  gap  in  Czechia  is  equivalent  to  the 
EU  average  (around  11%),  while  the  shadow 
economy is smaller than the EU average (13.5% of 
GDP against 17.6% in the EU-27) (65). 

The  VAT  compliance  gap  in  Czechia  remains 
below  the  EU  average.  In  2023,  the  VAT 
compliance gap was estimated at 8.0% of the VAT 
total  tax  liability,  representing  a  decrease  of 
0.2 pps  compared  to  2022.  Between  2019  and 
2023  the  VAT  compliance  gap  decreased  from 
14.6% to 8.0%. With an EU VAT compliance gap of 
approximately  9.5%,  Czechia 
is  ranked  13th 
among the EU Member States. The actionable VAT 
policy gap (66) stood at 18.4% in 2023, consisting 

(63)  Czech Finance Ministry: Detailed information on the impact 
of tax expenditures on revenues of general government  

(64)  Act No. 323/2025 Coll. on Uniform Monthly Employer 

Reporting 

(65)  Mind the Gap Report – Czechia Country Fiche 
(66)  For context: if no product or service was exempt from VAT 

and no reduced VAT rates were applied, the actionable VAT 
policy gap would be 0%. 

of a VAT rate gap of 7.3%, a national policy-driven 
VAT  exemption  gap  of  8.6%,  and  an  EU  policy-
mandated VAT exemption gap of 2.5%. 

Czechia  has  improved  the  effectiveness  of 
in  recent  years 
its  tax  recovery  policy 
resulting  in  an  amount  of  tax  arrears  below 
the  EU  average.  Czechia  has  risk-based  IT 
systems  in  place  for  managing  VAT  and  tax 
arrears. It has also recently undertaken a regional 
reorganisation of tax recovery offices with a view 
to  bolstering  the  effectiveness  of  tax  recovery 
processes.  The  level  of  outstanding  tax  arrears  in 
Czechia  is  below  the  EU  average,  amounting  to 
15.9%  of  the  total  net  revenue  in  2023  and 
following  a  downward  trend  over  time  (the  2019 
level  of  outstanding  arrears  amounted  to  30%  of 
the  total  net  revenue,  against  20.4%  in  2022). 
Nevertheless,  there  is  scope  for  further  use  of 
dedicated  digital  tools  to  improve  early  detection 
of  non-compliance  and  tax  recovery  performance, 
and  for  reducing  the  cost  of  tax  collection.  In 
addition, 
recovery  under  mutual  assistance 
remains  limited  with  a  recovery  rate  in  2022–
the  amounts 
2024  at  around  4.7%  of 
requested (67). 

to 

tax 

and 

improved 

compliance 

through 
Enhancing 
tax 
digitalisation 
administration 
increase 
could  help 
revenue  without  changing  tax  rates.  Better 
data  analytics  can  help  reduce tax  avoidance  and 
tax  evasion,  ensuring  a  fairer  distribution  of  the 
tax  burden.  In  particular,  Czechia  has  not  yet 
developed a dedicated strategy guiding the digital 
transformation of the tax administration, including 
through  the  use  of  AI-driven  processes  and  tools. 
However,  a  proof-of-concept  phase  is  currently 
underway  for  some  IT-tools  designed  to  support 
In 
the  tax  administration’s  daily  operations. 
addition, Czechia  demonstrates  satisfactory  levels 
of  e-filing  implementation  for  CIT  and  VAT  (over 
97%  of  returns  for  these  two  tax  categories  are 
indicating  effective 
now 
systems  for  businesses,  and  reducing  errors  and 
compliance costs. 

filed  electronically), 

Although there has been significant progress, 
there  is  still  room  to  increase  the  e-filling 
rate for  PIT returns.  In 2023,  this  rate  reached 
67% (against 20.3% in 2018), lagging about 20% 
behind  the  EU  average.  Finally,  pre-filling  of  CIT, 

(67)  International Survey on Revenue Administration 

48 

 
 
 
the 

launch  of 

PIT  and  VAT  tax  returns  is  not  yet  implemented, 
the  single  monthly 
though 
employer’s  report  may  support  improvements  in 
this  area.  Czechia 
implements  pre-filling  for 
property taxes returns based on cadastral data. 

49 

 
PRODUCTIVITY 
ANNEX 4: INNOVATION TO BUSINESS  

far 

the 

from 

share 

national 
the 

In  2025,  Czechia  continued  to  be  deemed  a 
‘moderate  innovator’,  with  a  performance 
below  the  EU  average.  Czechia’s  innovation 
performance  score  has  dropped  to  80.6%  of  the 
EU average (down from 89.7% in 2024), according 
to  the  2025  European  Innovation  Scoreboard (68). 
R&D expenditure (69) remained at 1.82% of GDP in 
2024,  matching  the  previous  year’s  level.  This 
follows three  consecutive  years  of  decline after  a 
period of annual growth from 2016 to 2020, when 
R&D investment peaked at nearly 2% of GDP. The 
current level is below the EU average of 2.2% and 
target (70) 
still 
of 3% by 2030.  Moreover, 
of 
expenditure on science and research in the GDP of 
individual  regions (71)  varies  significantly 
(see 
Annex 
country-specific 
recommendations  (CSRs)  highlighted  challenges 
Czechia  is  facing  in  supporting  the  creation  of 
start-ups  and  spin-offs,  fostering  technology 
transfer  and  improving  the  efficiency  and  uptake 
of  public  support  to  business 
In 
addition  to  these  challenges,  which  remain  acute 
today, 
the 
research  ecosystem  and  weak  coordination 
continue  to  undermine  scientific  output  and  limit 
innovation  capacity.  On  digitalisation, 
overall 
Czechia continues to make progress in its business 
sector.  AI  adoption  has  increased  rapidly,  nearly 
doubling in 2024 and approaching the EU average. 
In  contrast,  cloud  services  and  data  analytics 
remain less widely used, particularly among SMEs.  

the  persistent  fragmentation  of 

innovation. 

2025 

18). 

The 

Excellent science 

Declining  public  R&D 
intensity  and  a 
fragmented  science  base  hinder  the  quality 
and  efficiency of  the research  system.  Public 
R&D  expenditure  as  a  percentage  of  GDP  has 
declined  in  recent  years  (0.63%  in  2024,  down 
from  0.75%  in  2020).  In  real  terms,  inflation-
adjusted  public  spending  on  R&D  has  returned  to 
its  2016  level,  while  the  number  of  institutions, 
staff  and  new  infrastructure  has  continued  to 
grow.  This  'hidden  deficit'  -  the  distribution  of  a 
smaller  real  volume  of  public  funding  to  an 
increasingly  large  ecosystem  -  strengthens  the 
widespread  perception  of 
inadequate  public 
resource  allocation  and  is  affecting  all  research 
and 
research 
system’s 
institutional 
degree 
fragmentation (72)  weighs  on  the  quality  of  Czech 
research  outputs (73).  These  are  improving  over 
time  but  remain  below  the  EU  average,  despite  a 
relatively high public R&D intensity compared with 
peer  countries.  Consequently,  it  would  be  highly 
institutional 
beneficial 
defragmentation  and  prioritise  merit-based  and 
strategic  funding  allocation  to  high-performing, 
collaborative R&I entities. 

innovation  actors.  The  public 

incentivise 

high 

of 

to 

(68)  European 

Commission, 

Innovation 
2025, 
Scoreboard, country profile Czechia. The scoreboard provides 
a  comparative  analysis  of  innovation  performance  in  EU 
countries, including the relative strengths and weaknesses of 
their national systems ec_rtd_eis-country-profile-cz.pdf. 

European 

(69)  Defined as gross domestic expenditure on R&D as a 

percentage of GDP. 

(70)  Czechia’s innovation strategy for 2019-2030 sets targets for 
increasing R&D funding (by 2% by 2020, 2.5% by 2025 and 
3% by 2030). 

(71)  In  the  South  Moravian  region  it  accounts  for  2.8%  of  GDP 
and  in  Prague  2.7%  of  GDP,  whereas  in  the  Karlovy  Vary 
region it accounts for only 0.3% of GDP and in the Ústí region 
0.4%  of  GDP.  See  data  of  the  Czech  Statistical  Office: 
https://csu.gov.cz/produkty/ukazatele-vyzkumu-a-vyvoje-
2023. 

(72)  Background  report,  Policy  Support  Facility  Support  Czechia. 
Czechia  on  the  reform  of  the  Technology  Transfer  Offices 
sector  -  Publications  Office  of  the  EU  (see  p.  9)  and  Czech 
research cooperation in the EU is growing only slightly, AVUni 
is doing well | RMU – Asociace výzkumných univerzit.  

(73)  This is illustrated by the share of scientific publications within 
the  top  10%  most-cited  publications  worldwide  as  a 
percentage of total publications (5.54% vs 9.44% of the EU 
average in 2022). 

50 

 
 
 
 
 
 
 
Graph A4.1: Top 10% most-cited publications in 
relation to public R&D expenditure 

align rules and procedures for R&I support across 
providers  were  adopted  by  the  Council  for 
Research,  Development  and 
Innovation,  an 
advisory body of the Czech government. While this 
represents  a  positive  first  step  towards  reducing 
the  administrative  burden,  sustained  efforts  will 
be  needed  to  achieve  further  simplification  and 
efficiency. 

Business innovation  

foreign 

combination 

A 
affiliate 
of 
dependence and a still quite low value-added 
constrain  Czechia’s 
industrial  structure 
innovation  potential  and  its  convergence 
with  more  advanced  EU  economies.  Business 
enterprise expenditure on R&D as a percentage of 
GDP was below the EU average in 2024 (1.18% vs 
1.49%) but has shown a steady increase over the 
past decade. Nevertheless, these gains have been 
largely  driven  by  foreign  affiliates,  which  account 
for  approximately  65%  of  total  R&D  business 
expenditure(77).  This  demonstrates  that  foreign 
firms  lay  a  crucial  role  in  the  economy  and  in 
business  R&D.  On  a  positive  note,  examples  of 
qualitative  changes  in  the  activities  of  foreign 
companies (from production to R&D) are becoming 
more common. At the same time, there is a lack of 
domestic  companies  capable  of  implementing 
Czech 
advanced 
economy (79),  firms 
lower-order 
suppliers 
larger 
companies  are  typically  positioned  on  the  lower 
tiers  of  value  chains,  which  is  associated  with  a 
significant 
price 
competitiveness. Relatively weak innovation output 

still  dominate,  and  even 

innovations (78). 

that  act  as 

reliance 

the 

on 

In 

(77)  The amount of R&D spending in foreign-controlled 

companies has increased more than threefold in nominal 
terms since 2010. 

(78)  INKA 3: Výsledky mapování - INKA 3 | INKAviz – 

Technologicka Agentura CR. 

(79)  There  is  a  reliance  on  mid-tech  industries  and  a  weaker 
innovation output rate: the value added in medium-high-tech 
manufacturing  (e.g.  automotive)  as  %  of  total  value  added 
significantly  prevails (9.57  vs  EU average of  5.63 in 2023). 
Value added in high-tech manufacturing as % of total value 
added  lags  behind  the  EU  average  and  is  decreasing  over 
time (it stood at 1.87 in 2013 and reduced over time to 1.50 
in  2023).  The  majority  of  business  expenditure  on  R&D  is 
spent  in  the  manufacturing  sector  (54%),  with  a  visible 
pattern of growth also in the ICT sector (20%) (source: Policy 
Support Facility background report). 

Source: Eurostat/Science-Metrix 

strategies 

to  align  with 

The governance of the research & innovation 
(R&I)  system  and  evaluation  of  policies  and 
support  programmes  remain  inadequate.  The 
lack  of  coordination  in  the  development  and 
execution  of  R&I  policies (74),  combined  with 
inadequate monitoring and evaluation, continue to 
limit effective strategic steering. The new R&I Act 
(75) effective from 1 January 2027 seeks to make 
strategies  more  consistent  by  requiring  research 
organisation 
the 
conceptual  frameworks  of  funding  bodies,  which 
must  themselves  be  consistent  with  the  national 
policy  on  research,  development,  innovation  and 
transfer.  A  further  benefit  of  the  Act  is  that  it 
opens possibilities for more flexible, differentiated 
R&I  public  funding.  While 
the  Act  clarifies 
responsibilities  regarding  the  development  of 
innovation  policy  (now  assigned  explicitly  to  the 
Ministry of Industry and Trade), it fails to address 
broader  governance  inconsistencies  and  the  lack 
of 
coordination  across  R&I  policy  actors. 
Fragmentation and duplication of R&I programmes 
across  multiple  providers  continue  to  create 
overlaps, 
and 
administrative burdens for beneficiaries, especially 
innovative  companies  seeking  public  R&I  funding. 
It  also  makes  it  harder  to  systematically  assess 
the  efficiency  of  invested  resources.  In  spring 
2025,  methodological  guidelines  helping (76)  to 

responsibilities 

unclear 

(74)  OECD, 2025, OECD Economic Surveys: Czechia 2025, OECD 
Publishing, Paris, https://doi.org/10.1787/7a70af5c-en. (see 
p. 49) 

(75)  Zákon o výzkumu, vývoji, inovacích a transferu znalostí, 

328/2025 Sb 

(76)  Milestone under Czech recovery and resilience plan 

component 5.3. 

51 

BEBGCZDKDEEEIEELESFRHRITCYLVLTLUHUMTNLATPLPTROSISKFISE024681012141600.20.40.60.811.2Top 10% highly-cited publication as % of total publicationsPublic expenditure on R&D (GOVERD + HERD) as % of GDP in 2024 
  
 
 
is also  reflected  in  a  decline  in  patenting  activity, 
which is well below EU average and has decreased 
in recent years (80). At the same time, a large part 
of the value of intellectual property created in the 
form  of  patents  is  offshored  abroad (81),  limiting 
the  domestic  capture  of  economic  value  and 
knowledge spillovers. 

large,  well-established 

Public support for innovation is less effective 
in  reaching  young  and  smaller  innovative 
firms.  A  recent  report (82)  highlights  that  public 
funding  for  innovation  in  Czechia  predominantly 
industrial 
advantages 
companies,  yet  falls  short  in  aiding  smaller, 
innovative  enterprises.  In  2023,  indirect  support 
through  R&D  tax  incentives  constituted  0.04%  of 
GDP,  significantly  lower  than  the  EU  average  of 
0.10%.  Fewer  than  30%  of  companies  actively 
involved  in  R&D  use  these  incentives  (83),  with 
small  and  emerging  firms  employing  them  at  an 
even  lower  rate.  Businesses  have  criticised  the 
scheme for its complexity and bureaucratic nature. 
In  line  with  the  2025  CSR  on  better  tapping  the 
potential  of  R&D 
to  stimulate 
innovation,  a  reform (84)  effective  from  January 
2026  aims  to  make  the  tax  credit  scheme  more 
attractive  for  SMEs  by  increasing  deduction  rates, 
extending  application  periods  from  three  to  five 
years  and  simplifying  administrative  procedures. 
Although  this  is  a  positive  step  towards  making 
the  R&D  tax  deduction  more  attractive  for  small 
businesses,  its  impact  would  be  strengthened  by 
further  efforts  to  reduce  the  administrative 
hurdles 
implementation.  Moreover,  direct 
innovation  support  programmes  (in  the  form  of 
grants) would benefit from a review and potential 

tax  benefits 

in 

(80)  Patent applications filed under the Patent Cooperation Treaty 
per billion of GDP (in purchasing power standards EUR) stood 
at 0.7 in 2022 in Czechia. The EU average was 2.8. 

(81)  Although ‘offshored patents’ account for only 5.5% of the 
total number of patents between 2000-2021, their value 
reaches almost 40%. In other words, nearly half of the value 
created during this period was offshored to foreign countries. 
Source:  fin TAČR analýza hodnoty patentu. 

(82)  Martin  Srholec,  Národohospodářský  ústav  AV  ČR,2024 
IDEA_Studie_06_2024_Nedotovani_inovatori_tisk_0926.pdf 
Which Innovative Firms Do/Do Not Receive Public Support for 
Innovation?,  Jaké 
(ne)čerpají  veřejnou 
inovativní  firmy 
podporu na inovace?). 

(83)  A number that has been gradually decreasing (by more than 
40%) since 2015. Policy Support Facility, Background report 
2024, (see p. 33). 

restructuring to better accommodate the needs of 
young, innovative companies.  

for 

researchers 

The  transfer  of  knowledge  and  technology 
between  academia  and  businesses  remains 
subdued.  Linkages  between  businesses  and 
academia  remain  weak,  as  evidenced  by  the  low 
share  of  public  R&D  expenditure  funded  by  the 
business  enterprise  sector.  In  2024  this  stood  at 
0.02% of GDP, a third of the EU average of 0.06%. 
Additionally, the transfer of research outcomes to 
entrepreneurial ventures is limited, reflected in the 
country’s  persistently  low  number  of  spin-offs. 
in  some 
While  good  practices  are  emerging 
universities  and 
institutes,  Czech 
research 
universities are absent from the top 181 European 
institutions  in  spin-out  performance (85).  Reasons 
for  this  may  include:  (i)  inconsistent  support  and 
uneven  quality  of  technology  transfer  offices;  (ii) 
bureaucratic  hurdles in intellectual  property  rights 
and 
(IPR)  management 
entrepreneurs;  and  (iii)  a  lack  of  institutional 
incentive  for  universities,  and  in  turn  researchers, 
to 
core 
educational  and  research  missions.  Concerning 
CSR  2025  on  facilitating knowledge  transfer from 
academia  to  business,  the  new  R&I  Act  (no. 
328/2025  Coll.),  effective  from  1 January  2027, 
integrates  knowledge  transfer  for  the  first  time 
explicitly 
legislative  framework.  This 
requires  organisations  and  funding  providers  to 
have  a  strategy  for  translating  scientific  findings 
into practice. Knowledge  transfer  is  a  criterion (86) 
research 
under 
assessment 
these 
to  effectively 
measures  appear 
transfer  activities.  As 
incentivise  knowledge 
universities 
their 
strategic  orientation, 
commitment  and 
capacity  of  individual  institutions  will  be  decisive. 
incentives  and 
Stronger  and  more  consistent 
improved 
technology 
of 
transfer  functions  would  help  foster  research 
commercialisation.  

in  universities.  However, 
insufficient 

prioritise  activities  beyond 

retain  full  autonomy  over 

the  new  methodology 

professionalisation 

into  the 

their 

the 

for 

The uptake of digital technologies by firms in 
Czechia  continues  to  progress,  although 
performance  remains  mixed  compared  with 
the  EU  average.  In  2025,  70%  of  SMEs  in 
Czechia  reached  at  least  a  basic  level  of  digital 

(85)  European Spinouts Report - 2025 | Dealroom.co. 

(84)  Mainly an amendment to the Income Tax Act.  

(86)  Methodology HEI 2025+, modul 3. 

52 

 
 
 
indicating  steady  but  still 

intensity.  This  was  close  to  the  EU  average  of 
incomplete 
71%, 
diffusion  of  basic  digital  tools  among  smaller 
firms.  The  adoption  of  more  advanced  digital 
technologies  shows  a  differentiated  picture.  AI 
uptake  by  enterprises  reached  18%  in  2025, 
remaining  below 
the  EU  average  of  20%, 
suggesting  that  barriers  persist  in  scaling  AI 
solutions  across 
the  business  sector.  Cloud 
computing  adoption  stood  at  43%  of  enterprises, 
also below the EU average of 47%. This points to 
slower  uptake  of  scalable  digital  infrastructure, 
particularly  among  SMEs.  By  contrast,  Czechia 
performs above the EU  average in data analytics, 
with 45% of enterprises using data analytics tools 
in  2025,  compared  with  40%  at  EU  level.  This 
indicates  relatively  strong  capabilities  in  data  use 
and  analysis,  which  could  provide  a  solid 
foundation for further uptake of AI and advanced 
digital applications. To support continued progress 
in digital transformation, Czechia has expanded its 
set  of  targeted  measures,  notably  under  the 
Programme 
Operational 
and 
Applications 
(OP  TAC), 
for  Competitiveness 
supported  by  the  Recovery  and  Resilience  Facility 
and  cohesion  funding (87).  These  measures  are 
complemented  by  national  initiatives  promoting 
cloud, 
uptake. 
Implementation of the national AI strategy is also 
beneficial  in  this  regard,  as  it  addresses  key 
adoption  barriers  through  skills  development, 
awareness  raising  and  access  to  experimentation 
platforms, with a particular focus on SMEs. 

Technologies 

analytics 

data 

and 

AI 

Entrepreneurial dynamism 

start-up 

ecosystem 

The 
remains 
underdeveloped,  but  initiatives  are  under 
way  to  support  the  growth  of  innovative 
companies  in  Czechia.  According  to  the  EU 
Startup  Nations  Standard  of  Excellence,  Czechia 
meets  38%  of  start-up  standards,  while  the 
average  for  the  participating  countries'  alliance  is 
55%  (88).  This 
indicates  that  the  ecosystem 

(87)  Flagship initiatives such as ‘Digital Enterprise – Call I’ and the 
planned Call II provide financial support for SMEs to invest in 
Industry  4.0-related  digital  technologies,  including  cloud 
solutions,  cybersecurity,  digital  twins  and  advanced  ICT 
systems,  while  ‘DEEP  TECH  –  Call  III’  supports  industrial 
research  and  experimental  development 
in  advanced 
technologies such as AI, big data, 5G and semiconductors. 

(88)  https://scoreboard.esnalliance.eu/. 

53 

the  conditions 

conditions remain suboptimal (89). In 2025, Czechia 
had  167  start-ups  per  million  inhabitants  (90), 
below  the  EU  average  (201)  and  far  behind  the 
USA  (512)  and  leading  EU  countries  like  Estonia 
(843).  In  2024,  a  Czech  start-up  association (91) 
was created. This is helping other already existing 
stakeholder organisations such as Czech founders 
and public support providers to nurture growth and 
improve 
to  ensure  a  more 
supportive  ecosystem.  The  2025  Analysis  of 
support for the startup environment in Czechia (92) 
revealed  the  shortcomings  and  challenges  for  the 
development  of  innovative  companies  and  should 
serve  as  a  basis  for  a  new  start-up  act.  This  act, 
expected to be adopted by 2027, aims to provide a 
holistic  framework  covering  principal  areas  such 
as: (i) a legal definition of start-up/scale-up firms; 
(ii) labour flexibility and talent attraction; (iii) public 
procurement and sandboxes; (iv) taxation of start-
ups  and  investors  (business  angels);  and  (v) 
simplification  measures  cutting  red  tape.  Quickly 
putting  the  act  into  practical  operation  could  help 
address  low  business  dynamism  and  strengthen 
the  economy's  ability  to  generate  innovation.  In 
response  to  the  2025  CSR  on  supporting  the 
creation  of  startups,  for  example  by  improving 
legislation on employee stock option plans, several 
measures  have  been  introduced  to  support  start-
up  financing,  including  initiatives  under  the  Czech 
recovery  and  resilience  plan  (RRP).  A  reform  to 
Czechia’s  employee  stock  option  framework, 
implemented 
2024,  was 
supplemented and refined in 2025 to increase its 
effectiveness  and  competitiveness  relative  to  EU 
and  global  counterparts.  With  effect 
from 
1 January  2026,  employee  stock  ownership  plans 
are subject to income tax only, similar to ordinary 
shares,  and  therefore  are  not  burdened  by  social 
and health levies. This brings the framework in line 
with other EU countries in terms of total taxation. 
It should also help Czech companies and start-ups 
to  better  compete  in  foreign  labour  markets.  The 
principle  of  ‘no  tax  before  cash’ applies –  i.e. 
employees  are  taxed  only  when  they  earn  money 
from the sale of shares, not upfront.  

1 January 

on 

(89)  Czechia does not have a single start-up that meets the 

definition of an 'innovative start-up' (i.e. founded in the last 
20 years, having a patent, and a valuation over EUR 100 
million). By way of comparison, Sweden has 40, Europe 979, 
and the USA 2 725. 

(90)  Analyza_startupy.pdf. 

(91)  Česká startupová asociace. 

(92)  Idem. 

 
 
 
entry and stay of non-EU nationals was submitted 
to  facilitate  the  admission  process  but  was  not 
adopted  before  the  end  of  the 
legislature. 
Challenges  in  the  domestic  labour  market  are 
further detailed in Annex 11. 

A 

is 

2024 

among 

adopted 

integrated 

education. 

to  support 

in 
and  work’ 

In  Czechia,  a  national 
research  and 
innovation  strategy  for  smart  specialisation 
the  development  of 
aims 
entrepreneurship 
revised 
framework  educational  programme  for  basic 
includes 
education 
key 
‘entrepreneurship 
competences  to  be  developed  during  compulsory 
education.  Entrepreneurship 
into 
general  upper  secondary  education  through  a 
cross-curricular  approach  (2024/2025),  and  the 
entrepreneurship competence is also highlighted in 
the  framework  education  programme  for  general 
secondary  education.  Students,  including  those  in 
vocational education and training (VET), are helped 
to obtain entrepreneurial skills through the Centre 
for  Fictitious  Companies (96).  Schools  can  also 
cooperate in this area with the Junior Achievement 
organisation  and  other  NGOs.  The  Czechinvest 
on 
agency 
invests 
entrepreneurship. 
is 
investing in  the  'Entrepreneurship  Support  Project' 
the 
(CZK 14.3  million)  aimed  at  boosting 
entrepreneurship  skills  of  a  target  audience 
ranging  from  students  in  basic  schools  to  young 
adult  entrepreneurs.  However,  there  is  no  explicit 
reference 
in 
Czechia’s 
competence 
frameworks  in  primary  and  general  secondary 
education. In addition, there are a lack of data on 
entrepreneurship  education  and 
results, 
including  on  the  entrepreneurial  skills  of  recent 
graduates.  

to  entrepreneurship  education 

adult 
Furthermore, 

learning 
the  RRP 

top-level 

teacher 

its 

in 

Venture capital activity has seen growth but 
remains  well  below  the  EU  average.  The 
average  venture  capital  investment  as  a  share  of 
GDP  climbed  from  0.003%  in  2013  to  0.02%  in 
2024,  yet  this  figure  remains  significantly  below 
the  EU  average  of  0.06%.  Additionally,  domestic 
institutional  investors  play  only  a  limited  role  in 
funding  start-ups  and  venture  capital  initiatives, 
exacerbating  the  underdevelopment  of  the  local 
risk  capital  ecosystem.  As  a  result,  a  substantial 
funding 
early-stage, 
persists 
innovation-driven enterprises requiring capital that 
accommodates high-risk exposure throughout their 
growth trajectory (see Annex 6).  

shortfall 

for 

the  benchmarking  of  national 

Czechia’s innovation procurement framework 
would benefit  from  significant  improvement. 
In 
innovation 
procurement  policy  frameworks  across  Europe, 
Czechia is ranked 24th in the EU, with a total score 
of 14% (93). Even though the country improved its 
score  a  little,  it  dropped  three  places  compared 
with the previous  benchmarking  in  2020  as  other 
countries  improved  their  policy  framework  faster. 
Its  performance  is  below  the  European  average 
(33%) in total and on all 10 indicators. Czechia has 
implemented  so  far  only  a  few  of  the  policy 
measures 
comprehensive 
framework for innovation procurement. 

establish 

to 

a 

Czechia’s innovation potential is constrained 
by  a  shortage  of  skilled  labour.  There  is  a 
declining  share  of  the  population  with  tertiary 
education.  In  2024,  only  33.5%  of  young  people 
aged  25 to  34  held  a tertiary  degree,  below  both 
the national target of 35% and the EU-level target 
of  45%  by  2030  (vs  44.2%  in  the  EU) (94).  The 
number  of  graduates  in  science  and  engineering 
fields  has  continued  to  decline  (14.2  per  1 000 
people aged 25–35 in 2012, vs 10.4 in 2023). At 
the  same  time,  demand  for  university-level 
graduates  has  exceeded  the  available  supply (95). 
To address labour shortages, Czech employers are 
increasingly seeking workers from abroad. Despite 
this, the current immigration policy is not making it 
easier  to  attract  highly  skilled  foreign  talent.  A 
planned  legislative  amendment  to  the  Act  on  the 

(93)  CZECH REPUBLIC. COUNTRY PROFILE – Benchmarking of 
national policy frameworks for innovation procurement, 
2024. 

(94)  See Annex 13. 

(95)  OECD, 2025, OECD Economic Surveys: Czechia 2025, OECD 
Publishing, Paris, https://doi.org/10.1787/7a70af5c-en. 

(96)  Podkrušnohorský veletrh fiktivních firem (SŠ) | ICUK. 

54 

 
 
 
 
Table A4.1:  Key innovation indicators 

(1) EU average for the last available year or the year with the highest number of country data. * break in series. 
Source: Eurostat, OECD, DG JRC, Science-Metrix (Scopus database), Invest Europe, European Innovation Scoreboard. 

55 

R&D intensity (gross domestic expenditure on R&D as % of GDP)1.311.911.951.891.821.82:2.243.44Public expenditure on R&D as % of GDP0.560.860.750.670.620.63:0.720.64Scientific publications of the country within the top 10% most-cited publications worldwide as % of total publications of the country 5.096.644.775.54:::9.4412.31Researchers (FTEs) employed by public sector (Gov+HEI) per thousand active population3.23.64.24.44.34.4:4.3:International co-publications as % of total number of publications35.4540.0151.0953.6555.0657.54:57.24:Business enterprise expenditure on R&D (BERD) as % of GDP0.741.041.191.211.181.18:1.492.69Business enterprise expenditure on R&D (BERD) performed by SMEs as % of GDP0.340.360.320.350.350.34:0.470.30Researchers employed by business per thousand active population2.43.74.35.25.35.1:5.9:Patent applications filed under the Patent Cooperation Treaty per billion GDP (in PPS €)11.491.221.340.9::2.812.20Employment share of high-growth enterprises measured in employment (%):::0.750.74::0.87:SMEs with at least a basic level of digital intensity% SMEs (EU Digital Decade target by 2030: 90%)::::49.30:70.4671.39:Data analytics adoption% enterprises (EU Digital Decade target by 2030: 75%)::::19.49:44.6039.85:Cloud adoption% enterprises (EU Digital Decade target by 2030: 75%)::::35.23:42.9346.69:Artificial intelligence adoption % enterprises (EU Digital Decade target by 2030: 75%)::::5.9011.2617.6019.95:Public-private scientific co-publications as % of total number of publications7.617.957.178.097.997.75:7.62:Public expenditure on R&D financed by business enterprises (national) as % of GDP0.020.030.030.020.030.02:0.060.02Total public-sector support for BERD as % of GDP0.160.170.150.140.12::0.21:R&D tax incentives: foregone revenues as % of GDP0.030.050.040.040.04::0.100.16BERD financed by the public sector (national and abroad) as % of GDP 0.130.120.110.100.080.07:0.11:Venture capital (market statistics) as % of GDP (calculated as a 3-year moving average)0.0100.010.030.030.02:0.06:Seed stage funding share (% of GDP)000000:0.01:Start-up stage funding share (% of GDP)000000:0.03:Later stage funding share (as % of GDP)0.01000.010.010.01:0.03:New graduates in science & engineering per thousand population aged 25-34:13.0610.5610.3010.40::16.82:Graduates in the field of computing per thousand population aged 25-34:2.662.642.913.12::3.84:Innovative talentR&D investment & researchers employed in businessesInnovation outputsDigitalisation of businessesAcademia-business collaboration Public support for business innovationFinancing innovationScience and innovative ecosystemsCZECHIA2010201520202022202320242025EU average (1)USHeadline indicator 
 
 
 
  
 
ANNEX 5: SINGLE MARKET AND INDUSTRY 

require 

innovation 

recommendations 

Czech businesses continue to face challenges 
primarily  due  to  high  energy  prices,  which 
weigh  heavily  on  competitiveness  and 
investment  decisions,  while  administrative 
and regulatory burdens add further pressure 
technological  and  digital 
and  ongoing 
transformations 
significant 
adaptation  across  sectors.  The  2025  country-
(CSRs)  highlighted 
specific 
challenges  in  simplifying  urban  planning  and 
construction-permitting  processes,  strengthening 
business  access  to  non-bank  finance,  increasing 
the  use  of  financial  instruments,  supporting  the 
creation  of  start-ups  and  spin-offs,  as  well  as 
stimulating 
in  the  private  sector. 
Despite  several  anti-bureaucracy  packages  and 
digital  initiatives,  the  perception  of  the  business 
environment  has  worsened  among  businesses, 
which  cite  administrative  hurdles, 
regulatory 
obstacles  and  late  payments  as  key  concerns. 
Access  to  finance  and  scaling  mid-sized  firms 
remain weak points. Labour shortages, particularly 
in  skilled  areas,  hinder 
investment  alongside 
permitting  delays,  while  public  procurement 
inefficiencies  and  regulated  professions  limit  the 
potential  of 
the 
automotive sector shows resilience and clean-tech 
exports position Czechia as a global leader, heavy 
import  reliance  on  critical  raw  materials  and 
supply chain vulnerabilities underscore the urgency 
for  stable  regulations  and  strategic  resource 
development. 

the  Single  Market.  While 

Business dynamics 

limiting 

difficult, 

The  economy  faces  a  scale-up  problem,  as 
the  step  from  micro  to  medium-sized  firms 
remains 
technology 
diffusion  and  the  emergence  of  strong 
domestic  champions.  In  2025,  the  business 
economy  of  Czechia  was  strongly  dominated  by 
micro-enterprises 
employees),  which 
represented  96.7%  of  registered  firms  (94.5%  in 
the  EU),  generating  more  than  one  third  of  total 
employment  and  almost  one  quarter  of  value 
added(97).  Small  and  medium‑sized  enterprises 
(10-249  employees)  were  far  fewer  in  number 
(3.2%),  accounted  for  35%  of  employment  and 
38%  of  value  added,  underscoring  their  central 

(0-9 

role in driving innovation, production and domestic 
supply chains. Large enterprises (250+ employees) 
formed only a tiny fraction of all firms (0.1%), but 
they  provided  almost  40%  of  value  added  and 
30%  of  total  employment,  reflecting much  higher 
labour  productivity  and  strong  export  orientation. 
Policy  efforts  focused  on  improving  access  by 
small  to  medium-sized  enterprises  (SMEs)  to 
finance,  skills  and  innovation  support,  with  the 
twin  objective  of  raising  micro‑firm  productivity 
and  enabling  scalable  SMEs  to  grow  into  larger, 
internationally  competitive  businesses,  would 
In 
contribute 
addition,  providing  support  to  clusters  in  key 
economic  sectors  would  help  foster  innovative 
collaboration activities, improve access to funding 
and  scale-up  support  services,  thereby  helping  to 
alleviate these challenges. 

to  sustainable  competitiveness. 

is 

Czechia’s  business  demography 
less 
dynamic,  characterised  by  a  relatively  lower 
business  churn  rate  than  in  the  EU.  While 
Czechia’s  lower  churn  rate  (15.75%  vs  the  EU 
average  of  19%)  may  suggest  greater  business 
stability - with fewer enterprises closing relative to 
new registrations, reflecting stronger firm survival 
and  resilience  -  it  could  also  indicate  reduced 
economic  dynamism  and  structural  rigidities. 
These rigidities, such as barriers to entry and exit, 
may protect less efficient firms, hindering resource 
allocation and innovation. A clearer understanding, 
based  on  further  analysis  of  the  drivers  of  churn, 
could  help  inform  the  design  of  more  targeted 
policy approaches. 

Czechia  is  home  to  a  dynamic  and  growing 
start-up ecosystem with several hubs across 
the  country.  Like  other  eastern  European 
economies,  Czechia’s  start-ups  primarily  offer 
digital  services,  with many  achieving international 
expansion.  A  few  in  tech-travel  and  cybersecurity 
have become notable success stories by scaling up 
abroad,  while  other  manage  global  operations 
domestically  –  with  foreign  investors  holding 
shares  or  ownership  –  though  most  are  acquired 
by 
to  Czech 
national 
Founders(98), 
in  2025,  the  total  amount  of 
investment  in  Czech  start-ups  fell  by  18.1% 
compared  with  2024,  mirroring  global  trends, 
where a small number of companies absorb most 
market 
start-up 
ecosystem  ranks  third  in  eastern  Europe  and  has 

buyers.  According 

investments. 

Czech 

The 

(97)  SME Performance Review 2026. 

(98)  Czech Founders, January 2026. 

56 

 
 
 
 
 
 
remained  stable  since  2024(99).  It  continues  to 
grow, supported by a broad network of incubators 
and  accelerators  operating  across  the  country. 
However, there is substantial  heterogeneity in the 
quality  of  these  business  incubators,  which  could 
be  mitigated  by  strengthening  the  skills  and 
capacities  of  incubator  managers  and  staff.  The 
forthcoming  start-up  law  could  further  boost  this 
environment,  in  line  with  the  2025  CSR  on 
supporting  the  creation  of  start-ups  and  spin-offs 
(see Annex 4). 

investment  has 

Despite  its  high  share  of  total  investment, 
Czechia  has  the  potential  to  enhance  the 
efficiency  of  its  investment  activities.  Total 
investment  (government, households, business)  at 
26.5%  of  GDP  places  Czechia  among  the  top 
investing  EU  countries.  Over  the  past  five  years, 
public 
remained  stable  at 
approximately  4.7%  of  GDP,  exceeding  the  EU 
average  (3.7%  in  2024).  This  share  is  primarily 
driven  by 
in  transport 
infrastructure  and  defence  and  serves  as  an 
important source of economic growth. However, a 
more  effective  national  system  for  project 
prioritisation  and  coordination  could 
lead  to 
greater  strategic  coherence.  Engaging  business 
investments  has  the  potential  to  expand  the 
volume of investment resources without increasing 
the immediate burden on the public budget. 

investments 

increased 

Czech  enterprises  report  investment  barrier 
concerns  comparable  to  the  EU  average.  The 
biggest  obstacles  are  the  availability  of  skilled 
staff  (88%)  and  uncertainty  about  the  future 
(84%), especially in construction. Energy costs are 
less of a worry than before (69%, down from 95% 
in 2024)(100). 

Business environment 

environment, 

improve  the 
Despite  ongoing  efforts  to 
and 
business 
administrative 
and 
obstacles 
significant  untapped  potential  for  further 
improvement  still  exists. 
the 
‘anti-bureaucratic 
introduction  of 

regulatory 
remain 

Following 

three 

the 

in 

the 

launched 

2022-2024(101), 

packages’ 
Czech 
government  approved  a  fourth  package in  August 
2025  to  alleviate  the  excessive  administrative 
burden on businesses. The Ministry of Industry and 
Trade  has 
its  online  Reporting 
Obligations  Database,  offering  businesses  a  one-
legislative 
stop  resource  for  navigating  their 
responsibilities.  Despite 
the 
perception  of  business  regulations  as  a  barrier  to 
investment  substantially  worsened  among  Czech 
businesses, with the share increasing from 57% in 
2024  to  71%  in  2025(102).  This  trend  was  also 
echoed  in  labour  regulations,  which  many  more 
businesses 
to 
investment in 2025 (45% in 2024). 

(70%)  saw  as  an  obstacle 

efforts, 

these 

disadvantage 

Czech  gold-plating  of  EU  directives  imposes 
stricter  rules  than  required, 
increasing 
bureaucracy  within  firms.  Such  additional 
burdens  put  the  businesses  concerned  at  a 
compared  with 
competitive 
businesses from Member States that have avoided 
regulatory  gold-plating.  In  Czechia,  gold-plating 
decreased  after  2016,  when  the  government 
mandated  transposition  of  these  regulations  into 
domestic  laws  with  minimal  amendments(103). 
According to the Report on Reducing the Burden on 
Entrepreneurs(104),  171  legal  acts  imposing  1 870 
information  obligations  for  businesses  have  been 
identified.  Most  of  these  obligations  arise  from 
national  legislation  (56%),  followed  by  directives 
of the European Parliament and the Council (37%) 
and EU regulations (7%). The largest share of the 
burden  stems  from  employment  and  health 
protection legislation (see Annex 7). 

in 

impact. 

Cumulative 

gold-plating 

phenomenon 

The 
the 
construction  sector  illustrates  its  negative 
economic 
over-
implementation  of  environmental  and  digital 
requirements  has  resulted  in  gold-plating  within 
construction-permitting  processes.  According  to 
the  Chamber  of  Commerce(105),  Czechia  has 
incorporated  so  many  obligations  and  references 
to  standards  into  the  building  permit  system  that 

(101) Vládní antibyrokratické balíčky | Vláda České republiky. 

(102) EIB Investment Survey 2025. 

(103) Gold-plating of EU Law in the Czech Republic Revisited, 

2024. 

(104) Ministry of Industry and Trade: Report on reducing the burden 

(99)  Global Startup Ecosystem Index 2025. 

on entrepreneurs, October 2025. 

(100) EIB Investment Survey 2025. 

(105) Jak nás gold plating připravuje o byty | BusinessInfo.cz. 

57 

 
 
 
constructing  any  apartment  or  house  is  more 
complicated than ever. 

and 

remain 

planning 

industrial 

processes 

Czechia’s  urban  planning  and  construction-
a 
permitting 
key 
investment  and 
bottleneck  for  business 
recommended 
development.  The  2025  CSR 
simplifying 
reducing 
urban 
administrative  burden  by  improving  digitalisation, 
capacity  and  the  management  of  construction 
offices. These hamper not only the housing, energy 
and  digital  sectors  but  also  foreign  direct 
expansion,  brownfield 
investment, 
investment and overall economic competitiveness. 
Czechia 
is  currently  working  on  a  major 
amendment  to  the  relatively  new  Construction 
Act(106),  approved 
in  2021.  However,  spatial 
excessive 
planning,  which 
from 
suffers 
administrative 
down 
development(107), is largely left out of this review, 
with  a  larger  review  planned  according  to  the 
government’s  economic  strategy(108).  The  digital 
permitting  system, 
in  July  2024, 
encountered technical difficulties in its roll-out and 
the  draft  amendment  postpones  full  digitalisation 
from 2027 to 2030. 

launched 

burden 

slows 

and 

calling 

reduction 

Czech  businesses  are 
for  a 
in  administrative 
substantial 
burdens  to  create  more  room  for  growth, 
innovation and investment. The Czech Chamber 
of  Commerce  has  launched  the  comprehensive 
‘Bureaucratic Detox’ initiative(109), which includes a 
concrete  proposal  for  a  systemic  reform,  the 
Anti-Bureaucratic  Act.  It  recommends  that  every 
legislation  be 
new  piece  of  EU  or  national 
accompanied 
easily 
concise 
by 
understandable summary of the obligations for its 
addressees. The proposal also envisages a regular 
annual  review  to  assess  the  effectiveness  of  the 
obligations imposed. 

and 

a 

is  ready  to 

Czechia 
introduce  13  new 
measures to help SMEs overcome challenges 
recent  economic  and 
stemming 

from 

(106) https://www.psp.cz/sqw/historie.sqw?o=10&T=67. 

(107) https://reforms-investments.ec.europa.eu/technical-support-
instrument-0/competitiveness/recommendations-and-
legislative-proposals-building-act-reform-area-spatial-
planning_en. 

(108) Country for the future 2.0, Section 3. 

(109) Bureaucratic Detox. 

geopolitical  developments. 
The  mid-term 
review of the SME strategy was completed in June 
2025. Based on it, the revision of the SME strategy 
was expected to be finalised  by the end of 2025. 
Among  the  measures  are  the  digitalisation  of 
law, 
SMEs,  preparation  of  a  new  start-up 
brownfield  development,  tax  incentives  for  early-
stage  investments  and  research  and  innovation 
(the  2025  recommendation  on 
(R&D)  policy 
stimulating  innovation  in  the  private  sector)  and 
strengthening  resource  and  energy  efficiency  in 
SMEs. Coordination across ministries will be crucial 
to successfully implementing these measures. 

In  Czechia,  oversight  of 
state-owned 
enterprises  (SOEs)  remains  limited  due  to 
unclear strategic objectives, restricted audits 
and 
inadequate  accountability  for  public 
interests  and  efficiency.  These  50  fully  state-
owned companies(110) generate an annual turnover 
exceeding  CZK  440  billion,  manage  assets  worth 
CZK  1.3  trillion  (representing  around  5.5%  and 
16.1%  of  Czechia’s  GDP  respectively)(111),  and 
employ  over  85 000  people.  Despite 
this 
significance,  SOEs  often  lack  clear  owner-defined 
mandates,  develop  their  own  strategies  without 
state  guidance,  deliver  uneven  financial  results 
across  sectors,  and  feature  non-competitive  and 
non-transparent 
selections. 
Consequently, substantial public funds flowing into 
these  firms  face  insufficient  strategic  and  audit 
checks,  as  the  Supreme  Audit  Office  still  cannot 
examine 
companies. 
Strengthening  strategic  governance,  management 
accountability and transparency in Czechia's SOEs 
would  enhance  their  overall  performance  and 
better  align  operations  with  the  specific  public 
interests for which they were established. 

management 

joint-stock 

state 

There  is  a  strong  push  for  digitalisation  to 
facilitate communication between businesses 
and  the  state.  While  some  measures  (e.g.  the 
online  Reporting  Obligations  Database 
for 
businesses)  are already in place, others are being 
developed  or  are  in  the  pipeline.  The  Licensed 
Trades Portal(112)  already makes it possible to set 
up a business fully online(113). The Entrepreneurial 

(110) Ministry of Finance, State Ownership Policy Strategy in 2024. 

(111) Czech Statistical Office, 2024 GDP data, Annual national 

accounts. 

(112) Licensed Trades Portal. 

(113) Part of the barriers highlighted in the 2025 Single Market 

Strategy (‘Terrible Ten’), Single market strategy. 

58 

 
 
 
all 

administrative 

Portal  –  an  umbrella  platform  and  a  measure  of 
the recovery and resilience plan (RRP)  – will serve 
as the central e-government point for businesses, 
incorporating 
procedures, 
including  tax  filing.  An  inspections  portal  (JePEK) 
will coordinate between inspection authorities and 
businesses,  including  providing  information  on 
planned inspections for entrepreneurs. The aim of 
the  digital  project  Stop  Bureaucracy(114)  is  to 
present  specific  measures  to  reduce  bureaucracy 
for  entrepreneurs  and  to  provide  information 
about key digital projects. 

combines 

near-universal 

Czechia 
5G 
coverage  with  a  persistent  gap  in  fixed 
gigabit  connectivity.  While  overall  5G  coverage 
reached 99.08% in 2024 (above the EU  average), 
the roll-out of very high-capacity networks (VHCN) 
and  fibre  to  the  premises  (FTTP)  remains  well 
below  EU  levels.  This  could  weigh  on  productivity 
and  firms’  ability  to  scale  digital  solutions.  This 
matters in the context of the Digital Decade 2030 
objectives  on  connectivity,  as  Czechia’s  national 
targets  remain  ambitious  (95%  VHCN,  60%  FTTP, 
100%  5G  by  2030).  But  delivery  will  depend  on 
accelerating 
addressing 
bottlenecks,  such  as  lengthy  permitting  processes 
and  limited  take-up  of  high-speed  broadband. 
Czechia  is  pursuing  measures  to  simplify  roll-out 
procedures,  including  an  action  plan  to  support 
network planning and construction and to promote 
fibre-ready  construction.  On  the  mobile  side,  it 
including 
relies  on  a  package  of  measures, 
spectrum-related  actions  and  subsidies 
for 
underserved  areas.  Additional  efforts  are  still 
needed  to  accelerate  VHCN/fibre  deployment  and 
strengthen 
stand-alone 
capacity 
ecosystem development. 

deployment 

and 

and 

5G 

Czechia  ranks  low  in  terms  of  the  ease  of 
equity financing. According to the 2025 EIF SME 
Access to Finance (ESAF) Index(115), the equity sub-
index  places  Czechia  second  among  the  worst-
ranked EU countries. The weakness of the venture 
capital  ecosystem,  particularly 
in  pre-seed 
investments, has been highlighted by stakeholders 
as a major barrier to accessing finance. Numerous 
(e.g. 
including  grant  schemes 
initiatives  – 
inkubace  by  CzechInvest)  or 
Technologická 

in 

(e.g. 

gaps, 

funding 

line  with 

regional 
the  South  Moravian 
Innovation agency JIC Ventures) – seek to address 
funding 
the  2025 
recommendation on strengthening business access 
to non-bank finance. Efforts are also underway to 
establish  a  deep-tech venture  capital  fund  by the 
end of 2027. Additional support measures, such as 
investors  and  the 
tax 
incentives  for  equity 
development  of  financial 
instruments,  would 
improve  access  to  early-stage  financing  options 
(the  2025  recommendation  on  increasing  the  use 
of  financial  instruments)  (see  Annex  6  and  Annex 
18). 

the 

This 

year 

(52%)(117). 

longest  payment 

In  recent  years,  Czechia  has  consistently 
ranked  among  the  EU  Member  States  with 
the  largest  share  of  companies  reporting 
difficulties  due  to 
late  payments.  The 
problem(116)  intensified  in  2024,  encompassing 
69% of Czech companies, which is a  considerably 
higher share than the reported EU average for the 
same 
represents  a 
deterioration of 4 percentage points in relation to 
the  2023  value  and  13  percentage  points  more 
than  the  lowest  value  recorded  during  the  period 
2019-2024 (56% in 2020). Czechia is the Member 
State  with 
times  by 
government-to-business  (G2B)  (73.8  days,  above 
the EU average of 69.8). Compared with 2023, the 
average  payment  period  for  G2B  transactions 
increased by seven days. On a more positive note, 
the  share  of  SMEs  experiencing  late  payments 
from  public  entities  and  payment  gaps  in  the 
public  sector  is  well  below  the  EU  average,  while 
the  share  of  payments  made  by  the  due  date 
ranks  well  above  the  EU  average.  The  average 
payment  period  for  business-to-business  (B2B) 
was longer than 60 days (62.3 days) and Czechia 
was one of two countries in which companies took 
invoices.  Czech 
the 
businesses  most  often  attribute  delays  to  invoice 
disputes  and  supply  chain  disruptions.  The 
‘transport  and 
the 
in  Czechia.  The  Czech 
weakest  performers 
government has implemented several measures  – 
effective  from  2025  -  to  tackle  late  payments, 
primarily  through  tax  and  VAT  reforms  aligned 
with EU directives. 

logistics’  sectors 

to  settle 

longest 

remain 

their 

(114) Stop byrokracii !. 

(115) The EIF SME Access to Finance Index (ESAF) is a composite 

indicator measuring SME financing ease across EU countries, 
capturing debt (loan) and equity conditions. 

(116) Part of the barriers highlighted in the Single market strategy 
(‘Terrible Ten’) and the 2026 Annual Single Market and 
Competitiveness Report. 

(117) EU Payment Observatory - Annual Report, December 2025.  

59 

 
 
 
Single Market 

(66%) 

remains 

(120).  Germany 

Czechia’s  deep  integration  into  the  Single 
Market  substantially  strengthens  economic 
performance.  As  a  country  which  is  highly 
integrated into EU value chains, Czechia is among 
the EU countries with the highest spillover-to-GDP 
ratio  at  1.3%(118).  Also,  with  one  of  the  highest 
shares  of  GDP  represented  by  EU  trade 
in 
goods(119),  Czech  businesses  demonstrate  strong 
export  orientation  (both  within  and  beyond  the 
Single  Market).  Three  quarters  of  Czech  firms 
engage  in  international  trade,  well  above  the  EU 
average 
the 
dominant  destination  (30%  of  exports),  followed 
by Slovakia, Poland and France. While this reliance 
confirms  Czechia’s  position  as  a  manufacturing 
hub  within  the  Single  Market  –  mainly  exporting 
it 
vehicles,  machinery  and 
simultaneously 
economy’s 
heightens 
vulnerability  to  external  shocks,  in  particular  a 
slowdown  in  Germany  and  fluctuations  in  EU 
demand. The posting of workers involves extensive 
formalities,  including  prior  notification,  record-
keeping  and  the  availability  of  Czech-language 
employment  documents  at  the  workplace,  backed 
case  of  non-
by 
compliance(121).  The  requirement  to  secure  an  A1 
portable  document  in  advance  can  further  delay 
short-notice cross-border assignments. 

financial  penalties 

electronics  – 

the 

in 

practices.  According  to  Product  Market  Regulation 
indicators(124),  there  are  also  still  restrictions 
regarding  administrative  requirements  for  new 
firms.  Despite  shortages  of  skilled  workers, 
Czechia  regulates  365  professions  –  the  second 
highest  reported  number of  regulated  professions 
in  the  EU  (EU  average:  210)(125).  The  European 
Commission’s  data(126)  and  the  OECD’s  Product 
Market  Regulation  (PMR)  figures  suggest  that 
restrictions on regulated professions in Czechia are 
higher  than  the  EU  average  for  lawyers,  civil 
engineers,  architects  and  estate  agents.  So  far, 
progress  in  addressing  barriers  in  the  field  of 
business services has remained limited. In answer 
to  a  survey  carried  out  by  the  Commission 
between  December  2025  and  February  2026, 
Czechia  reported  it  did  not  implement  any  of  the 
8 2021  Commission 
The 
is  currently  assessing  Czechia’s 
Commission 
progress 
answer 
in 
recommendations. 
2021 
implementing 
Undertaking reforms at national level, streamlining 
regulations and lowering unnecessary barriers can 
unlock new opportunities for businesses. According 
to the OECD, easing entry and conduct regulations 
in  professional  services  can  boost  competition, 
business  dynamism  and  productivity  growth. 
Moreover,  the  role  of  the  Regulatory  Impact 
Assessment  (RIA)  Board,  a  watchdog,  could  be 
strengthened  to  ensure  high  quality  regulatory 
impact assessments(127).  

to  measure 
the 

recommendations. 

actual 

While Czechia ranks among the most open EU 
countries for services trade within the Single 
Market,  it  also  has  one  of  the  highest 
numbers  of  regulated  professions.  The  2024 
OECD  Services  Trade  Restrictiveness  Index(122) 
indicates  an  open  regulatory  environment  for 
for 
services 
temporary  entry  of  contractual  service  suppliers 
remain  more  restrictive  than  international  best 

trade(123).  However, 

conditions 

(118) European Commission, Report on the Implementation of the 

Recovery and Resilience Facility, October 2025. 

(119) https://single-market-

scoreboard.ec.europa.eu/competitiveness/integration_en. 

(120) European Investment Bank, 2025, EIB investment survey. 
(121) Státní úřad inspekce práce (State Labour Inspection Office) 
(2026) Posting of Workers. Available at: Posting of Workers | 
Státní úřad inspekce práce - EN (Accessed 16 March 2026). 

(122) OECD Services trade restrictiveness index, February 2025. 

Czechia  has  potential  to  further  leverage 
Single  Market  opportunities.  For  example,  the 
timely  transposition  of  Single  Market  directives 
could still be  further improved. The percentage of 
Single  Market  directives  not  transposed 
into 
national law increased from 0.7% in 2024 to 0.9% 
in  2025  (still  below  the  1%  target  set  by  the  EU 
Council).  In  2025  Czechia  resolved  73.9%  of  the 
SOLVIT  cases  it  handled  as  lead  centre  (the  EU 
average was 84.6%). The conformity deficit (% of 
incorrectly)  and  the 
all  directives  transposed 
infringement  proceedings 
number  of  pending 
remained  at  2024  levels  in  2025,  within  the  EU 

(124) 2023-2024 OECD Product Market Regulation indicator. 

(125) European Commission: Regulated Profession Database. 

(126) European Commission, 2021, Communication on updating 
the reform recommendations for regulation in professional 
services, COM(2021) 385, 9/7/2021. 

(123) Part of the barriers highlighted in the 2025 Single Market 

(127) OECD Economic Outlook, Volume 2025 Issue 2, December 

Strategy (‘Terrible Ten’), Single market strategy. 

2025. 

60 

 
 
 
average.  For  goods,  packaging  compliance 
shaped by the national system (128).  

is 

Compliance  of  products circulating  in  the 
Single  Market(129)  is key to  ensuring a  level-
playing  field  for  law-abiding  companies  and 
the  safety  of  consumers. In  Czechia, 
the 
number  of  market  surveillance  investigations  has 
increased  compared  with  2019.  In  2025,  national 
authorities  reported  in  the  EU  system  for  market 
a 
surveillance 
total 
of 1283.9 investigations 
one  million 
inhabitants, which is higher than the EU median of 
136.2. The number of notifications remains limited 
in absolute terms, which may also be the result of 
insufficient  IT  national  interoperability  to  the 
ICSMS  system.  The  upcoming  revision  of  the 
Market Surveillance Regulation will upgrade ICSMS 
to a fully interoperable EU digital platform.  

(ICSMS) 

per 

in 

the  public  procurement 
Competition 
system  remains  below  the  EU  average, 
attracting  too  few  bidders  and  featuring 
lengthy, costly procedures, particularly in the 
review  system. Single-bid  tenders  persisted  at 
high levels in 2025 (41%, compared to EU median 
of  27%),  despite  ongoing  implementation  of  the 
2024 Public Procurement National Strategy (PPNS) 
and  its  action  plan  (an  RRP  measure),  including 
digitalisation efforts and a new competence centre 
for  training  and  centralised  purchasing.  In  April 
2025, an  amendment  to  the  Public  Procurement 
Act  entered  into  force  aiming  to  simplify  and 
clarify  the  public  procurement  process,  increase 
transparency  and  strengthen  the  protection  of 
competition.  However,  it  remains  too  early  to 
assess  the  impact  on  the  level  of  competition  in 
public  procurement  markets.  The  data  also 
suggest  that  structural  issues  –  such  as  an  over-
reliance  on  lowest-price  criteria  (used  in  81%  of 
contract  awards)  –  and  practical  implementation 
challenges 
professional 
expertise, 
collaboration  and  anti-
to 
corruption 
enhancing  competition,  efficiency  and  value  for 
money in public procurement. 

persist. 
regional 
safeguards 

Improving 

remains 

crucial 

in 

think 

Businesses’  views  on  corruption  risks  in 
public  procurement  are  above  the  EU 
average.  In  Czechia,  70%  of  companies  (EU 
average: 58%)  consider tailor-made specifications 
for  particular  companies  in  public  procurement 
procedures  and  53%  (EU  average:  51%)  the 
involvement  of  bidders 
the  design  of 
specifications  to  be  a  ‘very’  or  ‘fairly  widespread’ 
practice.  Among  companies  that  have  experience 
of  and  have  participated  in  a  public  procurement 
procedure,  27% 
that  corruption  has 
prevented them from winning a public tender or a 
(EU 
public  procurement  contract 
average:  25%)(130).  43%  of  businesses  perceive 
the 
the  public 
procurement  review  body  (the  Office  for  the 
Protection  of  Competition)  to  be  very  or  fairly 
good,  which  is  the  eighth  lowest  in  the  EU(131). 
Public procurement processes are seen as a main 
corruption risk area and are addressed in the new 
anti-corruption action plan, which strengthens links 
with  the  existing  2024-2028  public  procurement 
strategy  to  ensure  a  level  playing  field  for 
businesses(132). 

independence  of 

in  practice 

level  of 

stronger 

Czechia’s  e-procurement 
landscape  and 
limited  lifecycle  data  highlight  the  need  for 
interoperable  systems,  common  standards 
and 
governance. The 
data 
implementation of Czechia’s Electronisation Public 
is  addressing  market 
Procurement  Strategy 
to 
fragmentation,  data  quality,  and  access 
procurement  opportunities.  Moreover,  the  pilot 
project for its publication portal zakazky.gov.cz(133) 
facilitates access points, along with other relevant 
aspects  such  as  professionalisation,  centralised 
procurement, 
cooperation. 
Nevertheless, suppliers from other Member States 
must still use the Czech system and single access 
in  national  procurement 
point  to  participate 
procedures.  This  remains  a  significant  issue  in 
terms  of  complexity  and  barriers  to  participation. 
This challenge could be mitigated through greater 
interoperability and common standards. The once-
only  principle  is  only  partially  implemented  at 
national level (see Annex 7), and buyers across the 

regional 

and 

(128) Czech Republic (2001) Act No 477/2001 on packaging and 

amending certain other acts (Packaging Act). 

(129) Part of the barriers highlighted in the Single market strategy 
(‘Terrible Ten’) and the 2026 Annual Single Market and 
Competitiveness Report. 

(130) Flash Eurobarometer 557, p. 133. 

(131) Justice Scoreboard (2025), Figure 59, p. 53; Flash 

Eurobarometer 555, p. 39. 

(132) Rule of Law Report - Country Chapter Czechia (2025), pp. 

11-12. 

(133) Zakázky GOV 

61 

 
 
 
EU  still  lack  digital  access  to  relevant  evidence. 
The  pilot  project  also  aims  to  further  centralise 
public procurement data and make information on 
tender  procedures  available  to  suppliers.  This 
demonstrates  Czechia’s  ongoing  efforts 
to 
enhance  digitalisation,  data  management,  and 
data access. However, monitoring and reporting do 
not yet fully cover the public procurement lifecycle. 
Strengthening  data  collection  and  analysis  could 
support  more  data-driven  management  and 
oversight of the public procurement lifecycle(134). 

on 

unitary 

cooperation’ 

Czechia  remains  outside  the  unitary  patent 
(UP) system. Although Czechia participates in the 
‘enhanced 
patent 
protection  and  has  already  signed  the  Unified 
Patent  Court  Agreement,  it  has  not  yet  ratified  it. 
The  unitary  patent  therefore  does  not  cover 
Czechia.  This  has  the  following  consequences. 
Firstly,  Czech  and  non-Czech  companies  remain 
burdened by the significant administrative costs of 
national  validation  and  maintenance  fees  for 
obtaining  patent  protection  in  Czechia.  Secondly, 
the  enforcement  of  European  patents  in  Czechia 
can only take place before national courts, without 
benefiting  from  the  advantages  offered  by  the 
Unified  Patent  Court  in  terms  of  centralised 
litigation. For all these reasons, by refraining from 
joining  the  UP  system,  Czechia  may  be  less 
attractive,  in  terms  of  innovation  support,  than 
those Member States already  participating in that 
system.  Finally,  the  fact  that  several  Member 
States  do  not  participate  in  the  UP  system 
weakens  the  Single  Market,  making  the  EU  less 
attractive for inventors and innovative entities. 

of 

the 

As  technological  change  accelerates,  the 
effectiveness 
European 
Standardisation  System  depends  on  the 
ability of National Standardisation Bodies to 
engage  a  sufficiently  broad  and  skilled 
expert  base.  The  Czech  Office  for  Standards, 
Metrology and Testing, reported only 63 experts in 
its  last  published  annual  report,  highlighting  the 
challenge  of  maintaining  a  critical  mass  of 
contributors 
to  standardisation  activities.  For 
Czechia,  investing  in  its  national  standardisation 
body is key to ensuring a more robust and future-

(134) European Court of Auditors, Special Report 28/2023: Public 
Procurement in the EU. Less competition for contracts 
awarded for works, goods and services in the 10 years up to 
2021, 2023, Special report 28/2023: Public procurement in 
the EU 

62 

proof standardisation system to enable businesses 
to  fully  benefit  from  the  opportunities  of  the 
Single  Market.  Moreover,  the  transition  towards  a 
digitalised  national  standardisation  system  – 
which  would  make  it  faster,  more  efficient  and 
more inclusive – as well as the need to attract and 
retain  expertise  in  new  technologies,  such  as  AI 
and  quantum,  call  for  more  resources  directed  to 
the national standardisation system. 

Industry and economic security 

industry 

Czech  industry  faces  one  of  its  biggest 
transformations  in  decades.  Higher  electricity 
costs  since  the  energy  crisis  and  decarbonisation 
pressures are fundamentally reshaping investment 
decisions.  Although  Czech 
shifted 
structurally toward less energy-intensive industries 
between  2010  and  2023(135),  Czechia  still  ranks 
among  the  EU’s  most  energy-intensive  countries 
(41%  above  the  EU  average  in  terms  of  energy 
consumption).  Its  industry  is  approximately  13% 
more  energy-intensive  than  the  EU  average  per 
unit  of  gross  value  added(136).  Energy-intensive 
industries  accounted  for  approximately  10%  of 
Czechia’s  total  manufacturing  gross  value  added 
in  2023. 
ceramics 
manufacturers  in  particular  face  pressures  from 
comparatively 
a 
construction  sector  slowdown  and  intense  foreign 
competition. Electricity prices for Czech large-scale 
and energy-intensive industries are well above the 
EU  average  (around  EUR 0.19/kWh  in  H1 2025  vs 
EU  average  EUR 0.11/kWh)(137)  (see  Annex  9). 
Consequently,  some  factories(138)  are  suspending 
production.  According  to  the  Steel  Union(139),  raw 
steel  production  in  Czechia  fell  by  40%  between 

electricity 

chemical 

prices, 

higher 

Steel, 

and 

(135) Czechia energy efficiency & Trends policies | Czechia profile | 

ODYSSEE-MURE 

(136) UniCredit Bank, Weekly Notes, 09/2026. 

(137) Eurostat - Electricity prices for non-household consumers, 
consumption band is IF, referring to large-scale, energy-
intensive industrial plants, providing an insight into 
international competitiveness (price used for the calculation 
excludes VAT and other recoverable taxes/levies/fees as non-
household consumers are usually able to recover VAT and 
some other taxes). 

(138) Spolana (PVC producer) in Neratovice; Synthos Kralupy 

(chemical plant); Yokohama Rubber (closure of Mitas OHT 
plant in Prague). 

(139) https://www.ocelarskaunie.cz/. 

 
 
 
2022  and  2024,  while  steel  exports  dropped  by 
almost  25%  over  the  same  two-year  period.  The 
overall  situation  was  driven  mainly  by  production 
cutbacks  followed  by  the  closure  of  the  country’s 
largest steel producer. 

Graph A5.1: Manufacturing industry production: 
total and selected sector, index (2021=100), 
2015-2024 

amid 

record 

output 

Czechia’s  automotive sector  –  a  cornerstone 
of the national economy  – showed resilience 
European 
with 
challenges.  It  represents  around  9%  of  Czech 
GDP, 26% of Czech industrial production, and 23% 
of  Czech  exports.  The  sector  demonstrated 
remarkable resilience in 2025, achieving its second 
highest ever production level of nearly 1.44 million 
passenger  cars(140)  despite  challenging  market 
conditions  across  Europe.  While  the 
industry 
remains  anchored  in  internal  combustion  engine 
production, electric vehicle manufacturing and the 
sector’s  ongoing 
transformation 
have  emerged  as  key  drivers  of  growth.  The 
sector’s  transition  toward  electrification  continues 
to accelerate, strongly supporting Czechia’s export 
balance,  with  over  92.5%  of  passenger  cars 
produced  going  to  foreign  markets.  Domestically, 
Czechia  also  emerged  as  the  second  highest 
growth market for electric vehicle sales  in the EU 
in  the  first  half  of  2025,  with  registrations  rising 
by 67%(141). Czechia in 2025 used a mix of direct 
purchase  subsidies  (an  RRP  measure),  tax  breaks 
and  infrastructure  support  to  encourage  electric 
vehicle  adoption  for  households,  businesses  and 
the public sector. 

technological 

Source: Eurostat 

to 

potential 

significant 

Czechia  is  well  prepared  for  transitioning 
towards  clean-tech  manufacturing,  where  it 
has 
expand 
production  capacity.  A  study  by  the  Second 
Economic  Transformation(142)  ranks  Czechia  third 
globally  in  clean-tech  exports  as  a  share  of  GDP, 
with these exports growing three times faster than 
total domestic exports. By 2030, such products are 
projected to comprise one third of Czech exports – 
up  from  just  over  one  fifth  today  –  and  could 
nearly  double  in  volume  from  2023  levels,  if 
global  trends  persist.  The  clean  technology  sector 
currently  constitutes  a  significant  component  of 
labour  market,  employing  around 
the  Czech 
16 000  workers  in  2023,  representing  0.31%  of 
the  total  workforce.  Establishing  a  one-stop-shop 
and regulatory sandboxes for simplified permitting 
would  further  accelerate  the  growth  of  Czechia’s 
clean-tech  sector  by 
reducing  administrative 
barriers and encouraging innovation. 

The main driver of Czechia’s clean tech is the 
automotive industry – electric cars and their 
electrical  components, 
including  battery 
systems  and  electric  drives.  This  growth  is 
supported  by  new  investments  (expansion  of 
production  by 
three  main  automotive 
manufacturers in Czechia) and growing demand in 
the  EU.  At  the  same time,  this  type  of  production 

the 

(140) Czech Automotive Industry Association, January 2026. 

(141) CzechTrade, August 2025.  

(142) https://www.mapaprilezitosticeska.cz/ 

63 

7075808590951001051102015201620172018201920202021202220232024ManufacturingManufacture of wood and of products of wood and cork, except furniture;manufacture of articles of straw and plaiting materialsManufacture of paper and paper productsManufacture of chemicals and chemical productsManufacture of rubber and plastic productsManufacture of other non-metallic mineral productsManufacture of basic metals 
 
   
 
2028,  both  projects  will  supply  key  materials  for 
electric  vehicle  batteries,  enabling  Czechia  to 
create  jobs,  diversify  its  economy,  bolster  energy 
security  and  emerge  as  a  leader  in  Europe’s 
battery supply chain. 

to 

reduce 

Materials management is evolving in a more 
sustainable  direction.  Czechia  has  advanced 
import 
circular  materials  use 
dependence, with the rate rising to 14.8% in 2024 
from 11% in 2021 – now above the EU average of 
12.2%.  This  positive 
supports  more 
sustainable  practices  amid  ongoing  challenges. 
However, heavy import reliance still raises risks to 
sustainability and resilience, including supply chain 
risks,  environmental  degradation  and  social 
concerns. 

shift 

can  move  the  Czech  economy  up  in  the  value 
chain.  In  particular,  the  newly  emerging  ‘battery 
chain’  and  the  demand  for 
(e.g. 
chemistry,  cathodes,  anodes)  present  significant 
opportunities. 
to  electromobility, 
suppliers  of  railway  technology,  such  as  train 
manufacturing  and  brake  systems,  are  also 
propelling Czechia’s clean-tech sector forward. 

In  addition 

inputs 

its 

in 
Czechia  has  made  sound  progress 
implementing  the  Net-Zero 
Industry  Act 
(NZIA).  It  has  successfully  designated  a  single 
point  of  contact  and  established  the  Net-Zero 
Europe  Platform,  which  are 
for 
streamlining  communication  and  coordination 
among  stakeholders.  Furthermore,  Czechia  has 
introduced  a  national  contact  point  to  process 
applications,  facilitating  the  advancement  of  net-
zero  strategic  projects.  In  particular,  Czechia  has 
indicated 
net-zero 
acceleration valleys and a list of projects has been 
prepared under the NZIA framework(143). 

important 

projects 

two 

the 

for 

Czechia’s  heavy  reliance  on  imports  in  its 
production  processes  heightens  supply  chain 
risks  for  its  manufacturing  sector.  Despite 
ranking  among  the  EU’s  top  three  producers  of 
critical  raw  materials, 
like  coking  coal  and 
feldspar(144),  the  manufacturing  sector  depends 
heavily  on  imports  of  sub-components  for  green 
and digital transitions. In 2024, 34.8% of material 
inputs  were imported  (well  above the  EU  average 
of  22.4%),  exposing  Czechia  to  disruptions.  Key 
2023  non-EU  imports  by  value  included  coking 
coal 
(Russia), 
(mainly  US/Canada),  vanadium 
phosphorus (Kazakhstan) and titanium (Ukraine). 

of 

reserves 

strategic 

Czechia’s 
raw 
materials,  such  as  lithium  and  manganese, 
present  a major  opportunity for its industry. 
In  March  2025,  the  Czech  government  and  the 
European  Commission  designated  the  Cínovec 
lithium  and  Chvaletice  manganese  deposits  as 
lithium 
strategically 
production (7-8% of the projected 2030 European 
lithium demand) is projected to begin in 2029 and 
manganese 
(up  to  20%  of  projected  2030 
European  demand  for  high-purity  manganese)  in 

important(145).  While 

(143) Ministry of Industry and Trade, discussion during the 

European Semester mission to Czechia, December 2025. 

(144) RMIS - Country Profiles. 

(145) Selected strategic projects under CRMA, March 2025. 

64 

 
 
Table A5.1:  Single Market and Industry 

Source: (1) Eurostat, (2) EIB Investment Survey, (3) EIF SME Access to Finance Index, (4) Intrum Payment Report, (5) SAFE survey, 
(6) OECD, (7) data up to 2024: Single Market and Competitiveness Scoreboard, 2025: Commission calculation based on TED data, 
accessible at the Public Procurement Data Space (PPDS) (*) the value represented here under EU average is the median, (8) Single 
Market and Competitiveness Scoreboard, (9) European Commission calculations.  

65 

POLICY AREA20212022202320242025EU-27 average79.978.679.978.578.4100.015.316.416.615.6-12.64.64.54.84.7-3.9Business environment and simplification14.610.73.61.826.034.00.370.340.210.26-0.430.130.070.070.05-0.1911.59.414.816.018.517.49.89.217.414.811.313.6from private entities in the previous or current quarter---62.459.947.1from public entities in the previous or current quarter---13.88.215.948.350.246.846.144.740.70.0490.0490.0490.0490.0490.05039413940412710101010862.41.40.90.70.912.32.11.71.11.11.182.3594.97688.973.984.63330292625250.12750.23170.24180.21870.20980.146230.131.432.9--32.717.618.118.619.2-25.233.232.934.034.8-22.411.011.313.614.8-12.2CzechiaINDICATOR NAMEBusiness environment and investmentProductivity and investmentLabour productivity (GDP per hour worked in PPP terms), % of EU271Business investment (share of GDP)1Public investment (share of GDP)1Impact of regulation on long-term investment, % of firms reporting business regulation as a major obstacle2SME liquidityEIF Access to Finance for SMEs index - loans3EIF Access to Finance for SMEs index - equity3Late paymentsPayment gap - corporates B2B, difference in days between offered and actual payment4Payment gap - public sector, difference in days between offered and actual payment4Share of SMEs experiencing late payments, %5Industry and economic securitySingle Market IntegrationEU trade integration, average(intra-EU imports + intra EU exports)/GDP, %1EEA Services Trade Restrictiveness index6Public procurementSingle bids, % of total contractors7*Direct awards, % of negotiated procedures7*ComplianceTransposition deficit, % of all directives not transposed8Conformity deficit, % of all directives transposed incorrectly8SOLVIT, resolution rate per country, %8Number of pending infringement proceedings8Energy-intensive industriesElectricity prices for non-household consumers1Electrification (electricity as a share of total energy consumption in industry)1Share of energy from renewable sources (renewable energy generation as a share of overall energy consumption)1Critical raw materialsMaterial import dependency, %1Circular material use rate1Operational cleantech manufacturing capacity in 20259 - Solar PV (c: cell, w: wafer, M:module), GW- - Electrolyzer, GW- - Heat pump assembly 2.1038 - Battery, GW7.3 
 
     
 
ANNEX 6: SAVINGS, INVESTMENT AND ACCESS TO FINANCE 

Table A6.1:  Savings and Investments Union summary diagnostic 

Source: OECD (pensions), Eurostat (households' financial wealth), FISMA CMU dashboard (VC and PE), national sources (capital 
taxation). End-2024. 

2025 

country 

Czechia, 

For 
specific 
recommendations  (CSRs)  stressed  the  need  to 
strengthen  capital  markets,  business  access  to 
non-bank  finance  and  the  conditions  for  saving, 
investment and innovation. Czechia should achieve 
this  by  both:  (i)  promoting  household  investments 
the 
improving 
(ii) 
in  capital  markets;  and 
effectiveness  of  existing 
long-term  savings 
products in mobilising new long-term investments. 
The  CSRs  also  highlighted  the  need  to: 
(i) 
encourage  institutional  investor  participation  in 
listed  shares,  unlisted  shares,  venture  capital  and 
private  equity;  and  (ii)  strengthen  the  capacity  of 
the National Development Bank to mobilise private 
the 
funding 
decarbonisation of the economy. 

to  boost  competitiveness  and 

Compared  with  their  EU  peers,  Czech  firms  rely 
more on their own profitability to fund themselves 
and  much  less  on  capital  markets.  The  domestic 
equity  market  lacks  relative  size  and  depth,  while 
is  dominated  by  Czech 
the  debt  market 
government  bonds.  Czech  households  invest  their 
below-EU-average  wealth  conservatively,  but 
investment  behaviour  is  changing,  as  reflected  in 
the  fast-growing  Czech  investment  fund  industry. 
The 
retail 
investors and a long-term investment product was 
introduced  in  2024,  with  encouraging  but  still 
take-up.  Czech  banks  exhibit  good 
limited 
resilience 
to 
risks,  while  bank 
households  and  corporates  accelerated  in  2025. 
Insurers  and  legacy  transformed  pension  funds 

is  favourable  for 

tax  framework 

lending 

to 

invest  conservatively,  with  a  preference 
for 
domestic  government  bonds.  Nevertheless,  the 
growing  participation  funds  have  a  balanced 
investment  profile.  There  is  no  second  pillar  in 
Czechia’s  pension  system  and  no  auto-enrolment 
regime.  Participation  rates  in  third  pillar  pension 
funds  are  both  falling  and  low  among  younger 
employees,  while  the  average  contributions  by 
pension  savers  are  also  relatively  low.  Duration 
mismatches  and 
framework 
influence the investment strategies of institutional 
investors. The funding these institutional investors 
provide 
the  venture  and  growth  capital 
ecosystem  is  limited.  Of  the  third  pillar  pension 
funds,  only  alternative  participation  funds  are 
allowed  to  invest  in  venture  capital  and  private 
equity funds. The Czech venture and growth capital 
funds 
ecosystem 
domiciled  abroad,  and  it  does  not  fully  meet  the 
financing needs of Czech start-ups. 

fragmented,  with  most 

regulatory 

the 

to 

is 

Business landscape and company 
funding 

Czech  firms  rely  more  on  their  own 
profitability  to  fund  operations  –  and  much 
less  on  capital  markets  –  than  their  EU 
peers. Unlisted and other equity (i.e. a measure of 
the capital invested by firms’ owners and earnings 
retained)  was  equivalent  to  106.7%  of  GDP  in 

66 

Main featuresRelative EU positioningAssets at 7.8% of GDP (32.3% in the EU)10-year real return of -2.7% (1.4% in the EU)Low share in asset-backed pension assets, negative real returns over a ten-year period partly due to still-high share of legacy transformed funds. The share of participation funds, with more balanced investment profiles, is growing. EUR 42 305 per capita  (EUR 85 090 in the EU)o/w 5.0% in listed shares and bonds (7.6% in the EU)o/w 12.3% in investment funds (11.0% in the EU)o/w 2.1%  in life insurance (13.4% in the EU)o/w 4.8% in pension claims (13.6% in the EU)Low household wealth. Smaller share invested in capital markets than EU peers but investment fund holdings are growing fast. Low holdings of life insurance products or pension claims. New SIA (long-term investment product) has encouraging but still limited takeup.  VC at 0.017% of GDP (0.064% in the EU)PE at 0.163% of GDP (0.487% in the EU)Low venture capital and private equity investments.Capital gains tax: 0% if a) held for three years and, for crypto-asset transactions only since 1 Jan 2026, subject to an annual cap of CZK 40 mn i.e. EUR 1.6 mn, or b) gross income from the sale of securities does not exceed CZK 100 000 in the tax period, otherwise subject to headline PIT or CIT rates. Dividend and interest income tax: 15% withholding tax for residents in Czechia or EU/EEA countries. For tax residents of third countries, the rate may vary depending on double tax treaties or can be as high as 35%. Interest expenses are tax deductible from CIT.Favorable capital gains tax framework. Dividend and interest income taxation is modest but there is lack of standardisation in the taxation of third country tax resident investors. Some bias towards debt financing, as interest expenses are CIT tax deductible. 1-34-1011-1718-2425-27TopicAsset-backed pension schemesHouseholds' financial assetsVenture capital (VC)Private equity (PE)Capital taxationColours indicate the country's relative ranking based on five groups, ranging from the three best to the three worst performers. The relative ranking as regards an SIU diagnostic topic derives from a consistent cross-country comparison, the starting point of which is the average of the underlying main features. 
 
 
        
 
 
for  Czech  companies,  with 

2024  (see  Graph  A6.1),  accounting  for  62.3%  of 
all funding for Czech companies vs an EU average 
of  45.7%.  Lending  is  the  other  main  source  of 
financing 
loans 
equivalent to 42.4% of GDP as of end-2024. Loan 
financing  in  Czechia  is  slightly  below  the  EU 
average as a share of all financing sources (24.7% 
of  all  financing  versus  26.9%  in  the  EU).  The  use 
of listed shares and bonds by Czech non-financial 
corporations  (NFCs)  was  much  lower  than  the  EU 
average,  both  as  a  percentage  of  GDP  (12.2%  in 
2024  vs  53.2%)  and  as  a  percentage  of  NFC 
financing  (7.1%  vs  23.5%).  This  is  in  line  with 
Czechia’s business structure, which is slightly more 
tilted  towards  micro  firms  and  SMEs  than  the  EU 
average  (see  Annex  5  for  more  detail).  Overall, 
NFC funding was equivalent to 171.4% of GDP in 
2024, below the EU’s 226.2%. 

Graph A6.1: Composition of non-financial 
corporations' funding 

much  lower  than  the  EU  average  of  55%.  Third 
pillar  pension  funds  were  equivalent  to  roughly 
7.8% of GDP at end-2024, while investment funds 
continued  to  show  significant  growth,  reaching 
20.5%  of  GDP  at  end-2024,  up  from  11.7%  at 
end-2020. 

The  main  stock  exchange  in  Czechia  is  the 
Prague  Stock  Exchange  (PSE).  It  is  almost 
wholly  owned  by  the  Vienna  Stock  Exchange,  but 
the  integration  of  infrastructure  between  these 
two  exchanges  is  incomplete.  PSE  uses  the  Xetra 
T7  trading  system,  operated  in  partnership  with 
Deutsche Börse AG, while its trades are settled by 
Central  Securities  Depository  Prague,  a  wholly 
owned subsidiary of the PSE, which also clears all 
trades, providing limited risk mutualisation through 
a  clearing  fund.  This  set-up  is  in  contrast  to  the 
more typical practice of clearing trades through a 
central clearing counterparty. The country also has 
a  second,  smaller  stock  exchange,  RM-System, 
focusing  on  retail  investors,  which  also  includes 
companies traded on the PSE. 

Graph A6.2: Capital markets and financial 
intermediaries 

Source: Eurostat. end-2024. 

Size and structure of the financial 
sector 

Source: ECB, OECD, AMECO, CNB. End-2024. 

The  Czech  financial  sector  is  dominated  by 
banks, while investment funds have gained in 
importance  more 
recently.  With  assets 
equivalent  to  131.8%  of  GDP  in  2024,  the 
country’s banking sector accounts for roughly 80% 
of  the  domestic  financial  sector’s  assets  (see 
Graph  A6.2).  Foreign  banks  control  78.3%  of  the 
sector’s assets, including the three largest banks in 
the  country.  Banking  concentration  is  significantly 
above  the  EU  average  of  50.9%,  as  the  top  five 
banks control 65.1% of the sector. The total assets 
of  Czech  insurers  have  declined  from  8%  of  GDP 
at end-2020 to less than 6% of GDP at end-2024, 

The  Czech  capital  market is relatively small, 
with  low  trading  volumes  and  little  IPO 
activity.  If  we  exclude  the  Free  Market  segment, 
which contains dual-listed foreign equity titles and 
has  low  trading  volumes,  the  PSE’s  total  market 
capitalisation as of end-2024 was CZK 1.56 trillion 
(i.e.  around  EUR 64 billion  and  the  equivalent  of 
20.1% of GDP, much lower than the EU average of 
66.8%  (146)).  The  size,  number  of  listings,  and 

(146) See Market Capitalisation Summary | Prague Stock Exchange 
and  the  CNB’s  2024  Financial  market  supervision  report. 
However, 4 of the 10 listed companies in PSE’s prime market 

67 

050100150200250CZEU% of GDPLoansTrade credit and advancesBondsListed sharesUnlisted sharesOther equityNon-financial corporationsFinancial corporationsNon-financial corporationsMFIsInsurance  and pension fundsOther financialsGovernmentMFIsPension fundsInsurance corporationsInvestment funds020406080100120140   Listed equity               Bonds                        Assets by sector% of GDP 
      
     
 
 
overall liquidity of the Czech equity market remain 
limited, despite both: (i) initiatives by the PSE (such 
as  the  introduction  of  an  option  for  a  cheaper 
listing  in  the  Start  Market  via  the  PSE’s  own  PX-
Public  Offer  platform,  and  a  12-month  period  of 
no  settlement  fees  for  trades  on  newly  admitted 
stocks);  and 
(ii)  a  revamp  of  the  National 
Development Bank’s IPO fund to act as an anchor 
investor in new listings in the PSE’s START growth 
market. In 2023 and 2024, trading volume on the 
PSE  was  on  a  downward  trend,  falling  to  the 
lowest  level  in  more  than  20  years,  before 
recovering in 2025. At the same time, the volume 
of  over-the-counter  transactions 
(i.e.  bilateral 
trades  that  occur  outside  of  a  trading venue)  has 
long been in excess of the one on the PSE, both for 
equities and bonds (147), a sign of a lack of depth 
in Czechia’s listed capital markets. This also raises 
investor-protection  concerns  in  the  case  of  i) 
unlisted  corporate  bonds  below  the  EUR  1 m 
threshold, which fall outside the supervision of the 
Czech National Bank (CNB), Czechia’s central bank, 
or  ii)  corporate  bonds  directly  marketed  and 
distributed  by  their  issuer,  in  practice  often  via 
distribution  channels,  that  are  not  licensed  and 
supervised by the CNB.  

(iii)  the 

The  PSE’s  liquidity  and  depth  are  adversely 
affected by a number of factors. These factors 
include: (i) its classification as an emerging capital 
market;  (ii)  the  relatively  low  level  of  financial 
literacy  of  retail 
lack  of 
investors; 
harmonisation  in  the  taxation  of  non-resident 
investors  and  cross-border 
(iv) 
information  asymmetries  due  to  lack  of  research, 
especially  for  SMEs  listed  in  the  START  market. 
Plans  by  the  Czech  government  to  fully  acquire 
part or all of the energy group ČEZ may adversely 
affect  liquidity  on  the  PSE  as  ČEZ  accounts  for  a 
third of the PSE’s total market capitalisation (148). 

listings;  and 

The Czech domestic bond market is relatively 
small  and  dominated  by  the  sovereign.  The 
outstanding  volume  of  debt  securities  traded  on 
this market was equivalent to 56% of GDP at end-

are  dual-listed  foreign  firms  established  in  Austria  and 
Slovakia.  This  explains  why  the  market  capitalisation  of 
listed Czech firms, irrespective of the stock exchange where 
they are listed, was only equivalent to 10.3% of GDP in 2024 
(see Table A6.2).  

(147) See Financial Market Development Report 2024 | Ministry of 

Finance of the Czech Republic. 

2024,  less  than  half  the  EU  average  (139.9%). 
General  government  bonds  accounted  for  two 
thirds of this amount, compared to 51.2% for the 
EU average. Bonds issued by banks (21.1%), NFCs 
(9%)  and  other  financial  intermediaries  (2.3%) 
accounted  for  the  remainder.  However,  the  total 
volume  of  bonds 
issued  by  non-financial 
corporations  increased  for  the  second  year  in  a 
row  in  2024,  reaching  CZK  396.3  billion  (i.e.  circa 
EUR 16.1  billion),  the  highest  value  since  2020. 
Moreover, 
ledger 
technology  platform  for  corporate  bonds  provides 
new options for NFC issuers. 

the  PSE’s  new  distributed 

Regulatory burden for market participants is 
being  reduced.  There  has  not  been  an  updated 
dedicated  strategy  to  develop  Czechia’s  capital 
markets since 2024. However, supporting financial 
innovation  and  better  access  to  finance  for  firms 
and  individuals  are  goals  of  Czechia’s  new  2040 
economic strategy. In 2025, the CNB abolished 36 
rules  set  out  in  the  CNB’s  decrees  and  reporting 
duties,  in  order  to  lift  unnecessary  burden  on 
market  participants 
legislative 
proposal  to  limit  regulatory  ‘goldplating’,  beyond 
what  is  envisaged  under  EU  rules,  for  investment 
funds is being discussed in Parliament. 

(149),  while  a 

Households’ participation in capital 
markets 

is 

Czech  households’  wealth 
invested 
conservatively,  despite  gradual  changes  in 
investment  behaviour.  The  overall  financial 
wealth of Czech households is substantially below 
the  EU  average,  both  in  per  capita  and  share-of-
GDP  terms  (see  Graph  A6.3).  Nevertheless,  the 
savings  rate  of  Czech  households  is  one  of  the 
EU’s highest (19.9%). So far, this wealth has been 
invested  conservatively,  but  there  has  been  a 
gradual change in investment patterns in the past 
two  decades.  The  share  of  households’  financial 
assets  held  in  pension  and  investment  funds  or 
directly in financial instruments is quite low, which 
has  led  to  the  2025  CSR  stressing  the  need  for 
Czechia  to  promote  household  investments  in 
capital  markets.  However,  this  share  is  gradually 
rising,  reaching  24.7%  in  2024  (EU  average 
46.5%),  compared  with  only  17.8%  in  2008. 

(148) See  Section  3.1  of  ‘Czech  Republic:  Country  for  the  Future 
2.0’ economic strategy, as well as relevant press reports. 

(149) See CNB press release 

68 

 
 
 
in 

listed  shares 

Compared with the EU average, Czech households 
have  a  much  lower  share  of  financial  assets 
invested 
(2.3%  vs  4.8%), 
supplementary  pension  funds  (4.8%  vs  13.6%) 
and  insurance  products  (2.6%  vs  14.2%),  while 
they have a similar share invested in bonds (2.7% 
vs  2.8%)  and  a  higher  share  in  investment  funds 
(12.3% vs 11.0%, up from only 6% in 2015).  

Graph A6.3: Composition of households' financial 
assets 

Source: Eurostat. End-2024. 

investors  benefit  from  a 
Czech  retail 
Investors  can 
favourable  tax  framework. 
benefit  from  a  full  exemption  from  capital  gains 
tax  on  equities  and  bonds  subject  to  a  minimum 
holding period  of  three  years  and  certain  ceilings. 
Dividend  and  interest  income-tax  rates  for  tax 
resident  investors  in  Czechia  or  EU/EEA  countries 
are  set  at  a  modest  15%,  but  are 
less 
standardised for tax residents of third countries. In 
the absence of double-taxation treaties, these tax 
rates can reach as high as 35%.  

in  2024.  The 

Czechia  introduced  a  long-term  investment 
‘long-term 
savings  account 
investment  product’  or  LTIP,  offers  an  alternative 
to  other  state-supported 
long-term  savings 
products  such  as  pension  funds,  life  insurance 
products  and  the  new  long-term  care  insurance 
product.  The  new  account,  which  is  flexible  in 
terms  of  permitted  asset  allocations  and 
investment  strategies,  is  subject  to  the  same 
cumulative  tax-relief  cap  as  these  other  products 
(150).  Its  take-up  has  been  encouraging,  and  as  of 

(150) Employees  can  get  tax  relief  from  their  tax  base  for 
contributions 
(for 
contributions  above  the  minimum  required  for  the  state 
contribution);  (b)  life  insurance  products;  (c)  the  new  long-

third  pillar  pension 

funds 

(a) 

to: 

end-March 2026, 244 217 people in Czechia were 
making  use  of  the  LTIP,  with  a  total  invested 
amount of circa CZK 9.5 billion (151) and a median 
investment  three  times  higher  than  third  pillar 
pension funds. 

Czechia  has  taken  some  measures  to  make 
LTIPs  more  attractive.  A  law  amendment  in 
force  since  May  2025  improved  the  portability  of 
the  saving  period  in  the  transfer  of  an  LTIP 
between different providers, applying retroactively 
since the 2024 tax period (152). It aims to address 
the  2025  CSR  to  ‘improve  existing  long-term 
savings  products’  effectiveness’.  However,  there 
are  still  no  comprehensive  data  to  allow  for  an 
appropriate, granular evaluation of the LTIP and all 
other  long-term  savings  products,  including  their 
additionality  and  attractiveness  for  new  savers. 
Current plans to improve data availability on LTIPs 
from  tax  services  may  take  up  to  two  years  to 
then  will  still  have 
bear 
shortcomings (e.g. with regards to having  data  on 
investors’  income  groups).  Moreover,  the  overall 
design of the LTIP risks that the public perceives it 
as  being  a  substitute  choice  for  –  and  not 
complementary to – third pillar pension funds (153). 
This could lead to LTIPs diverting investment flows 
from  these  funds,  instead  of  bringing  in  fresh 
retail  investment.  In  addition,  there  is  demand  in 
Czechia  for  a  transparent  framework  for  savings 
and investment accounts for children. 

fruit,  and  even 

is 

of 

There 

funds. 

products 

investment 

Czech  retail  investors  have  access  to  a 
variety 
and 
investment 
increasing 
competition between providers of LTIPs (which are 
mainly  used  as  a  tax-efficient  vehicle  to  take 
positions in investment funds), and this is pushing 
costs  down.  Czech  retail 
investors,  and  by 
extension  LTIPs,  have  access  to:  (i))  UCITS  funds; 
(ii) 
funds’,  which  are  alternative 
investment  funds  (AIFs)  with  almost  the  same 
eligible  assets  as  UCITS  funds  but  broader 
investor 
investment 
funds’, which are AIFs that can invest in any type 

limits;  and  (iii) 

‘qualified 

‘special 

term  care  saving  product;  and (d)  the  long-term  investment 
product (LTIP) up to a cumulative limit of CZK 48 000. 

(151) See relevant Press release by AKAT 

(152) 84/2025 Coll. Act amending Act No. 247/2014 Coll. 

(153) Namely, the fact that its lock-up period is tied to the same 
age limit as for third pillar pension funds, and that tax relief 
for contributions is subject to the same cumulative ceiling as 
third pillar pension funds, albeit from the first euro invested. 

69 

050100150200250020406080100CZEUCZEUper capita (000 EUR) (lhs)% of GDP (rhs)Currency and depositsInsurance and pension fundsInvestment fundsBondsListed sharesUnlisted sharesOther equityHH Debt (liability) 
      
 
 
 
of  assets  and  have  minimal  restrictions  on 
investments.  The  latter  are  subject  to  minimum 
investment  limits  and  are  only  available  to  high 
net-worth individuals with sufficient knowledge of 
financial  products.  They  have  become  quite 
in  recent  years,  experiencing  strong 
popular 
growth. However, such AIFs rarely  include venture 
capital and private equity funds with headquarters 
in Czechia, as most of those are domiciled abroad.  

Financial literacy in Czechia is slightly below 
the  EU  average.  Financial  education  has  been 
included as a subject in Czech elementary schools 
since 2008, but the level of financial literacy in the 
country  remains  slightly 
lower  than  the  EU 
average,  based  on  the  2023  Eurobarometer 
survey.  The  overall  financial-literacy  indicator  for 
Czechia  is  44.5  vs  45.5  for  the  EU  on  average. 
More  recently,  the  2025  edition  of  the  Czech 
Banking  Association’s 
index 
showed  a  slight  year-on-year  improvement  to  a 
score  of  57,  up  from  56  in  2024,  particularly  for 
the  18-34  age  group,  which  nevertheless 
continues to have the weakest scores. Czechia has 
a  national  strategy  for  financial  education  which 
was updated (version 2.0) in 2021 (154).  

financial-literacy 

The banking sector: resilience and 
financing of the economy 

Czech  banks  exhibit  good  resilience  to  risks 
and  are  thus  not  constrained  in  funding  the 
economy.  The  capital  position  of  Czech  banks 
improved  as  of  September  2025  compared  with 
end-2024 and remains above EU the average, with 
good  quality  of  capital  (see  Table  A6.2).  Czech 
banks’  above-average  profitability  has  continued 
to  increase,  while  asset  quality  is  robust,  with  a 
non-performing loan (NPL) ratio well below the EU 
average, a solid NPL-coverage ratio (50.1%), and a 
declining  share  of  stage  2  loans.  However,  banks’ 
asset  quality  is  subject  to  increased  uncertainty 
due to the  current  conflict  in  the  Middle  East  and 
its potential impact on energy prices and economic 
growth.  Czech  banks  maintain  strong  liquidity 
positions  while  their  liquidity  in  euro  improved 
year-on-year  as  of  June  2025.  However,  banks’ 
exposure  to  their  sovereign  has  increased  rapidly 
in  recent  years.  Czech  government  bond  holdings 

(154) See Czechia’s national financial education strategy 2.0. 

represented  14.7%  of  Czech  banks’  assets  as  of 
September  2025,  up  from  6.9%  at  the  end  of 
2019.  

As  interest  rates  have  gradually  eased, 
credit  demand  and  therefore  credit  growth 
have both begun to recover. Credit growth was 
on  a  general  downward  path  between  August 
2022  and  August  2024,  but  has  been  recovering 
since  then,  picking  up  speed 
in  2025.  For 
households,  the  annual  rate  of  credit  growth  for 
adjusted  loans  gradually  edged  up  from  4.1%  in 
April  2024  to  8.7%  in  December  2025,  while  the 
2026  outlook  for  housing  loans  is  positive.  For 
NFCs, following a steep fall from December 2023 
to  July  2024,  annual  credit  growth  began  to 
gradually  recover  in  November  2024,  reaching 
6.7% in December 2025. Credit growth for NFCs is 
expected by the CNB to remain in the 4-6% range 
until end-2027.  

Role of non-bank financial 
intermediaries 

Czechia  has  a  growing  fund-management 
industry.  At  the  end  of  2025,  assets  invested  in 
domestic domiciled investment funds and qualified 
investor  funds  offered  in  Czechia  amounted  to 
CZK 2 142 billion (i.e. equivalent to 25.1% of GDP 
or  circa  EUR  88.8  billion).  They  were  up  29.4% 
year-on-year  and  253%  in  nominal  terms  since 
2019. If we add foreign domiciled funds, the total 
amount  of  assets  under  management  by 
investment  funds  in  Czechia  reaches  CZK  2  601 
billion (i.e. equivalent to 30.5% of GDP) (155). As of 
end-2025,  the  assets  of  domestic  domiciled 
collective investment  funds  and  qualified investor 
funds  were  allocated  as  follows:  (i)  12.7%  in 
equity  funds;  (ii)  22.2% in  bond  funds;  (iii)  10.5% 
in mixed funds; (iv) 19.3% in real estate funds; and 
(v)  35.3%  in  other  funds.  Almost  50%  of  these 
investments  are  in  foreign  assets  and  the  rest  in 
domestic  assets,  a  greater  home  bias  than  other 
EU  peers (156). Foreign domiciled funds distributed 
in  Czechia  are  more  invested  in  equities,  with 
43.1%  in  equity  funds,  25.9%  in  mixed  funds, 

(155) Based on CNB data for domestic domiciled and AKAT data 

on foreign domiciled investment funds. 

(156) EFAMA Asset Management in Europe, December 2025. 

70 

 
 
 
20.4% in bond funds, 5.0% in money market funds 
and 5.7% in other funds. 

liability  structure  of  Czech 

The liability structure of Czech insurers does 
not  favour  long-term  equity  investments, 
and  leads  to  a  bias  towards  bond  holdings. 
The 
insurance 
companies  tends  to  have  a  short  duration,  which 
does  not  easily  allow  for  long-term  or  illiquid 
equity investments. This is because: (i) the non-life 
segment,  which  has  mainly  short-term  claims,  is 
dominant, 
total  net 
representing  73.5%  of 
premiums written in the first nine months of 2025; 
and (ii) the life insurance segment is also exposed 
to  early  surrenders  with  relatively  short  minimum 
prior notice periods. Hence, faced with strict asset–
liability  matching  rules  and  currency  risk,  Czech 
insurance firms prefer liquid, low-risk investments. 
Government  bonds,  mostly  domestic,  accounted 
for  44.1%  of  total  assets  held  by  Czech  insurers 
as of September 2025 (compared with 19.1% for 
insurers in the EU on average), with another 5.8% 
held in cash and deposits (157). Equities accounted 
for  8.2%  of  insurance  fund  assets,  and  corporate 
bonds  for  9.9%.  Investment  funds  accounted  for 
another  22.2%  of  Czech  insurers’  investment 
portfolio, of which 44.7% was in equity funds. 

first  pillar  system 

The Czech supplementary pension system is a 
voluntary  third  pillar  system.  The  mandatory, 
state  pay-as-you-go 
is 
complemented by a voluntary, private, fully funded 
third  pillar  fund  industry.  A  second  pillar  in  the 
pension  system  was  briefly  adopted  in  the  past 
but  was  soon  abolished,  which  makes 
the 
introduction of an auto-enrolment mechanism very 
difficult.  Third  pillar  pension  funds  have  been 
growing  in  terms  of  total  assets  since  their 
introduction in 1994, but this growth has not kept 
pace with GDP growth in recent years. As a result, 
their assets were equivalent to 7.8% of GDP as of 
end-2024,  compared  with  8.6%  as  of  end-2019 
(158).  Participants  in  the  voluntary  third  pillar 
pension funds are entitled to a state  contribution, 
while  there  are  tax  benefits 
linked  to  the 
contribution of participants and their employers.  

There  are  two  types  of  third  pillar  pension 
funds  in  Czechia,  with  different  investment 
profiles.  There  are  two  types  of  pension  funds, 

(157) EIOPA Insurance statistics - Asset exposures. 

transformed funds and participation funds. Legacy 
transformed  funds  are  closed  to  new  entrants 
since  a  reform  in  2013.  These  provide  a  no-loss 
guarantee, resulting in very conservative and low-
return  allocation  strategies.  Government  bonds 
(almost  entirely  domestic)  represent  the  vast 
majority  of  their  assets 
(circa  81%),  while 
participation 
funds  maintain  more  balanced 
investment  strategies,  with  about  46%  of  their 
in  shares  and  equity  mutual  funds, 
assets 
including  ETFs  and  derivatives  (159).  Transformed 
funds  still  represented  55.1%  of  third  pillar 
pension  fund  assets  as  of  September  2025,  and 
their  phase-out  is  expected  to  be  slow.  This  also 
largely  explains  the  overall  poor  performance  of 
the  Czech  private  pension  system,  with  a  -2.7% 
average  annual  net  real  return  over  a  10-year 
period  (OECD  data).  Policy  changes  in  2024  (160) 
have accelerated the shift to participation pension 
funds and less conservative investment strategies, 
with assets of legacy transformed funds dropping 
by  13.2%  year-on-year  at  end-2024,  and  their 
participants  falling  from  2.4 m to  just  below  2 m. 
39%  of  2024  contributions  to  participation  funds 
came from transfers from transformed funds.  

The  participation  of  young  employees  –  and 
average  contributions  – 
in  third  pillar 
pensions  are  low.  The  overall  participation  rate 
in third pillar pension schemes as a percentage of 
the  total  population  aged  15-64  years  is  rather 
high,  at  57.3%,  but  the  number  of  members  is 
falling  (161)  and  young  people  participate  less. 
Participants  aged  30  and  younger  represented 
only  10.4%  of  third  pillar  pension  fund  members 
(but  a  higher  20.9%  of  participation  fund 
members)  as  of  end-2024,  compared to  a  14.2% 
share for this age group in the overall labour force 
(162).  The  average  annual  contributions  per 
member is also low, amounting to 15 040 CZK (i.e. 
circa  EUR  597)  (163),  with  similar  figures  for 

(159) Czech Association of Pension Companies, Quarterly statistics, 

September 2025. Similar picture in CNB’s database. 

(160) In  place  since  July  2024,  they  included:  (a)  the  abolition  of 
the  state  contribution  for  workers  aged  over  65  years;  and 
(b)  facilitating  the  switch  of  pension  investments  between 
transformed and participation pension funds. 

(161) CNB  and  Czech  statistical  office  data.  Members  were  down 

from 4.45 m in 2019 to just below 4 m in 2024.  

(162) Based on Figure 8.3 of Financial Market Development Report 
2024, Ministry of Finance of the Czech Republic and Eurostat 
labour force data. 

(158) OECD, Asset-backed pensions database. 

(163) With employer contributions but outside state contributions. 

71 

 
 
 
transformed  and  participation  funds  respectively, 
despite  the  positive  effect  of  measures  taken  to 
promote  contributions  in  2024  (164).  In  fact,  as 
most  third  pillar  planholders  do  not  contribute 
enough  to  reach  state-contribution  and  tax-relief 
ceilings,  more  targeted  fiscal  incentives  (e.g.  for 
first-time  employees,  young  employees,  or  for 
employees  under  age  40  who  wish  to  transfer 
their  assets  from  transformed  funds  to  less 
conservative participation funds (165)) may be more 
effective than increases in these ceilings. 

The  investment  strategy  of  participation 
funds  is  influenced  by  duration  mismatches 
and  regulation.  The  duration  of  their  liability 
structure depends not only on regular payouts, but 
also  on  the  possibility  of  early  withdrawals. 
Although  there  are  disincentives  in  place  against 
early  withdrawals  by  planholders  (166),  minimum 
notice  periods  are  usually  short,  with  the  main 
condition  before  requesting  an  early  withdrawal 
being  a  minimum  24  months  of  contributions, 
irrespective of age. Conservative participation sub-
funds (circa 21% of participation fund assets) are 
not  allowed  to  invest  even  a  small  share  of  their 
portfolio  in 
is  a 
mandatory  switch  to  conservative  sub-funds  for 
all participants five years before pensionable age. 
In  addition,  before  planholders  can  make  any 
investment  in  alternative participation  funds,  they 
must 
investment-suitability 
questionnaire,  which  is  binding  and  may  lead  to 
the  planholder  being  forced  to  switch  to  a 
conservative portfolio.  

listed  equities,  while  there 

complete 

an 

impact  the  return 
Other  elements  also 
profile  of  pension  funds  and  competition  in 
the  market.  There  is  a  statutory  cap  on  pension 
fund  fees,  which  some  studies  (167)  consider 
in  preventing  fees  from  eroding 
ineffective 

(164) CNB  data  and  FISMA  own  calculations.  In  July  2024,  there 
was an increase in the lower and upper limits to obtain the 
state  contribution  when  investing  in  pension  funds.  This 
contributed  to  a  9.2% 
in  average  employee 
increase 
contributions by end-2024 relative to end-2023. 

(165) According  to  CNB  data,  such  planholders 

represented 
approximately 26% of transformed funds’ participants as of 
end-2024. 

(166) Early  withdrawal  results  in  the  obligation  to  repay  the  tax 
relief  received  (including  the  state  contribution)  and  any 
capital gains lose their tax-exempt status. 

(167) See 

IDEA_Studie_01_2026_Penzijni_fondy_0106,  which 
however has been criticised for its methodology by the Czech 
pension funds’ association. 

pension fund returns. The all-in-one nature (168) of 
Czech pension fund fees may unintendedly create 
an  incentive  for  pension  fund  managers  to  invest 
in  low-fee  financial  products,  irrespective  of  the 
return  profile.  Meantime,  there  is  no  blended 
option  between  full  lump-sum  withdrawal  on  the 
one hand and taking an annuity on the other, and 
the tax advantage for the annuity option has been 
significantly  reduced  for  participation  pension 
lump-sum  withdrawal  the 
funds.  This  makes 
preferred  choice  of  members.  A  publicly  available 
monitoring tool at individual pension fund level for 
easy  comparison  of  returns  and  fees could  foster 
competition,  and  there  is  no  pension-tracking 
system  to  allow  pension  planholders  to  see  the 
combined value of their pension entitlements from 
all (i.e. both public and private) pension schemes.  

Venture capital ecosystem 

Czechia’s  local  venture  and  growth  capital 
market  is  not  developed  enough  to  meet 
start-up  financing  needs.  The  Czech  private 
equity  (PE)  and  venture  capital  (VC)  ecosystem  is 
fragmented and most funds are domiciled abroad, 
while  a  large  part  of  the  innovation  in  Czechia 
relies  on  funding  from  abroad.  Both  PE  and  VC 
investment (respectively 0.16% and 0.02% of GDP 
on  a  three-year  moving  average  in  2024)  lost 
traction  in  2024  and  significantly  lag  behind  the 
EU  averages  of  0.49%  and  0.06%  of  GDP 
respectively.  The  annual  flow  of  VC investment in 
Czechia  in  2024  fell  by  65%  in  2024  relative  to 
2023, to USD 22.7 m (169).  

in  PE 

provide 

investors 

Institutional 
limited 
funding to innovative start-ups. Based on data 
from EIOPA, only 0.1% of Czech insurers’ assets is 
invested 
Investment  by 
‘traditional’ third pillar participation pension funds 
in the VC and PE asset classes is prohibited by law, 
but  would  also  be  de  facto  limited  by:  (i)  risk 
aversion;  (ii)  lack  of  expertise;  (iii)  due  diligence 
costs;  (iv)  pension  fund  concerns  with  regards  to 

funds 

(170). 

(168) I.e.  a  single  annual  fee  is  charged  to  cover  essentially  all 
operating  costs  of  the  pension  company  for  that  scheme 
(management, administration, distribution, overhead), except 
any explicitly listed additional one-off costs set by law. 

(169) OECD Data Explorer, Venture capital investments statistics. 

(170) EIOPA Insurance statistics - Asset exposures. 

72 

 
 
 
Table A6.2:  Financial sector indicators 

(1) Annualised data. EU data for credit growth and pension funds refer to the EA average. 
Source: ECB, Eurostat, European Insurance and Occupational Pensions Authority, DG FISMA CMU dashboard, AMECO. 

fees  incurred,  given  their  all-in-one  fee  structure; 
and  (v)  the  risk  of  early  withdrawals  from  their 
liability side. Most of these barriers also apply for 
Czech  insurers,  given  their  strict  asset-liability 
matching rules and the dominance of the non-life 
segment.  Alternative  participation  pension  funds 
have been available since July 2024, and their fee 
policy  and  investment  strategy  can  be  set  more 
freely allowing them to invest in VC and PE funds. 
However, there are only a few of these alternative 
participation  funds  in  existence  (only  four)  and 
they are small in size (assets of CZK 2 billion as of 
September 2025, i.e. EUR 85 m).  

(NRB) 

The  Czech  development  bank 
is 
building up capacity in the area of VC. A fund 
of VC funds, with an overall budget of EUR 55 m, 
has already been set-up under the Czech recovery 
and  resilience plan  (171)  and  is  being  managed  by 
the EIF, which has launched the relevant calls  for 
the  selection  of  VC  managers  for  the  three 
underlying VC funds. The NRB, in cooperation with 
the  Ministry  of  Industry  and  Trade,  also  plans  to 
launch its own fund of VC funds in 2026, aimed at 
supporting cutting-edge technologies, and with an 
overall budget of CZK 1 billion (i.e. circa EUR 41 m) 

institutional 

from State resources (172). The NRB hopes that this 
fund of VC funds will broaden the VC investor base 
investors  to 
and  allow  domestic 
access this asset class in a cost-effective and risk-
controlled way, leveraging the NRB’s skills in fund 
selection  and  due  diligence.  This  would  be  in  line 
with  the  2025  CSR  to  ‘encourage  institutional 
investor participation in listed and unlisted shares, 
as well as venture capital and private equity’ and 
‘to  strengthen  the  capacity  of  the  National 
Development  Bank  to  mobilise  private  funding  to 
boost competitiveness’.  

Other  initiatives  may  materialise  to  foster 
institutional  investment  in  VC  and  PE  funds. 
A  new  start-up  law  is  being  drawn  up,  but  is  not 
expected to be adopted before 2027 (see Annex 4 
for  more  details).  Fiscal  incentives  are  also  under 
consideration  to  promote  institutional  investment 
in the venture and growth capital ecosystem. Such 
measures would provide scale-up funding to local 
improving 
start-ups,  fostering 
competitiveness. 

innovation  and 

(171) Component 1.4, Investment 9, see RRF Czech Republic FoFs. 

Ministry of Industry and Trade. 

(172) New DeepTech fund to support highly innovative start-ups - 

73 

20182019202020212022202320242025-Q3EUTotal assets of MFIs, % of GDP133.9131.0138.8140.8129.4126.1131.8136.2246.1Common equity Tier 1 ratio17.118.220.319.818.718.818.519.016.8Total capital adequacy ratio18.319.722.121.220.320.620.621.020.2Overall NPL ratio, % of all loans2.11.71.91.71.41.21.21.11.9NPL ratio, loans to NFCs5.44.34.84.33.62.72.82.63.5NPL ratio, loans to HHs2.31.92.01.71.41.41.51.52.1Return on equity ratio113.313.96.710.614.413.715.116.69.6Loans to NFCs, % of GDP20.019.419.619.618.017.317.717.629.3Loans to HHs, % of GDP30.130.032.233.531.028.529.530.043.6NFC credit growth rate, %6.33.9-0.68.16.88.13.75.42.5HH credit growth rate, %7.96.66.810.26.64.86.18.12.6Stock market capitalisation, % of GDP--9.813.39.39.710.313.069.9Initial public offerings, % of GDP0.010.000.000.040.010.000.00-0.06Market funding ratio47.246.146.141.841.038.941.0-49.7Private equity, % of GDP0.1530.1660.1990.1840.2140.2270.163-0.487Venture capital, % of GDP0.0040.0070.0090.0220.0260.0300.017-0.064Financial literacy, composite index-----44.5--45.5Bonds, % of HHs' financial assets1.91.91.91.72.62.62.7-2.8Listed shares, % of HHs' financial assets3.02.92.82.92.32.32.3-4.8Investment funds, % of HHs' financial assets6.67.16.98.18.510.512.3-11.0Insurance/pension funds, % of HHs' financial assets10.610.49.89.58.98.17.4-27.8Total assets of insurers, % of GDP8.67.88.07.86.25.95.95.753.9Pension assets, bn EUR---22.424.425.824.9-5813.8Pension assets, % of GDP---9.18.58.17.8-32.310y real return average of pension assets, %------2.7-2.7-1.4Pension funds assets, ECB (% of GDP)---------1-34-1011-1718-2425-27Colours indicate performance ranking among the 27 EU Member States.Banking sectorNon-banking sector 
 
 
 
      
 
ANNEX 7: EFFECTIVE INSTITUTIONAL FRAMEWORK 

institutional  framework 

An  effective 
is 
essential  for  competitiveness.  This  requires 
public  trust  built  on  integrity,  quality  legislation, 
regulatory  simplification  and  efficient  services  for 
people  and  businesses.  The  2025  country-specific 
recommendations  for  Czechia  highlighted  the 
fragmented  governance  and 
challenges  of 
cooperation  arrangements, 
strategic 
limited 
steering and long-standing challenges in  terms of 
the  attractiveness  and  skills  base  of  the  civil 
service. 

 Public trust 

Graph A7.1: Trust in the justice system, regional / 
local authorities and in government 

Quality of lawmaking 

into 

integrated 

(RIAs)  are 

lawmaking 

initiatives)  which 

rules.  Regulatory 

Czechia  faces  challenges  in  the  application 
Impact 
of 
Assessments 
the 
legislative workflow and overseen by the Office of 
the  Government.  However,  uneven  application, 
frequent exemptions and inconsistent quality pose 
significant hurdles. RIAs are compulsory by default 
only for executive proposals, which constitute just 
45%  of  tabled  primary  laws  (i.e.  not  covering 
a 
parliamentary 
considerable  gap  (174).  Additionally,  RIAs  often 
function  more  as  procedural  steps  rather  than 
effective  policymaking  tools,  marked  by  frequent 
quality  variations  and  scant  quantification 
if 
evidence  (175).  There  is  a  board  that  reviews  and 
comments  on  RIAs,  with  strong  transparency 
measures in place, yet it lacks the formal authority 
its 
to  enforce  changes,  which  means 
that 
recommendations  may  be  disregarded. 
In 
November  2025,  Czechia  adopted  a  new  impact 
assessment  procedure,  funded  by  the  Recovery 
and Resilience Facility (176).  

leaves 

Legislative drafts are publicly accessible via 
(177).  Additionally, 
a  government  portal 
filibustering  has  been  increasingly  used  in  the 
Chamber  of  Deputies,  with  speeches  lasting  over 
10  hours,  intended  to  delay  law-making  as  not 
prohibited in the rules of procedure.  

Ex  post  evaluations  remain  discretionary, 
which  hinders  the  development  of  robust 
management  of  regulatory  stock  (178).  More 
systematic data collection and sharing is expected 
with  the  implementation  of  compulsory  ex  post 

(174) OECD, 2025, OECD Economic Surveys: Czechia 2025, OECD 
Publishing, Paris https://doi.org/10.1787/7a70af5c-en. 

(175) Publications Office of the European Union, 2025, Building 

capacity for evidence-informed policymaking in governance 
and public administration in a post-pandemic Europe, 
https://data.europa.eu/doi/10.2760/9257621. 

(176) ria.vlada.cz, 2025, Nový Manuál hodnocení dopadů regulace 

představen. 

(177) OECD, 2025, OECD Economic Surveys: Czechia 2025, OECD 
Publishing, Paris https://doi.org/10.1787/7a70af5c-en. 

(178) Publications Office of the European Union, 2025, Building 

capacity for evidence-informed policymaking in governance 
and public administration in a post-pandemic Europe, 
https://data.europa.eu/doi/10.2760/9257621. 

(1) EU-27 since 2019; EU-28 before 
Source: European Commission, Standard Eurobarometer 
surveys 

people 

Public  trust  in  central  government  remains 
among  the lowest  in  the  EU  (Czechia  29%;  EU 
in  the  past  two  years,  the 
36%).  However, 
proportion 
public 
describing 
of 
administration  as  ‘slow  and  burdensome’  has 
fallen  by  7  percentage  points  (pps)  to  38%,  and 
the proportion saying it is ‘close to the citizens’ has 
increased by 12 pps to 31%, the highest increase 
in  the  EU  (173).  Trust  in  the  justice  system  and  in 
regional and local authorities has remained stable, 
around the EU average (Graph A7.1). 

(173) European Commission, 2026, Flash Eurobarometer surveys 
567 and 568 on satisfaction with administrative services. 

74 

00.10.20.30.40.50.60.70.80.9AutumnSpringAutumnSpringAutumnSpringWinterSummerWinterSpringWinterSummerAutumnSpringAutumnSpringAutumnSpring202520242023202220212020201920182017Justice,  legal system EU-27Justice,  legal system CZRegional or local public authorities EU-27Regional or local public authorities CZGovernment  EU-27Government  CZ 
 
      
 
 
 
 
Table A7.1:  Czechia. Selected indicators on better regulation practices for primary legislation 

Source: OECD (2025), Regulatory Policy Outlook 2025 [https://doi.org/10.1787/56b60e39-en] and Better Regulation across the 
European Union 2025   

evaluations and the introduction of a standardised 
format (179). 

Czechia  performs  below  the  EU  average  in 
stakeholder  engagement  While  consultations 
are  obligatory,  a  broader  range  of  perspectives, 
particularly  from  traditionally  underrepresented 
groups,  is  lacking.  It  can  also  contribute  to  the 
evidence  base  and  may  help  address  potential 
in  existing  data  (180).  The  quality  of 
biases 
legislation is compromised by the frequent use of 
a  procedural  technique  whereby  members  of 
parliament submit amendments that are unrelated 
to  the  substance  of  the  legislative  proposal,  a 
practice 
the 
constitutional court (181). 

unconstitutional 

ruled 

by 

Public service delivery and 
digitalisation 

Czechia  has  made  progress  in  digitalising 
public  services,  but  user-friendliness  and 
burden  reduction  remain  uneven.  Satisfaction 

(179) OECD, 2025, OECD Economic Surveys: Czechia 2025, OECD 
Publishing, Paris https://doi.org/10.1787/7a70af5c-en 

(180) OECD, 2025, Better Regulation Practices across the European 

Union 2025, https://doi.org/10.1787/6f007516-en.  

(181) For a more detailed analysis of the performance of the 

justice system in Czechia, see the upcoming 2026 EU Justice 
Scoreboard and the 2025 Rule of Law Report. 

with public administration services is above the EU 
average,  for  both  people  (Czechia  55%;  EU  45%) 
and  businesses  (Czechia  46%;  42%  EU).  At  the 
same time, services are perceived as functional, a 
high  percentage  of  people  and  companies 
providing  neutral  responses  (both  37%).  This 
suggests that public services are not entirely user-
friendly. This is particularly visible on the business 
side:  92%  of  businesses  interact  with  public 
administration  to  fulfil  regulatory  obligations  (25 
percentage  points  above  the  EU  average  and  the 
highest  in  EU),  while  38%  report  difficulties  in 
understanding how to comply with regulation. 21% 
of  businesses  also  have  difficulty  complying  with 
data protection rules (13% EU) (182). 

Graph A7.2: Most time-consuming aspects of 
service delivery 

Source: European Commission. Flash Eurobarometer 567 / 
568 on satisfaction with administrative services (2026) 

(182) European Commission, forthcoming, Simplification of key life 

events. 

75 

0%10%20%30%40%50%ApplicationformsDocumentspreparationLegislationandobligationsLegislationandobligationsDocumentspreparationServiceidentificationPeopleBusinessesEUTools for smart legislation: Share of possible impacts assessed for all primary laws when developing legislation 0Regulators are required to identify and quantify the benefits of a new primary law1Regulators are required to identify and assess the impacts of alternative non-regulatory options0Tools for effective implementation: when developing laws, regulators are required to:Assess the level of compliance1Identify and assess potential enforcement mechanisms1Specify the methodology of measuring progress in achieving the law's goals0Oversight of better regulation: There is an external  body responsible for reviewing the quality of RIAs and of ex post evacuations 1There are publicly available assessments of the effectiveness of RIA in modifying regulatory proposals 1There are reports on the level of compliance by government department with the requirements of RIA0There are indicators on the percentage of ex post evaluations that comply with guidelines0The effectiveness of ex post evaluations in improving the regulatory stock has been assessed in the last five years0 
 
     
 
 
   
 
Table A7.2:  Digital Decade key performance indicators: availability of digital public services 

(1) Digital Decade target by 2030: 100. (2) Publishing year, data was collected in the previous year 
Source: European Commission, State of the Digital Decade report 2025 

The  availability of  digital  public  services  for 
people is improving (Table A7.2). 81% of people 
are e-government users, suggesting relatively high 
usage.  However,  gathering  and 
submitting 
documents  remains  a  major  source  of  friction 
(35%),  and  the  proportion  of  pre-filled  forms  is 
just 44/100, well below the EU average of 71. This 
suggests  persistent  weakness 
in  data  reuse. 
Services are also hindered by legal barriers to the 
(183). 
automation  of  administrative  processes 
Access  to  electronic  health  records  has  increased 
sharply  from  score  of  51  to  77,  nearing  the  EU 
average of 82 (See Annex 15). Furthermore, cross-
border  eID  usage  rose  to  35.4%,  the  second 
highest increase in the EU, as Czechia prepares to 
implement  the  EU  Digital  Identity  Wallet  under 
eIDAS 2.0 (184). 

forms 

The  availability  of  digital  services  to 
businesses  is  in  line  with  the  EU  average. 
However,  businesses  remained  concerned  about 
legislation  and  obligations  and 
understanding 
(185).  For 
completing  and  submitting 
example, in the area of business registration, only 
10% of data is pre-filled, despite established data 
(186).  Life-event 
exchange  between 
portals  provide  clear  guidance,  yet  users  are  still 
required  to  initiate  and  complete  each  procedure 
separately,  which  means  that  gathering  and 
submitting documents takes even longer. This has 
a  detrimental  impact  on  businesses:  41%  report 
increased  costs  due  to  public  administration 
obstacles,  above  the  EU  average  of  30%.  This 
highlights  a  gap  between  technical  capability  and 
practical implementation.  

registers 

Despite  recent  reforms,  permitting  is  still 
hindered  by  incomplete  interoperability  and 
uneven  implementation  capacity.  The  2024 
Construction  Act  and  the  Single  Environmental 
Opinion  were  intended  to  simplify  procedures  by 
consolidating zoning and building proceedings and 
reducing  the  number  of  separate  environmental 
opinions.  However,  not  all  relevant  authorities  are 
yet fully integrated into a single end-to-end digital 
workflow  and  the  full  rollout  of  the  system  has 
been put back to 2030 (from 2027). This hampers 
simplification,  with  applicants  facing  multiple 
interfaces  and  fragmented  exchanges.  This  is 
exacerbated  by  the territorial  fragmentation  (over 
6 000 municipalities) and weak municipal capacity. 
This  includes  Prague,  responsible  for  more  than 
25% of Czechia’s GDP, which is splintered into 57 
municipalities,  the  second  highest number of  EU 
capitals  and  three  times  the  average.  The  small 
size  of  municipalities  often  undermines  service 
(187)  and 
quality,  administrative 
investment  capacity  –  Czechia's  municipalities 
have the highest savings relative to GDP in the EU 
(188). 

efficiency 

Czechia is technically ready to enable cross-
border  exchange  of  data  and  documents 
between  authorities  through  the  EU  once-
only  technical  system  (OOTS)(189).  Once  the 
system  is  configured,  people  and  businesses  will 
no longer have to search for their data, download 
and  upload  documents  manually  across  e-
government portals in different Member States. To 
derive  full  benefit,  more  authorities  will  need  to 
connect  to  OOTS,  to  identify  documents  and  data 

(183) Cesko funguj. 

(184) Evropská peněženka digitální identity. 

(185) European Commission, 2026, Flash Eurobarometer surveys 
567 and 568 on satisfaction with administrative services. 

(186) European Commission, forthcoming, Simplification of key life 

events. 

(187) World Bank, 2025, Subnational Business Ready in the 

European Union 2025: Czechia. 

(188) Eurostat, 2025, Government deficit/surplus, debt and 

associated data. 

(189) European Commission, Once-Only Technical System 

Acceleratormeter, Ec.europa.eu. 

76 

EU-272023202420252025767681828484868647517783CzechiaAccess to electronic health records (0 to 100)Digital public services for citizens (0 to 100)Digital public services for businesses (0 to 100) 
 
 
 
   
 
for  exchange  and  to  move  from  unstructured  to 
structured document formats. 

in younger staff recruitment, posing medium-term 
risks. 

Civil service 

Czechia continues reforms of the civil service 
framework,  yet  capacity  constraints  remain. 
Despite major investment  (190), including from the 
RRF,  improvements  in  quality,  professionalisation 
and  attractiveness  of  the civil  service  have  yet  to 
materialise.  The  causes  of  this  include  limited 
central steering, a lack of trust between politicians 
and  the  civil  service  and  limited  data-driven  HR 
policy (191).  

Attractiveness  and  retention  continue  to 
present  barriers  to  civil  service  capacity,  in 
particular in the central administration. 16% 
of  civil  servants  said  that  they  planned  to  leave 
within  a  year,  with  the  highest  proportion  among 
those  under  39.  While  some  turnover  can  provide 
fresh  skills  and  perspectives,  excessive  turnover 
disrupts  workflows  and  undermines  service 
continuity. Although civil servants are motivated by 
public-service  values,  they  cite  low  pay,  poor 
limited  career  prospects  as 
recognition  and 
reasons  for  leaving.  The  salaries  of  civil  servants 
have  been  declining  both  in  real  terms  and 
compared  to  the  average  salaries  in  the  private 
sector  for  more  than  eight  years  (192),  especially 
for  managerial  and  expert  positions;  in  Prague 
there is a 46% difference in relation to the private 
sector (193). 

Demographic  pressure  is  nearing  the  EU 
average,  with  the  ratio  of  staff  aged  below 
55  to  those  aged  55+  at  1.50,  compared  to 
the  EU  average  of  1.45.  Czechia  has 
experienced  one  of  the  steepest  declines  in  the 
proportion  of  younger  staff,  alongside  a  decrease 

Skills  development  of  civil  servants 
is 
improving  but  lacks  coherent  structure  and 
platforms. Progress has been made in systematic 
upskilling:  adult  learning  is  above  the  EU  average 
(19.2%  compared  to  19%).  While  most  staff  feel 
they  have  the  skills  needed  for  their  jobs,  these 
skills are under-used. Strategic areas such as law, 
IT  and  data  analysis,  precisely  those  needed  for 
regulatory, digital and evidence-informed reforms, 
are  the  main  shortage  areas  of  skills  (194). 
Measures to improve the civil service, such as the 
lacked 
Civil 
measurable 
and 
systematic evaluation (195). 

Information 
performance 

System, 
indicators 

Service 

Czechia’s  gender  gap  in  senior  civil  service 
roles  remains  one  of  the  widest  in  the  EU, 
with  a  deviation  from  parity  of  43.8  pps  (EU 
average: 4.6%). This figure has changed little over 
the  past  decade,  signalling  persistent  barriers  to 
advancement pathways and problems ingrained in 
the workplace culture (196). 

Changes  of  government  continue  to  affect 
the stability of senior management.  According 
to recent analysis, over 40% of the nominally non-
political  top-level  management  are  replaced  with 
each  change  of  government  (197).  The 
legal 
protection of civil servants against unfair dismissal 
(the ‘service committee’) is largely unused, mainly 
because  most  dismissals  are  classified  as 
reorganisation. The integrity of the civil service is a 
major  topic  for  civil  servants  as  only  23%  feel 
protected from undue political pressure, only 13% 
believe politicians respect civil  servants’  expertise, 
and  49%  believe 
influence 
appointments  in  managerial  positions  (198).  These 

that  politicians 

(194) Ministry of Interior of the Czech Republic, 2024, Survey Civil 

Servant's View - Civil Service. 

(190) Department of the Supreme Audit Office, 2026, CZK 870 

(195) Department of the Supreme Audit Office, 2026, CZK 870 

million between 2015 – 2024. 

million between 2015 – 2024. 

(191) Government of the Czech Republic, 2025, Civil service 2.0 
study, https://vlada.gov.cz/cz/statni_sluzba/aktuality/statni-
sluzba-2-0-225598/. 

(196) EIGE, 2025, Gender Statistics Database, National 

administrations: top two tiers of administrators by function 
of government. 

(192) Bouchal & Münich, 2025, State employees and civil servants, 

(197) The State in Form project, 2025, Stability of state 

https://ideaapps.cerge-
ei.cz/zamestnancistatu/#5b.Vůčiprůměrnémzdě. 

administration after changes of governments: Did the Civil 
Service Act help?. 

(193) IDEA CERGE EI, 2025, Comparison of salaries and wages in 
the Czech Republic, https://idea.cerge-ei.cz/studies/srovnani-
platu-a-mezd-v-ceske-republice-vetsi-problem-nez-se-zda. 

(198) Pohled úředníka, 2024, 

https://mv.gov.cz/sluzba/clanek/pruzkum-pohled-urednika-
ce.aspx. 

77 

 
 
 
that 

suggest 

i)  without 

findings 
stronger 
safeguards,  trust  in  reform  processes  and  policy 
continuity  may  erode  further  and  ii)  the  views  of 
civil  servants need  to be  considered in any  future 
reform.    An  RRF-financed  analysis  of  the  HR 
management  of  central  government  institutions 
has  been  completed  and needs  to  form  the basis 
for an HR action plan for 2026 (199). 

Integrity  

While  the  perception  of  corruption  when 
doing  business  in  Czechia  is  around  the  EU 
average,  the  level  of  experienced  corruption 
is low. 62% of companies consider that corruption 
is  widespread  (EU:  63%)  and  83%  that  too  close 
links  between  business  and  politics 
lead  to 
corruption  (EU: 76%).  Over  a  third  of  businesses 
identify  corruption  as  an  obstacle  to  doing 
business,  similar  to  the  EU  average  (35%)(200).  A 
sector  particularly  vulnerable  to  corruption  is 
public procurement (see Annex 5)(201). At the same 
time, few companies have been asked or expected 
to  offer  a  gift,  a  favour  or  extra  money  for 
permits,  services  or  procurement  well  below  the 
EU average (Czechia 5%; EU 10%). The proportion 
of 
that  people  and 
businesses  caught  bribing  a  senior  official  are 
appropriately  punished  is  lower  than  the  EU 
average (Czechia 24%; EU 33%) (202). 

companies 

indicating 

Legislation  on  transparency  of  lobbying  was 
adopted.  It  includes  provisions  to  ensure  the 
legislative  footprint,  but 
transparency  of  the 
effective  implementation  depends  on  sufficient 
resources.  The  constitutional  court  declared  that 
the  procedure  to  revise  legislation  on  conflicts  of 
interest  was  unconstitutional  and  annulled  the 
application  of 
to 
beneficial owners and media ownership. Following 
judgments  by  the  European  Court  of  Justice, 

the  amended  provisions 

(199) Government of the Czech Republic, 2025, Civil service 2.0 
study, https://vlada.gov.cz/cz/statni_sluzba/aktuality/statni-
sluzba-2-0-225598/. 

(200) European Commission, 2025, Flash Eurobarometer survey 
557 on Businesses' attitudes towards corruption in the EU. 

(201) European Commission, 2025, Rule of Law Report, 

https://commission.europa.eu/publications/2025-rule-law-
report-communication-and-country-chapters_en.  

(202) European Commission, 2025, Flash Eurobarometer survey 
557 on Businesses' attitudes towards corruption in the EU. 

unrestricted  access  to  the  beneficiary  ownership 
registry has been curtailed (203). 

as 

yet 

room 

is 
regards 

Corruption cases are largely investigated and 
prosecuted, 
for 
there 
high-level 
improvement 
corruption cases. Some measures were taken to 
reduce  the  length  of  proceedings  and  to  ensure 
the independence of investigation and prosecution 
in  such  cases,  but  concerns  remain.  Only  a  small 
number  of  cases  of  foreign  bribery  are  detected 
and prosecuted. 

Justice 

The  justice  system  is  performing  efficiently. 
The  time  taken  to  reach  a  decision  in  civil  and 
commercial cases in first-instance courts remained 
stable  at  126  days  in  2024,  one  of  the  lowest  in 
the  EU.  The  estimated  time  taken  to  resolve 
administrative  cases  at  first  instance  decreased 
from 212 days in 2023 to 202 days in 2024.  

Czechia  is  performing  moderately  well  in 
digitalising the  justice system.  It is  doing  well 
initiate  and  follow 
to 
for  digital  solutions 
proceedings in civil/commercial and administrative 
cases,  and  in  online  access  for  the  public  to 
published  judgments.  The  procedural  rules  permit 
the  use  of  digital  tools,  but  they  are  not  fully  in 
use  by  courts  and  prosecution  services.  The 
implementation  of  the  e-file  system  was  delayed 
further. Case law is accessible online, but it is not 
yet possible to download it in bulk to enable reuse 
by  private  companies.  Czechia  performs  well 
regarding  arrangements  for  producing  machine-
readable judicial decisions (204). 

(203) https://esm.justice.cz/ias/issm/rejstrik. 

(204) European Commission, 2025, Rule of Law Report, 

https://commission.europa.eu/publications/2025-rule-law-
report-communication-and-country-chapters_en.  

78 

 
 
 
SUSTAINABILITY 
ANNEX 8: INDUSTRY DECARBONISATION, CIRCULARITY AND CLIMATE MITIGATION 

received 

Czechia  is  advancing  on  decarbonising  its 
industry  and  road  transport,  but  challenges 
persist  on  both  fronts,  and  on  waste 
In  2025, 
generation  and  water  pollution. 
Czechia 
country-specific 
recommendations,  for  example  to  reduce  reliance 
on  fossil  fuels  in  road  transport,  to  promote  the 
use of long-term power purchase agreements and 
enable  the  electrification  of  industrial  processes. 
Czechia  is  focusing  its  policy  action  on  industry 
decarbonisation under various strategies including 
electrification  and  updating  its  hydrogen  strategy. 
It  uses  financial  support  from  EU  and  national 
schemes  to  aid  the  process  of  decarbonisation, 
with substantial funding for energy efficiency and 
low-carbon 
in 
increasing  the  take-up  of  electric  vehicles  and 
reducing  transport  emissions.  Czechia’s  transition 
to  a  circular  economy  remains  slow,  with  high 
volumes  of  waste  generated.  The  country  has  an 
ambitious  circular  economy  strategy  that  aims, 
among  others,  to  reduce  its  heavy  reliance  on 
imports of critical raw materials for the green and 
digital transitions and to develop its secondary raw 
material  market. 
is  too  soon  to  assess 
implementation.  Water  pollution  from  industry 
remains  a  critical  challenge,  despite  some 
improvements,  with  only  38.6%  of  surface  water 
bodies reported to achieve good chemical status. 

innovation.  Challenges  persist 

It 

Industry decarbonisation 

Greenhouse gas emissions from industry 

Industrial processes generate a high share of 
the greenhouse gas emissions from Czechia’s 
manufacturing  industry (205).  It  is  the  second 
most  polluting  sector,  with  emissions  from 

(205) This Annex discusses the transition of Czechia's 

manufacturing industry, specifically its energy-intensive 
industries, to low-carbon and net-zero modes of production, 
which is key to preserving competitiveness on the path 
towards climate neutrality as mandated by the European 
Climate Law. A broader perspective on the current 
competitiveness challenges facing Czechia's manufacturing 
industry is provided in Annex 5. For a more detailed 
description of greenhouse gas emissions from industry, see 
European Commission (2025), 2025 Country Report - 
Czechia, Commission staff working document, SWD (2025) 
205 final, Brussels, 4.6.2025, Annex A7. Clean industry and 
climate mitigation. 

industry  generating  17%  of  all  Czechia’s 
greenhouse  gas 
(GHG)  emissions,  and  a 
greenhouse  gas  emissions  intensity  of  about 
300 g  CO2eq  per  euro  of  gross  value  added (206). 
Since  2019,  the  emission  intensity  of  Czechia’s 
manufacturing  has  improved  by  15%  The  main 
share  of  Czechia’s  manufacturing  greenhouse 
emissions,  about  55%,  is  generated  by  industrial 
processes  and  product  use;  in  the  EU  overall,  this 
share is about 42%.  

Policies to promote industry decarbonisation 

for 

its  hydrogen  strategy 

Czechia  is  taking  some  measures  to  address 
the  2025  country-specific  recommendation 
on the electrification of industrial processes. 
Czechia’s  main 
industrial 
strategies 
decarbonisation  include  its  national  energy  and 
climate  plan,  which  aims  to  phase  out  coal 
generation of electricity and heat by 2033 and the 
development  of  nuclear  power  and  renewables. 
Another main strategy is the Economic Strategy of 
Czech  Republic,  which  sets  out  specific  measures 
to  decarbonise  the  economy.  Czechia  has  also 
updated 
to  develop 
hydrogen  for  use  in  industrial  processes.  This 
strategy plans for hydrogen to replace a share of 
fossil fuels in transport, to be used as a carrier for 
energy  transport  and  storage,  a  raw  material  for 
the  chemical  industry  and  as  a  heat  resource  for 
technologies.  An  example  of  good 
specific 
practices  in  industry  decarbonisation  is  AGC’s 
Barevka-patterned  glass  production  line  in  Dubí, 
which  will  be  entirely  refurbished  into  a  high 
performing  and  state-of-the-art  line  that  aims  to 
become  50%  electric  and  50%  fired  by  a 
combination  of  oxygen  and  gas,  funded  by  the 
Innovation  Fund.  An  example  of  the  challenges  is 
that, 
in  2025,  Třinecké  železárny  steelworks 
postponed  a  CZK 20  billion  investment  in  the 
construction  of  an  electric  arc  furnace  until  the 
end of the decade.  

Czechia  finances  industrial  decarbonisation 
through  a  mix  of  EU  and  national  funding 

(206) Data on the manufacturing sector exclude the NACE division 
C19 – manufacture of coke and refined petroleum products, 
for better match of the sectoral data from Eurostat (gross 
value added) with those from the UNFCCC under the 
Common Reporting Format. Also see further indicators on 
industry decarbonisation, as well as the annotation for 
further information, in table A8.1 at the end of this Annex. 

79 

 
 
 
 
 
 
that 

targeting 

industrial  energy 

the  RES+  programme 

instruments.  The  Modernisation  Fund  is  the 
largest  source.  It  has  already  provided  EUR 1.05 
billion and up to EUR 1.78 billion in 2025 calls for 
projects  to  finance  energy  efficiency,  renewables, 
reduction. 
hydrogen  and 
industrial  emissions 
in  2025 
Recent  calls  for  projects  published 
included 
funds 
industrial  photovoltaics  and  broader  funding 
savings, 
rounds 
hydrogen  and  low-carbon  innovation.(207)  Czechia 
has  raised  over  EUR 5.16  billion 
in  auction 
revenues  since  2013  (EUR 605  million  in  2024), 
available  for  further  climate  action  and  energy 
transformation. Czechia reported that, on average, 
it  spent  55%  of  revenue  on  climate  and  energy 
purposes over this period.(208) The highest share of 
emissions  trading  scheme  (ETS)  revenue  in  2024 
was  allocated  to  projects  to  modernise  railway 
junctions  and  stations  (EUR 131.9  million),  to 
modernise  and  optimise  railways 
(EUR 128.8 
million) and water management (EUR 76.9 million).  

related 

Additional funding is provided under the Just 
Transition Fund (JTF) (EUR 1.6 billion). Czechia 
is the third largest coal producer in the EU and the 
fourth  largest  beneficiary  of  the  JTF.  The  Czech 
just  transition  programme  covers  three  coal 
regions:  Ústecký  kraj  (where  80%  of  Czechia’s 
lignite is  extracted),  Karlovarský  kraj (where  there 
are  two  lignite  mines  and  the  mining  company 
provides  around  3 000  jobs  plus  another  1 000 
to  coal-power  generation)  and 
jobs 
Moravskoslezský  kraj (where  the  last  cart  of  hard 
coal 
on 
4 February 2026).  The  three  coal  regions  are  the 
least developed regions in Czechia and face social 
and  development  challenges.  Currently, 
the 
Innovation  Fund  supports  three  projects  with  a 
grant  of  EUR 20.3  million  (209).  Czechia  also  uses 
national, EU-approved State aid schemes including 
support  for  efficient  heat/power  generation  and 
energy  infrastructure.  The  RRF  investments  focus 
notably  on  energy  grids, 
infrastructure  and 
transport.  

extracted 

Czechia 

was 

in 

(207) Investments - Modernisation Fund. 

(208) 7c8c3bcb-7c34-4750-9c2c-65570edf9165_en. 

(209) INNOVFUND_Czechia.pdf. 

80 

Reduction of effort sharing emissions 

Compliance  with  effort  sharing  limits  with 
domestic measures 

Czechia is projected  to overachieve its  2030 
effort  sharing target (210). In 2024, greenhouse 
gas  emissions  from  Czechia’s  effort  sharing 
sectors  are  expected  to  have  been  11.4%  below 
2005  levels.  By  2030,  with  current  and  planned 
policies  and  measures,  these  emissions  are 
expected  to  decrease  by  36.6%,  resulting  in  a 
surplus  of  10.5  percentage  points  relative  to  the 
2030 target, a 26% reduction. Czechia is projected 
not to exceed its effort sharing emissions limits in 
any year in the 2021-2030 period.  

Sustainable transport 

to 

related 

In  2024,  road  transport  generated  38%  of 
Czechia’s  effort  sharing  emissions,  a  25% 
increase  on  2005  levels (211).  Czechia's  2025 
recommendations  highlighted 
country-specific 
challenges 
the  electrification  of 
transport,  plug-in  hybrid  vehicles  (PHEVs)  and  the 
shift  of  freight  transport  from  road  to  rail  and 
waterways.  Sales  of  electric  vehicles  (EV)  in 
Czechia continued the growth seen in 2024 after a 
record  year,  with the  difference  that in  2025, the 
highest increase was for sales of PHEVs. In 2025, 
15 325 battery EVs (BEVs) were registered (5.45% 
of sales) and PHEVs reached 11 273 units (4% of 
sales),  meaning  EVs  reached  a  9.47%  market 
share, up from 6.61% in 2024.(212) However, more 

(210) The  national  GHG  emission  reduction  target  is  set  out  in 
Regulation (EU) 2018/842 (the Effort Sharing Regulation). 
It  applies  jointly  to  buildings  (heating  and  cooling),  road 
transport, agriculture, waste and small industry (known as 
the  effort  sharing  sectors).  The  emissions  from  effort 
sharing  sectors  for  2024  are  based  on  approximated 
inventory data. The final data will be established in 2027 
after  a  comprehensive  review.  Projections  about  the 
impact of current policies (‘with existing measures’, WEM) 
and  additional  policies  (‘with  additional  measures’,  WAM) 
as  per  Czechia‘s  2025  reporting  under  Article  17  of 
Regulation  (EU)  2018/1999  (the  Governance  Regulation). 
Also  see  European  Commission  (2025),  Climate  Action 
Progress Report 2025 – Technical Information, Commission 
staff  working  document,  Brussels,  Chapter  9  (pp.  111ff.), 
and in particular Tables 25 and 26. 

(211) See Graph A8.1 below and Table A8.1 at the end of this 

Annex.  

(212) Czechia: PHEVs dominate growth in the electrified segment 

in 2025 | European Alternative Fuels Observatory. 

 
 
 
needs to be done to incentivise the uptake of BEVs 
and  PHEVs  as  the  average  age  of  Czechia's 
national  car  fleet  is  higher  than  the  average,  and 
the  take-up  of  BEVs  and  PHEVs  is  still  relatively 
low.  Decarbonising  the  fleet  of  heavy-duty  trucks 
remains  a  challenge  as  the  average  truck  age  in 
Czechia 
is  approximately  14  years,  and  the 
purchase price remains high. Czechia does not yet 
encourage the take-up  of zero-emission trucks by 
exempting  them  from  the  infrastructure  charge 
component  of  tolls,  which  is  a  demand-side 
economic  incentive  allowed  under  EU  law  until 
30 June 2031. 

Graph A8.1: Greenhouse gas emissions in the 
effort sharing sectors, 2005, 2023, and 2024 

Source: European Environment Agency. 

in 

poverty 

Transport 
Czechia 
disproportionately  affects  rural,  low-income 
and  elderly  populations.  This  is  due  to  limited 
access  to  public  transport,  the  high  level  of 
dependency  on  cars  and  insufficiently  affordable 
alternatives, which exacerbates social exclusion. 

Sustainable industry 

Circular economy industry 

Waste  management  is  still  a  challenge  in 
Czechia. Waste generation remains rather high, at 
538 kg per  capita in  2023  (213), the  recycling  rate 
was  43.5%  in  2023,  lower  than  the  EU  average 
(47.7%), and the landfilling rate is decreasing, but 
slowly.  In  2023,  42.3%  of  municipal  waste  was 
landfilled (EU average 22%), which puts Czechia at 

(213)Eurostat , Waste generation and treatment (kg per capita), 
https://ec.europa.eu/eurostat/databrowser/view/env_wasgen/defa
ult/table?lang=en 

81 

risk of not meeting the 2035 target of a maximum 
10%  of  municipal  waste  landfilled.  The  planned 
new deposit refund scheme for plastic bottles and 
cans  (due  to  take  effect  in  January  2026)  would 
have  helped  increase  recycling  rates  but  it  has 
been  put  on  hold(214).  Equally,  the  use  of  raw 
materials  has  stayed  high,  with  only  a  negligible 
reduction  over  the  last  10  years(215).  On  the 
positive  side,  the  circular  material  use  rate  has 
increased  considerably  from  7.5%  in  2016  to 
14.8%  in  2024,  above  the  EU  average.  Similarly, 
resource  productivity  is  improving,  increasing  to 
EUR 2.19  per  kg  in  2024  but  still  below  the  EU 
average of almost EUR 3 per kg (216).  

Czechia’s  circular  economy  strategy 
is 
ambitious  and  comprehensive,  but  it  is  too 
soon  to  assess  implementation.  The  strategic 
framework  'Circular  Czechia  2040',  finalised  as  a 
reform  under  the  RRP,  includes  an  action  plan 
adopted  in  June  2023  that  covers  a  six-year 
period  with  measures  in  many  sectors  such  as 
products,  design,  raw  materials,  bioeconomy, 
waste  management  and  circular  cities  (217).  The 
first  monitoring  report  evaluating  the  action  plan 
was published in December 2025 (218). One of the 
objectives is to reduce Czechia’s heavy reliance on 
imports of critical raw materials for the green and 
the  use  of 
digital 
secondary raw materials and reducing pressure on 
natural resources.  

transition  by 

increasing 

Czechia  performs  quite  well  on  patents 
related  to  recycling  and  secondary  raw 

(214)360 Excise duties. Amendment to Czech Packaging act on 
hold, https://www.excise-360.com/newsletter/amendment-to-
czech-packaging-act-on-hold-deposit-system-for-bottles-and-
cans-
delayed#:~:text=The%20Czech%20government%20has%20prop
osed%20an%20amendment,operator%20and%20paying%20de
posits%20and%20associated%20fees. 

(215)Eurostat, Material footprints, 
https://ec.europa.eu/eurostat/databrowser/view/cei_pc020/defaul
t/table?lang=en.  

(216)Eurostat, Resource productivity, 
https://ec.europa.eu/eurostat/databrowser/view/env_ac_rp/defaul
t/table?lang=en. 

(217)Czech Ministry of Environment, Circular Czechia 2040 
Strategic Framework, https://mzp.gov.cz/cz/agenda/odpadove-
hospodarstvi-a-cirkularni-ekonomika/cirkularni-
ekonomika/cirkularni-cesko-0.  

(218)Czech Ministry of Environment, 1st Monitoring report of 
meeting the Action Plan Circular Czechia 2040 for 2022-2024, 
December 2025, https://mzp.gov.cz/system/files/2026-02/OCEO-
1_Monitorovaci_zprava_CC_2040-20260223.pdf.  

010203040506070200520232024MtCO2eDomestic transport (excl. aviation)Buildings (under ESR)AgricultureSmall industryWaste 
   
 
 
materials. In 2020, it filed 10.74 patents (though 
this  dropped  to  5.75  in  2021,  still  above  the  EU 
average) (219), more than most Member States of a 
similar size. Together with the high number of EU 
Ecolabel-awarded  licences  and  products  (5 408) 
the  Eco-
and  26  companies 
Management  and  Audit  Scheme,  this  is  a  positive 
sign  that  drives  the  country’s  pace  of  innovation. 
Against  this  backdrop,  the  circular  economy 
generates  2.6%  of  total  employment,  above  the 
EU average.  

registered 

in 

tax 

revenue 

Czechia  has  scope  to  further  develop  fiscal 
tools for circular practices to boost potential 
revenue and reduce waste. Total environmental 
tax revenue is below the EU average (1.5% of GDP 
in  2022,  EU  average  of  2.24%)  (220).  Taxes  on 
pollution  and  resources  make  up  a  low  share  of 
overall  environmental 
(0.7%). 
Environmental  taxes  have  increased  by  23.1% 
over  the  last  15  years  (2009-2023)  in  absolute 
terms, but they decreased by 32% in terms of GDP 
ratio  (221).  Czechia  is  finally  implementing  a 
gradual increase in landfill tax rates that has been 
delayed  for  many  years,  and  ‘pay  as  you  throw‘ 
schemes  cover  about  20%  of  the  population(222). 
The  current  Waste  Act,  in  force  since  2021, 
complemented by a reform under Czechia's RRP to 
adopt the implementing legislation, provides for an 
annual 
in  2021  to 
EUR 73/t in 2029.  

increase  from  EUR 32/t 

the 

The  new  circular  economy  strategy  (Circular 
Czechia  2040) 
role  of 
reflects 
environmental  taxation  in  the  transition.  It 
proposes  increasing  landfill  fees  and  bringing  in 
taxes based on product recyclability, on single-use 
plastics,  fertilisers  and  on  incineration.  The  Czech 
administration  considers  that  the  low  share  of 

(219)Eurostat, Patents related to recycling and secondary raw 
materials, 
https://ec.europa.eu/eurostat/databrowser/view/cei_cie020/defau
lt/table?lang=en&category=cei.cei_cie. 

(220)European Commission, Environmental Implementation 
Review (2025), Czechia country report, 
https://environment.ec.europa.eu/law-and-
governance/environmental-implementation-review_en. 

(221)European Commission, Directorate-General for Environment, 
RPA Europe, Conduct in-depth assessments on environmental 
priorities to support the greening of the European Semester and 
integration of environmental priorities into the EU's economic 
governance framework, 2025.   

(222)European Environmental Agency, Waste Management 
country profile, 2025, C:\Users\paolagi\Downloads\CZ Municipal 
waste factsheet.pdf. 

that 

installations 

municipal  waste  incinerated  (14,2%  in  2023,  but 
increasing)  does  not  justify  bringing in  a  new  tax. 
However,  under  the  2025  waste  management 
plan,  Czechia  plans  to  double  the  capacity  of 
energy 
incinerate  mixed 
municipal  waste  to  1.8  million  t/year.  Caution  is 
required  as  increasing  incineration  capacity  could 
lead to a reduction in the volume of waste sent for 
recycling,  given  the  situation  where  separate 
collection still needs to be substantially improved. 
In  addition  to  the 
in  recycling 
infrastructure  under  the  RRP,  Czechia  would  need 
a  further  EUR 470  million  in  investment  per  year 
(223) to reach the circular economy objectives. 

investments 

Bioeconomy industry 

Czechia's bioeconomy is anchored by a strong 
food  and  beverage  sector  and  a  traditional 
wood  and  furniture  industry.  Together  these 
two sectors employ the highest number of people 
in  the  field  (224).  In  bio-based  chemicals  and 
plastics  - 
the  highest-performing  sub-sector, 
averaging  7.6%  value-added  growth  between 
2018 and 2023(225)- Czechia's traditionally strong 
research  in  chemistry,  biochemistry,  biology  and 
biotechnology, 
advanced 
agriculture  and  food  industries  provide  a  solid 
foundation  for  locally  based  circular  systems. 
Despite 
the 
bioeconomy  slightly  fallen,  with  the  exception  of 
plastics 
chemicals 
the 
manufacturing  sector  recording  a  growth  in  total 
employment  between  2018  and  2023  (0.6%)(226). 
Under its recovery and resilience plan, Czechia has 
invested  in  expanding  university  facilities  for 
biomedical studies, in supporting companies in the 
biotechnology sector and(227)and biomass.  

this,  overall 

employment 

bio-based 

combined 

with 

and 

in 

(223)European Commission, Environmental Implementation 
Review (2025), Czechia country report, 
https://environment.ec.europa.eu/publications/2025-
environmental-implementation-review-country-report-
czechia_en. 

(224) Shapingbio, Bioeconomy country file 

(225)Bioeconomy subsectors: food and beverages; bio-based 
textiles; wood products and furniture; bio-based chemicals and 
plastics. 

(226)Joint Research Centre, Developments of Economic Growth 
and Employment in Bioeconomy Sectors across the EU, 
https://datam.jrc.ec.europa.eu/datam/mashup/BIOECONOMICS/. 

(227)Czechia’s recovery and resilience plan, 
https://planobnovy.gov.cz/.  

82 

 
 
 
Labor  productivity  in the bioeconomy  –  measured 
as  value  added  per  person  employed  –  stood  at 
73.5%  of  the  national  average  and  it  has  been 
almost stable from 73.9% in 2018(228). 

from  bioeconomy-relevant 

(R&D)  business 
Research  and  Development 
expenditure 
sub-
sectors  has  grown  slightly  more  than  the  overall 
R&D business expenditure in Czech Republic (8.8% 
compared to 7.2% on average between 2018 and 
2023) (229). 

Zero-pollution industry 

Over  the  past  decade,  Czechia  has  made 
progress 
in  reducing  key  air  pollutants 
through  cleaner  energy  production  and  tighter 
vehicle emission standards. However, the intensity 
of industrial releases in water and air remains high 
and  above  the  EU  average  (230).  In  2023,  air 
pollutants  (NOx,  NMVOC,  PM2.5,  PM10,  SOx) 
decreased  by  29%  in  kg  per  capita  of  emissions 
(231).  The  New  Green  Saving  Programme,  also 
financed  under  the  RRF,  has  had  a  key  role  by 
investing  in  the  energy  efficiency  of  more  than 
600 000  households,  mostly  (about  two  thirds) 
since  2021.  Despite these  advancements,  Czechia 
continues to grapple with air pollution costs as it is 
estimated  that  66  years  of  life  are  lost  per 
100 000 inhabitants, over the EU average in 2022. 
In  the  same  year,  multiple  air  quality  zones 
exceeded  the  target  limit  for  ozone,  resulting  in 
annual damages estimated to cost EUR 13 million 
per year(232). This underscores the need for further 
action,  particularly  in industrial  regions  and  urban 

(228)Joint  Research  Centre,  Developments  of  Economic  Growth 
and  Employment 
in  Bioeconomy  Sectors  across  the  EU, 
https://datam.jrc.ec.europa.eu/datam/mashup/BIOECONOMICS/. 

(229)Joint Research Centre, Business expenditure in Research and 
bioeconomy, 
Development 
https://datam.jrc.ec.europa.eu/datam/mashup/BERD_BIOECONOM
Y/. 

(R&D) 

the 

EU 

in 

(230)EEA, European Industrial Emission portal, 
https://industry.eea.europa.eu/industrial-emissions/dataset.  

(231)Eurostat, Air emissions accounts, 
https://ec.europa.eu/eurostat/databrowser/view/env_ac_ainah_r2
__custom_19207573/default/table 

(232)European Commission: Directorate-General for Environment, 
EMRC, Logika Group and RPA Europe; Update of the costs of not 
implementing EU environmental law (2025), 
https://op.europa.eu/en/publication-detail/-
/publication/4dead000-263d-11f0-8a44-
01aa75ed71a1/language-
en?mc_cid=d30edf72a9&mc_eid=3bdab86db2. The damage 
cost is calculated as VOLY.  

83 

transport corridors. Czechia has not levied any new 
taxes on major air pollutants such as NOx, SO₂ or 
particulate  matter  lately.  A  moderate  increase 
could 
those 
pollutants  by  7-44%  (depending  on  the  tax  rate) 
and  increase  revenue  by  up  to  EUR 13  million  by 
2030(233).   

incentivise  abatements, 

reduce 

(IED) 

status 

Industrial  Emissions  Directive 

Water  pollution  from  industry  remains  a 
critical challenge. Czechia has made progress on 
water  pollution 
including  achieving  a  34% 
reduction  in  industrial  heavy  metal  releases  (Cd, 
Hg,  Ni,  Pb)  and  a  43%  reduction  in  total  nitrogen 
emissions to water since 2010, as reported under 
(234). 
the 
Nonetheless,  only  38.6%  of  Czechia's  surface 
water  bodies  were  reported  to  achieve  good 
chemical 
river  basin 
the 
management plan (RBMP), a significant drop from 
68.5%  reported  in  the  second  RBMP.  Degradation 
is  mainly  due  to  the  presence  of  ubiquitous, 
persistent,  bio-accumulative  and  toxic  substances 
(uPBTs) generated by past-industrial activities(235). 
Czechia  still  faces  a  heavy  environmental  burden 
deriving  from  mercury-contaminated  waste  and 
soil,  a  major  source  of  pollution  in  rivers  and 
groundwater.  Water  pollution  by  industry  imposes 
direct and indirect costs of EUR 30 million a year, 
not yet sufficiently borne by the polluters(236).  

third 

in 

The  total  economic  cost  of 
industrial 
pollution in Czechia is about EUR 48 million a 
year (237) encompassing healthcare expenses, lost 

(233)European  Commission:  Directorate-General  for  Environment, 
Camboni,  M.,  Markandya,  A.,  Tyrer,  D.,  Goonesekera,  S.  et  al., 
Greening the European Semester – Resource and pollution taxes. 
Annex 6, Country factsheets, Publications Office of the European 
Union, 2026. https://data.europa.eu/doi/10.2779/7798318  

(234)EEA, Water pollutant releases changes from 2010 to 2022 
for the EU Member States, 2024, 
https://www.eea.europa.eu/en/analysis/maps-and-charts/water-
pollutant-releases-3. 

(235)European Commission. Third river basin management plans, 
second flood hazard and risk maps and second flood risk 
management plans, Member State: Czechia, 02/2025, 
https://eur-lex.europa.eu/legal-
content/EN/TXT/PDF/?uri=CELEX:52025SC0033. 

(236)EU study, Green taxation and other economic instruments – 
Internalising environmental costs to make the polluter pay, 
https://environment.ec.europa.eu/publications/green-taxation-
and-other-economic-instruments-internalising-environmental-
costs-make-polluter-pay_en. 

(237)About EUR 18 million for air pollution and about EUR 30 
million for water pollution.  

 
 
 
productivity  and  environmental  degradation  (238). 
The level of investment is still insufficient to meet 
national  and  EU  targets  for  pollution  prevention 
and  control.  To  reach  the  targets,  Czechia  would 
need  to  spend  an  additional  EUR 1  billion  every 
year  (about  0.38%  of  GDP),  largely  on  reducing 
environmental  noise,  remediating  industrial  sites 
and on protection from nuclear radiation (239). 

(238)EEA, The cost of health and the environment from industrial 
air pollution in Europe - 2024 update, 2024, 
https://www.eea.europa.eu/en/analysis/publications/the-costs-to-
health-and-the-environment-from-industrial-air-pollution-in-
europe-2024-update. The costs reported are calculated as value 
of a statistical life.  

(239)European Commission: Directorate-General for Environment, 
EMRC, Logika Group and RPA Europe; Update of the costs of not 
implementing EU environmental law (2025), 
https://op.europa.eu/en/publication-detail/-
/publication/4dead000-263d-11f0-8a44-
01aa75ed71a1/language-
en?mc_cid=d30edf72a9&mc_eid=3bdab86db2.   

84 

 
 
 
 
 
 
 
 
 
 
 
 
 
Table A8.1:  Key clean industry and climate mitigation indicators: Czechia 

Sources and notes: Industry decarbonisation: All data are from Eurostat; data following the UNFCCC Common Reporting 
Format (CRF) are from the European Environment Agency (EEA), republished by Eurostat. (1) Sectors covered: all divisions of 
section C - Manufacturing - of the NACE Rev. 2 statistical classification of economic activities, except C19 (manufacture of coke 
and refined petroleum products). (2) GHG emissions as per UNFCCC Common Reporting Framework (CRF) categories 1.A.2 - fuel 
combustion in manufacturing in industries and construction (that broadly correspond to the broadly correspond to the NACE 
sections C - Manufacturing and E - Construction, excluding C-19),  and CRF2 - industrial processes and product use. The figures 
shows the emissions in the 1.A.2 category as a share of the sum of CRF1.A.2. and CRF2 emissions. (3) Sectors covered: CRF 1.A.2 
as described above. Gross value added (GVA) data in the denominator aligned in sectoral coverage, in 2020 prices. (4) Sectors 
covered: NACE section C excluding C19. (5) Nominator: NACE divisions C17, 20, 23, 24; denominator: NACE section C excluding 
C19 (see above). (6) GVA (denominator) in 2020 prices. Reduction of effort sharing emissions: Data source: European 
Environment Agency, greenhouse gas data viewer; European Commission, Climate Action Progress Report, 2025. For details, see 
the footnote in the "Reduction of effort sharing emissions" section. Sustainable road transport: (7) Source: Eurostat; (8) Source: 
European Alternative Fuels Observatory; (9) Source: Eurostat. For all climate mitigation indicators, the trend arrows compare the 
latest available data (year t) with the data four years earlier (t-4). Sustainable industry: Bioeconomy value added, employment 
and productivity: JRC, Developments of Economic Growth and Employment in Bioeconomy Sectors across the EU. Bioeconomy 
R&D business expenditure: JRC, Business expenditure in Research and Development (R&D) in the EU bioeconomy. Damage cost for 
industrial pollution: EEA, The costs to health and the environment from industrial air pollution in Europe, 2024. Water industrial 
pollutants releases: EEA, Industrial releases of pollutants to water and economic activity in the EU-27, 2024. Water chemical 
status: WISE, Surface water bodies: Chemical status, 2024 and WISE Groundwater bodies: chemical status, 2024. Other indicators: 
Eurostat. For circular economy indicators, the trend arrows compare the latest available data (year t) with the data two years 
earlier (t-2). 

85 

Climate mitigationTrendIndustry decarbonisation201820192020202120222023202420182023GHG emissions intensity of manufacturing production, g/€ (1)385356380401342283302330-Share of energy-related emissions in industrial GHG emissions (2)38.638.641.044.643.044.4-55.557.9Energy-related GHG emissions intensity of manufacturing and construction, g/€ (3)208.0190.6224.3278.8225.0193.6-203.9163.0Share of electricity and renewables in final energy consumption in manufacturing, % (4)37.839.138.438.139.741.543.642.843.9Energy intensity of manufacturing, GWh/€ (4)1.521.441.611.691.461.281.261.271.05Share of energy-intensive industries in manufacturing production, % in GVA (5)13.2412.7912.4112.2513.6811.9711.73--GHG emissions intensity of production in sector [...], g/€ (6)- paper and paper products (NACE C17) 533          544          478                 472            497                  375           411             722             619            - chemicals and chemical products (NACE C20) 3 649       3 520       2 825              5 229         3 935               3 880        3 955          --- other non-metallic mineral products (NACE C23) 1 597       1 598       1 656              1 559         1 537               1 550        1 790          2 495          2 352         - basic metals (NACE C24) 6 202       5 047       5 454              12 433       22 056             12 206      9 494          2 842          3 099         Reduction of effort sharing emissions201820192020202120222023202420182023GHG emission reductions relative to base year, % -9.0-11.5-14.5-11.4- domestic road transport8.59.52.19.111.914.825.1-1.4-5.6- buildings-9.1-13.0-14.7-11.4-19.7-32.5-31.5-20.3-33.520052021202220232024TargetWEMWAMEffort sharing: GHG emissions, Mt; target, gap, %65.059.157.555.557.5-26.0%-27.6%-36.5%Sustainable road transport2018201920202021202220232024202520182021New zero-emission vehicles, electricity motor, % (7)0.280.311.651.542.133.094.991.038.96Number of publicly accessible AC/DC charging points (8)--103120013817466463597574446956n/aShare of electrified railways, % of total (9)33.8033.7933.9133.9633.9734.4434.4455.4756.49Sustainable industryTrendEU-27Circular economy transition20182019202020212022202320242018latest dataMaterial footprint, tonnes per person18.117.616.019.018.617.917.114.813.7Circular material use rate, %10.5          10.6         11.5                11.0           11.3                  13.6           14.811.612.2Resource productivity, €/kg1.3            1.3           1.4                  1.5             1.7                    2.1             2.22.13.0Employees in circular economy2.5            2.62.6                  2.9             2.6                    2.6             -2.12.0Patents in circular economy4.679.8           10.7                5.8             12.312.0Recycling rate           32.2           33.3                  40.5             43.3                   41.4            43.5 :46.4048.1Plastic recyling 57%61%42%45%-52%-41%42%Construction and demolition waste (CDW) recovery na-968889Bioeconomy industry 2018201920202021202220232024CAGR 2018-202320182023Value added, million EUR10 39810 91810 85811 57914 03915 000-6.3%642 438863 436Employment, total number of people employed391 517381 326371 596369 975376 908377 091--0.6%17 649 04017 085 642ProductivityValued added per worker, thousand EUR26.628.629.231.337.239.8-7.0%36.450.5Valued added per worker, % of national average73.973.876.073.776.073.5--62.270.7R&D business expenditureTotal bioeconomy (biomass producing and converting sectors)5255556371868.8%15 67223 335Total R&D business expenditure2 4822 6802 6122 9863 4843 766-7.2%196 587259 525Zero pollution industry201820192020202120222023202420182021Damage cost for industrial pollution23.119.917.8----414.9352.7Water industrial pollutants releases 2021change (2010)2021change (2010)2021change (2010)2021change (2010)-           -34%-                  -43%4 366 620        no data-              no data Water chemical statusGood432                 Good (%)0.4                    Poor480.0Poor (%)43%EUTOCPhosporusCzechiaCzechiaCd, Hg, Ni, Pbnitrogen 
 
  
 
ANNEX 9: AFFORDABLE ENERGY TRANSITION 

This  annex  outlines  the  progress  made  and 
the  ongoing  challenges  faced  in  enhancing 
energy  affordability,  while  advancing  the 
transition 
the 
implementation  of  past  energy-related  country-
specific recommendations. 

to  net  zero. 

reflects 

It 

purchase 

Czechia’s  2025  energy-related  country-
specific  recommendations  highlighted  the 
need  to  reduce  reliance  on  fossil  fuels, 
notably  for  heating  and  power  generation, 
renewable 
while  expanding 
large-scale 
long-term 
energy  through  auctions  and 
power 
The 
recommendations also called for investment to be 
increased in the electricity grid in order to achieve 
greater  non-fossil  flexibility,  for  the  electrification 
of  transport  and 
industrial  processes  to  be 
enabled, for Czechia’s Electricity Data Centre to be 
made fully operational, and lastly, for measures to 
be enacted to reduce the energy consumption and 
carbon  intensity  of  the  building  sector,  especially 
the public building stock. 

agreements. 

Czechia  continues  to  see  low  levels  of 
renewables  deployment  and  grid  flexibility, 
with  incentives  only  partially  available.  This 
is especially due to the lack of support instruments 
(Contracts  for  Difference  and  power  purchase 
agreements).  Nevertheless,  important  legislative 
steps  have  been  taken  to  streamline  permitting 
towards 
and  empower  consumers.  Progress 
improving  the  energy  efficiency  of  the  building 
stock  has  remained  steady  but  slow  despite  the 
introduction  of  programmes 
the 
decarbonisation of the heating sector. 

to  support 

Energy prices and costs 

in 

skewed 

Czechia, 

disproportionately 

In  S1  2025,  the  retail  cost  of  energy  was 
below or close to the EU average, except for 
households electricity users.  The tax burden 
towards 
is 
undermining 
electricity 
affordability  and  distorting  price  signals  for 
further electrification. In the first half of 2025, 
household  gas  prices  in  Czechia  continued  their 
downward  trend  and  remained  below  the  EU 
average  at  EUR 0.0967/kWh,  However,  household 
electricity  prices,  despite  being  down  on  2024, 
at 
the 
remained 

average 

above 

EU 

EUR 0.3179/kWh  (the  sixth  highest  in  the  EU). 
Retail  energy  prices  for  industrial  consumers  also 
continued  their  downward  trend  and  were  almost 
in  line  with  the  EU  average.  However,  industrial 
electricity 
increased, 
the  EU  average 
remaining  slightly  above 
(EUR 164/MWh). While wholesale costs account for 
43%  of  industrial  electricity prices,  network  costs, 
carbon  costs  and  taxes  represent  27%,  20%  and 
10% respectively of electricity bills.  

(EUR 166/MW) 

prices 

Graph A9.1: Electricity and gas prices for 
household and non-household consumers, first 
half of 2025 

(i) For household consumers, the consumption band is DC for 
electricity and D2 for gas.  
(ii) For non-household consumers, the consumption band is ID 
for electricity and I4 for gas. VAT and recoverable charges are 
not displayed for non-household consumers as these are 
typically recovered by businesses. This also applies to the ‘% 
of taxes and levies’, which is shown excluding VAT and 
recoverable charges for non-household consumers.  
(iii) ‘Without taxes and levies’ indicates the retail price 
excluding all taxes and levies. It always includes the 
energy/supply and network cost components, which are not 
disaggregated in Eurostat’s six-monthly price dataset. 
Source: Eurostat 

Importantly,  since  tax  is  disproportionately 
skewed  towards  electricity,  final  energy 
prices in Czechia have stayed imbalanced. For 
large  businesses,  electricity  was  3.1  times  more 
expensive than gas in the first half of 2025, with 
taxes and levies (excluding VAT) for non-household 
consumers  representing  on  average  11%  of 
electricity bills but only 2% of gas bills. Excluding 
taxes  and  levies,  the  electricity-to-gas  price  ratio 
would have fallen to 2.9. The situation was similar 
for  household  consumers,  where  the  ratio  would 
have  decreased  from  3.3  to  3  if  taxes  were 
excluded,  meaning  Czech  fiscal  measures  have  a 
negative 
on 
household  electricity  bills.  Czechia  took  a  positive 
step  to  address  this  issue  in  early  2026  by 

particularly 

balancing 

effect, 

86 

 
 
 
 
 
transferring  the  renewables  levy  to  the  state 
budget 

Flexibility and electricity grids 

level  of  non-fossil 

electricity 
in  2025 

Due  to  its  continued  reliance  on  expensive 
fossil fuels for electricity generation and its 
flexibility, 
limited 
Czechia’s  wholesale 
prices 
averaged  EUR 99/MWh 
(vs  EU 
average  of  EUR 85/MWh  (240).  Fossil  fuels 
accounted  for  40.8%  of  Czechia’s  electricity 
generation in 2025 (mainly coal at 34%), retaining 
their  important  role  as  costly  marginal  price-
setting  technology  (74%  of  price-setting  hours). 
Average  day-ahead  electricity  prices  in  Czechia 
increased by 14% in 2025 amid rising natural gas 
costs.  Short-run  marginal  costs  of  natural  gas  in 
the  EU  rose  from  EUR 96/MWh  in  2024  to  EUR 
103/MWh  in  2025.  Czechia  remains  vulnerable  to 
severe  price  spikes  during  peak-demand  hours. 
This  is  because  falling  solar  power  output  in  the 
evening and early morning, combined with limited 
non-fossil  flexibility,  requires  natural  gas-fired 
generation  to  be  significantly  ramped  up to  cover 
the supply–demand gap. As a result, price spreads 
in Czechia averaged EUR 122/MWh in 2025, up 7% 
from  2024,  nearly  matching  the  EU  average  of 
EUR 121/MWh. 

Graph A9.2: Low-carbon electricity generation vs. 
electricity wholesale prices, 2025 

Unavailable data for Cyprus and Malta. Wholesale price is 
given as average of day-ahead electricity prices over 2025. 
EU-27 average is calculated as consumption-weighted. EU 
low-carbon share is calculated out of total EU electricity 
generation. Low-carbon share by country is calculated out of 
total public electricity generation. Low-carbon includes 
renewables and nuclear. 
Source: Eurostat 

Czechia is relatively well interconnected with 
its neighbours and has a high level of cross-
border  trade,  although  in  recent  years  price 
differentials with its neighbours have grown, 
illustrating  the  need  to  further  increase 
cross-border  capacity  and  reinforce  the 
Czech  internal  grid.  Czechia  is  in  the  Core 
capacity  calculation  region  (CCR)  and  is  market-
coupled  at  all  of  its  borders  with  the  other 
members  of  the  CCR.  Czechia  is  a  net  electricity 
exporter  (12%  of  own  consumption),  exporting 
significant volumes  to  Slovakia  and  Austria,  while 
importing  from  Germany  and  Poland.  Average 
wholesale  prices  show  a  generally  good  level  of 
convergence  with  the  average  regional  electricity 
price, however price spreads have been increasing 
in recent years. Member States must ensure that a 
minimum  of  70%  of 
technical  cross-border 
capacity is available for trading which, in the case 
of Czechia, was successfully achieved for 100% of 
hours (241), the only country in the region to do so. 
Czechia’s  interconnection  rate  reached  26.3%  in 
2025,  well  above  the  EU  requirement  of  15%.  At 
the same time, congestion has been increasing at 
certain  borders,  illustrating  the  need  for  further 
infrastructure  reinforcements,  as  also  pointed  out 
in  Czechia’s  10-year  national  development  plan 
support 
from 
interconnectivity,  Czechia  is  working  on  electricity 
interconnection  projects  with  Germany  and 
Slovakia  which  are  included  on  the  second  Union 
list of Projects of Common Interest and Projects of 
Mutual Interest.  

further 

2024 

(242). 

To 

lines 

internal 

investment 

Despite  high 
in 
levels  of 
Czechia’s electricity grid, the construction of 
new 
remains 
power 
challenging.  Based  on  its  2025-2034  national 
development  plan,  Czechia  has  invested  in  the 
distribution grid, notably through the Recovery and 
Resilience  Facility,  with 
investments 
planned  with  the  intention  of  integrating  an 
additional 1.9 GW of new capacity. Looking ahead, 
Czechia’s  transmission  system  operator  (ČEPS)  is 
preparing 
approximately 
EUR 3 billion to modernise and reinforce 1 700 km 

investments  worth 

further 

(240) Ember. 

(241) ACER market monitoring report. 

(242) TYNDP 2024 / Infrastructure Gaps Report / Opportunities for 

a more efficient European power system by 2050 

87 

 
 
 
 
 
of power lines, which will address grid congestion 
and  enhance  interconnectivity.  However,  Czechia 
continues to allow critical infrastructure projects to 
be  heavily  delayed  (e.g.  two  internal  power  lines 
which  are  a  Project  of  Common  Interest  are  not 
expected  to  be  finalised  until  2030),  notably  due 
to zoning plans which can take as long as 9 years 
to finalise for a single project (see below). Further 
efforts are also needed to strengthen and upgrade 
the grid infrastructure. The number of rejected grid 
connection  requests  has  increased,  while  a  38% 
increase has also been recorded in the number of 
connection agreements refused due to insufficient 
connection capacity or for supply security reasons 
(243).  With  regard  to  hydrogen 
infrastructure, 
Czechia adopted an updated  hydrogen strategy in 
mid-2024, confirming the country’s involvement in 
the  Central  European  Hydrogen  Corridor  through 
the Czech H2 Backbone North project, which is on 
the  second  Union  list  of  Projects  of  Common 
Interest  and  Projects  of  Mutual  Interest.  A  cluster 
of  projects 
the  Czech–German 
to 
Hydrogen  Interconnector  intended  to  expand  the 
internal  hydrogen  infrastructure  in Czechia (Czech 
H2  Backbone West)  and Germany  have  also been 
included on the second Union list. 

relating 

reforms  of 

Czechia  continues  to  make  slow  progress  on 
streamlining  permit-granting  procedures  for 
energy  infrastructure.  Since  January  2024, 
Czechia  carried  out  major 
its 
Construction  Act  and  Energy  Act.  This  led  to  the 
introduction of the Transport and Energy Authority 
–  which  handles  strategic  infrastructure  projects, 
including  in  the  energy  sector  –  and  the  Builder’s 
Portal which digitalises the building permit process 
and  indicates  the  development  status  of  public 
infrastructure  or  energy  security  projects  for 
specific 
The 
digitalisation  process  has  experienced  repeated 
delays.  Moreover,  understaffing  of  the  Transport 
and  Energy  Authority  remains  a  critical  problem. 
Spatial  planning  is  also  still  in  need  of  reform 
for  grid 
since 
infrastructure projects often takes several years to 
start,  delaying  construction  and  significantly 
extending the time it takes to complete Projects of 
Common Interest. 

the  permit-granting  process 

infrastructure 

plants. 

and 

Challenges  remain  in  addressing  the  2025 
country-specific recommendation to increase 

(Lex RES III) 

legal  framework 

investment  in  electricity  grids  to  enhance 
non-fossil  flexibility,  however  Czechia  has 
taken steps in the right direction. Czechia has 
committed  to  further  promoting  demand-side 
response  and  energy  storage  in  order  to  increase 
the flexibility of its energy system. It has adopted 
a 
that  allows 
aggregation  (including  independent  aggregation) 
on wholesale markets. Electricity storage is still in 
the  early  stages  of  development  but  is  growing, 
with  2.5 GWh  of  operational  energy  storage 
capacity  currently  available,  of  which  546 MWh 
was  installed  in  2025.  As  of  2024,  Czechia  had 
480 MW of battery storage capacity connected to 
the  grid,  mostly  behind-the-meter  storage, 
large  scale  batteries  are  gaining 
however 
scheme  worth 
momentum.  A  State 
EUR 279 million  is  expected  to  accelerate  battery 
roll-out  by  supporting  an  additional  1.5 GWh  of 
large-scale  electricity  storage  projects.  While  the 
scheme has attracted significant interest, much of 
this  may  be  considered  speculative.  In  addition, 
with  support  from  the  Recovery  and  Resilience 
Facility,  Czechia  is  setting  up  the  Electricity  Data 
Centre (EDC), a new centralised entity responsible 
for data provision and exchange on the electricity 
market.  This  platform  should  further  enable 
services  such  as  aggregation  and  energy  sharing 
for  energy  communities.  However,  the  expected 
capabilities  of  the  EDC  are  not  all  yet  fully  in 
service. 

aid 

Despite  some  progress  since  2024,  an 
incomplete  legislative  framework  and  slow 
smart  meter  roll-out  are  continuing  to  limit 
consumer  engagement.  With  the  support  of  its 
recovery  and  resilience plan,  Czechia  amended  its 
renewable  energy  legislation  in  August 2025,  to 
foster  the  development  of  energy  communities,  
however  it  still  needs  to  put  in  place  secondary 
legislation  in  order  to  fully  implement  the  reform 
Czechia  had  around  50 
registered  energy 
communities  in  2025,  suggesting  the  momentum 
from  the  previous  year  has  begun  to  stall. 
Although  energy  sharing  has  seen 
increased 
uptake,  with  35 000  participants  sharing  nearly 
60 GWh  of  electricity  in  2025,  there  is  still 
untapped potential. While most consumers are on 
fixed-price retail contracts, the share of consumers 
that  switched  supplier  increased  to  6.8%  from 
4.2%  in  2023  (244).  Both  the  roll-out  of  smart 
meters  (below  15%)  and  the  percentage  of 

(243) Monitoring připojování výroben elektřiny - aktualizace k 

30.06.2025 | eru.gov.cz 

(244) Report by ACER and CEER 

88 

 
 
 
to 

strengthen 

(4%)  remain 

prosumer  households 
low.  This 
indicates  limited  consumer  engagement  in  the 
energy  market.  Czechia  has  adopted  legislation 
(Lex RES III) 
consumer 
empowerment,  especially  as  regards  demand 
response,  energy  communities,  dynamic  pricing 
and  smart  grids.  Moreover,  it  has  introduced 
comparison tools to help consumers find the best 
offers  on  the  market.  However,  due  to  the  low 
smart meter roll-out rate, customers have limited 
scope  to provide flexibility services, even with the 
wholesale  markets  shortly  being  opened  up  to 
the  possibility  of 
demand 
independent  aggregation  is  introduced.  Delayed 
reforms to energy tariffs are further slowing down 
the  roll-out  of  dynamic  pricing,  for  which  a  ‘pilot 
project’ is now not envisaged until 2027-2028. 

response  once 

(245),  partly  due 

In  2024,  electricity  accounted  for  21.6%  of 
Czechia’s  final  energy  consumption  (FEC) 
(below  the  EU  average  of  33.5%),  a  share 
which  has  remained  largely  unchanged  in 
recent  years 
to  an 
unfavourable  electricity-to-gas  price  ratio 
that  disincentivises  electrification  and  cost-
effective  decarbonisation.  Electricity  accounts 
for 21.6% and 33.5% of household and industrial 
FEC  respectively  (see  Annex  8).  In  the  transport 
sector,  the  share  of  FEC  accounted  for  by 
electricity  remains  negligible  at  2.2%.  Further 
progress  in  electrification  across  sectors  would 
help  to  cost-effectively  decarbonise  the  economy 
and  bring  the  benefits  of  affordable  renewable 
generation to consumers. 

Renewables and long-term contracts 

The  deployment  of  renewables  has  been 
progressing slowly, in particular wind energy. 
In  2025,  renewable  energy  accounted  for  16.6% 
of  Czechia’s  electricity  mix,  largely  unchanged 
from  2024 (+0.6  percentage  points)  and  still  well 
below the EU average of 47%, the second lowest 
in the EU. Hydro represented 3.7%, biomass 7.5% 
and  solar  5.9%  of  the  electricity  mix.  Installed 
renewables  capacity  grew  by  8.7%  in  2025, 
capacity 
renewable 
meaning 

energy 

total 

increased  to  6.880  (246) MW (see  Graph  A9.1)  in 
its 
Czechia.  Solar  deployment  has  continued 
steady acceleration, with total installed capacity in 
2025  reaching  4 500 MW  (an  increase  of  almost 
13.9%  compared  to  2024).  In  contrast,  installed 
in  Czechia  grew  only 
wind  energy  capacity 
modestly  (+24 MW,  i.e.  an  increase  of  6.7%), 
reaching  380 MW  in  2025,  relatively  far  from 
Czechia’s 2030 wind capacity target of 1.5 GW (as 
its  National  Energy  and  Climate  Plan). 
per 
Czechia’s new Economic Strategy sets a target for 
renewables deployment of 10 GW by 2030.  

Graph A9.3: Czechia’s installed renewable capacity 
vs electricity generation mix 

Electricity mix is given as net electricity generation (gross 
electricity production minus consumption of power stations’ 
auxiliary services). Electricity produced in pumped hydro 
plants is excluded from total net electricity production, as it 
was previously counted as electricity produced from another 
source. 
“Other” includes renewable municipal waste, solid biofuels, 
liquid biofuels, and biogas. 
Source: IRENA, Eurostat 

In  2025,  Czechia  made  progress  towards 
speeding up permitting for renewable energy 
installations,  but  there  is  scope  for  further 
action.  In  July 2025,  as  part  of  its  recovery  and 
resilience  plan,  Czechia  adopted 
framework 
legislation  establishing  renewables  acceleration 
areas  for  wind  and  solar (Act  No.  249/2025 Coll). 
While  the  framework  allowed  municipalities  to 
participate 
the  designation  process,  no 
acceleration  areas  have  yet  been  designated 
despite  targeted  regional-level  incentives.  As  of 
April  2026, a draft proposal  of acceleration areas 
of national significance has been published by the 
Ministry  for  Regional  Development.  Czechia  has 
also  raised  the  thresholds  below  which  solar  and 

in 

(245) The CAGR (compound annual growth rate) was 0.34% 

between 2015 and 2024. The minimum/maximum shares 
were 20.2% and 21.1% respectively. (Source: Eurostat). 

(246) International Renewable Energy Agency (IRENA) - Renewable 

Capacity Statistics 2026  

89 

 
 
 
 
 
storage  installations  (247)  do  not  require  a  licence 
(100kW).  Furthermore,  the  Czech government  has 
passed  legislation  to  regulate  the  framework  for 
agrivoltaics. A specific grid connection fee has also 
been  introduced  to  help  reduce  the  backlog  of 
renewables  projects  awaiting  connection  to  the 
grid.  Beyond  these  efforts  to  simplify  permit-
granting  procedures  for  renewables  and  promote 
the deployment of agrivoltaics, Czechia has scope 
to  improve  other  aspects  of  permitting,  e.g.  by 
ensuring  additional  human  resources  and  skills, 
enabling digitalisation and public participation, and 
promoting  the  development  of  other  innovative 
technologies and forms of deployment.  

provide 

In  2025, 

In  2025,  Czechia  ran  auctions  to  support 
renewable  energy  sources,  helping  to  make 
progress  towards  its  2025  country-specific 
recommendation 
further 
to 
incentives  for  the  roll-out  of  large-scale 
renewable  energy  capacity.  However,  the 
lack  of  long-term  price  certainty  remains  a 
fundamental  barrier. 
the  Czech 
Ministry of Industry and Trade published two calls 
for bids in a renewables auction to award support 
for  the  installation  of  a  total  of  5 MWe  of  small 
hydropower plants (construction of new plants and 
upgrade  of  existing  plants)  and  180 MW  of  wind 
power  plants.  After  the  latter  failed  to  attract 
sufficient  bids,  highlighting 
lack  of  a 
sustainable  stream  of  projects,  a  second  auction 
was launched in December 2025, with a simplified 
design and with a target capacity of 360 MWe of 
wind  power  plants.  There  has  been  almost  no 
progress  in  relation  to  Contracts  for  Difference, 
which are only available for wind, or in relation to 
power purchase agreements, which have seen very 
limited  uptake  in  Czechia  in  the  absence  of  an 
enabling  framework,  including  measures  such  as 
state-backed  guarantees,  a  matching  platform  or 
demand-pooling facilities. 

the 

Energy efficiency 

towards 
Czechia  made  slight  progress 
improving  overall  energy  efficiency,  despite 
taking  measures  to  ensure  the  timely 
implementation  of  related  EU  legislation.  In 

(247) Czechia introduces new licensing rules for energy storage - 

Energy Storage 

90 

In 

2024,  final  energy  consumption  (FEC)  decreased 
by  0.3%  to  22.6  Mtoe,  as  compared  to  2023, 
slowing the downward trend observed since 2019. 
Czechia’s  FEC  in  2024  was  in  line  with  the 
trajectory for meeting its expected contribution by 
level,  FEC  has  decreased 
2030.  At  sectoral 
substantially  since  2019. 
industry  FEC 
decreased  by  14.8%,  mainly  due  to  structural 
changes  and  technical  energy  savings,  in  services 
FEC  decreased  by  15%,  whereby  an  increase  in 
activity  was  outstripped  by  energy  savings  and 
increased productivity, and in the residential sector 
FEC  decreased  by  14.2%,  mainly  due  to  building 
renovations  and  energy-saving behaviour. Czechia 
was the first Member State to fully transpose the 
2023  update  to  the  Energy  Efficiency  Directive. 
Moreover,  several  successful  energy  efficiency 
programmes  financed  by  national  and  EU  funds 
have been continued, while in February 2026, the 
National Energy Efficiency Financing Platform was 
launched. 

in 

to 

reduce 

decrease 

its  2025 
to 

country-specific 
Further 
recommendation 
the  energy 
consumption  and  carbon  intensity  of  the 
buildings  sector,  especially 
the  public 
building  stock,  Czechia  continued  making 
improving  the  energy 
progress  towards 
efficiency  of  residential  buildings,  although 
these  efforts  could  be  undermined  if  the 
is  phased  out.  The 
support  framework 
energy 
final 
aforementioned 
consumption  in  Czechia’s  residential  sector  was 
mostly driven by energy savings, including through 
structural  measures  such  as  deep  renovations. 
Czechia has already met the 2030 target from its 
long-term  renovation  strategy  to  reduce  the 
energy consumption of buildings by 8% compared 
with  2020.  However,  as  buildings  are  responsible 
for 37.8% of energy use, Czechia is encouraged to 
submit  its  draft  national  building  renovation  plan 
pursuant  to  the  recast  Energy  Performance  of 
Buildings  Directive  in  order  to  ensure  a  clear  and 
predictable  pathway  towards  an  energy  efficient 
and  decarbonised  building  stock.  The  potential 
phase-out  of  Czechia’s  successful  ‘New  Energy 
Savings’  renovation  programme  in  favour  of  a 
loans-based approach could put at risk the positive 
trend  in  energy  efficiency  if  the  approach  is  not 
properly targeted, especially in relation to energy-
poor  households.  In  the  absence  of  a  Social 
Climate Plan, it is unclear how Czechia will ensure 
renovations  are  carried  out  to  the  public  building 
stock, including social housing.  

 
 
Czechia is continuing to transition away from 
the  use  of  coal  for  heating,  but  major 
challenges  remain  for  both  individual  and 
district heating. Heating and cooling account for 
83%  (248)  of  Czechia’s  residential  final  energy 
consumption, with renewables supplying 28% (249) 
of  total  energy  used  for  heating  and  cooling 
across  all  sectors.  Approximately  2.5 million 
households  use  a  gas  boiler  for  heating  purposes 
(250).  Around  20 000  heat  pumps  were  sold  in 
2024,  a  decrease  of  64%  compared  to  the 
previous year, taking Czechia’s total stock of heat 
retail 
pumps 
electricity-to-gas  price  ratio  in  the  residential 
sector was 3.29 in the first half of 2025 and has 
been  on  an  upward  trend  since  2022  (252).  This 
means  that  by  switching  from  an  individual  gas 
boiler to  a  heat  pump  end  users  will  save  energy 
but may not save money.  

to  nearly  320 000 

(251).  The 

Security of supply and diversification   

Czechia made substantial progress in  ending 
its  reliance  on  Russian  oil.  Czechia  ended  its 
reliance  on  Russian  oil  supplies  in  mid-2025 
following the completion of the TAL Plus pipeline. 

Despite  making  progress  on  renewables, 
Czechia’s  overall  energy  mix  in  2024  was 
still  heavily  based  on  fossil  fuels.  Coal 
accounted  for  25%  of  gross  inland  consumption, 
oil for 26% and natural gas for 15%. Nuclear and 
renewables (including  biofuels)  contributed  19.3% 
and  14% 
reliance 
underscores  the  importance  of  Czechia’s  ongoing 
efforts to diversify its energy sources, to phase out 
coal and strengthen its energy security. 

respectively 

(253).  This 

Decarbonising  the  district  heating  system 
still represents a challenge for Czechia which 
intends  to  replace  coal-based  sources  with 
renewable  energy,  using  gas  as  the  main 
transitional  fuel.  Thanks  to  investment  under 
the  recovery  and  resilience  plan  and  the  HEAT 
programme (financed by the Modernisation Fund), 
the  use  of  coal  in  district  heating  has  gradually 
decreased,  with  a  target  to  completely  phase  out 
coal  by  2030.  The  main  sources  which  are 
replacing  coal  are  combined  heat  and  power, 
biomass,  biogas/biomethane  and  nuclear  waste 
heat.  The  estimated  cost  of  decarbonising  district 
heating  by  2030  is CZK 200 billion  (EUR 8 billion). 
The potential for using large industrial heat pumps 
in the district heating sector remains untapped.  

(248)Eurostat,2025. https://data.europa.eu/data/datasets/uvygjkxe

v6pywqwbgmgwyg?locale=en   

(249)Eurostat,2025. https://ec.europa.eu/eurostat/databrowser/pro
duct/view/SDG_07_40?lang=en&category=sdg.sdg_07  

(250) JRC analysis based on data from European Hearing Industrie, 

Hotmaps and the Czech Statistical Officce 

(251) European Hear Pump Association (EHPA) 2025. 

https://ehpa.org/market-data/ 

(252) Eurostat 2025 Household electricity 

priceshttps://ec.europa.eu/eurostat/databrowser/view/nrg_pc_
204/default/table?lang=en and housold gas prices 
https://ec.europa.eu/eurostat/databrowser/view/nrg_pc_202/d
efault/table?lang=en 

to  play  a  key 

role 
its  economy,  securing 

Czechia  plans  for  nuclear  energy  (alongside 
in 
renewables) 
decarbonising 
its 
energy  supply  and  providing  affordable 
energy  for  consumers.  The  Czech  government 
plans  to  further  increase  the  share  of  Czechia's 
energy mix accounted for by nuclear energy to 25-
33%  (currently  around  15%)  of  primary  energy 
sources  and  to  46-58%  (37%  in  2022)  of  gross 
electricity  production  by  2040.  To  meet  these 
targets, Czechia plans to construct up to four new 
nuclear  reactors  and  to  deploy  small  modular 
reactors  (mainly  at  brownfield  sites).  A  Korean 
consortium (led by KHNP) was selected following a 
two  nuclear 
competitive  procedure 
the 
reactors  at  Dukovany 
contract for which was signed on 4 June 2025. In 
addition,  in  2024,  ČEZ  Group  entered  into  a 
strategic  partnership  with  Rolls-Royce  to  deploy 
small  modular  reactors.  Czechia  has  also  secured 
alternative  nuclear  fuel  supplies  by  concluding 
and 
supply 
Framatome.  Having 
fuel 
assemblies  in  2025,  Czechia  expects  to  start 
licensing  in  2026  While  these  steps  will  reduce 
reliance  on  nuclear  fuel  from  Russia,  Czechia 
continues to  be  dependent  on  Rosatom due  to its 
VVER  reactors.  Czechia  is  prioritizing  industrial 
localization  and  domestic  manufacturing  in  line 
with  EU  efforts  to  strengthen  nuclear  supply 
chains.  However,  Small  Modular  Reactor  (SMR) 
projects  face  persistent  financing  uncertainties 

contracts  with  Westinghouse 
the  new 
received 

to  build 
(1055  MWe/unit), 

(253) Gross inland consumption (Eurostat). 

91 

 
 
 
 
due  to  limited  cost  benchmarks,  necessitating 
clearer  EU  risk-sharing  and  state-aid  frameworks. 
Furthermore,  the  use  of  foreign  reactor  designs 
regulatory 
presents  ongoing  challenges 
licensing 
cross-border 
cooperation 

convergence 

and 

for 

In  response  to  the  regional  crisis  in  the 
Middle  East,  Czechia  has  imposed  a  fixed 
margin  cap  of  CZK  2.50  (€0.10)  per  litre  on 
petrol  and  diesel,  with  daily  price  ceiling 
updates  based  on  wholesale  indices.  The 
government has also reduced excise tax on diesel 
by CZK 1.939 (≈€0.08) per litre and is conducting 
anti-gouging checks at petrol stations. Czechia has 
released 100,000 tonnes of oil as part of the IEA 
collective  action  and  is  drafting  legislation  for 
permanent fuel price regulation tools.  

Fossil fuel subsidies 

In  2024,  environmentally  harmful  (254)  fossil 
fuel  subsidies  without  a  planned  phase-out 
before  2030  represented  0.01%  (255)  of 
Czechia’s  GDP  (256).  However,  Czechia’s  2023 
Effective  Carbon  Rate  (257)  averaged  EUR 65.00 
per tonne of CO₂, below the EU weighted mean of 
EUR 84.80(258). 

(254) Explicit fossil fuel subsidies (e.g. direct transfers) and implicit 
fossil fuel subsidies (i.e. tax expenditures linked to forgone 
tax revenues that have an identifiable fiscal impact for the 
central budget) that support fossil fuel energy production, 
transmission and/or consumption.  

(255) European Commission calculation based on underlying data 
from the Study on energy subsidies and other government 
interventions in the EU – 2025 edition, Enerdata. 

(256) 2024 Gross Domestic Product at market prices, Eurostat. 

(257) The Effective Carbon Rate is the sum of carbon taxes, ETS 
permit prices and fuel excise taxes, representing the 
aggregate effective carbon rate paid on emissions. 

(258) OECD (2024), Pricing Greenhouse Gas Emissions 2024 

92 

 
 
 
 
ANNEX 10: CLIMATE ADAPTATION, PREPAREDNESS AND ENVIRONMENT 

respect 

Czechia  has  made  some  progress 
in 
developing resilience and adaptation policies 
over  the  last  year,  but  various  challenges 
remain.  The  main  obstacle  to 
implementing 
climate  resilience  policy  is  a  systemic  lack  of 
human resources in ministries and at regional and 
local  levels,  and  inefficient  coordination  between 
them.  With 
to  water  management, 
Czechia’s urban wastewater treatment compliance 
has  improved,  but  its  surface  waters  remain 
among  the  most  degraded  in  the  EU.  Nature  in 
Czechia 
from 
intensive  agriculture,  forestry  and  urbanisation, 
which  also  significantly  limits  the  landscape’s 
rainwater  retention  capacity.  Habitat  degradation 
is  widespread,  but  Czechia  is  taking  steps  in  this 
regard  and  restoring  river  ecosystem  connectivity. 
Pesticide  contamination  remains  a  critical  issue, 
affecting both surface water bodies and soils. 

is  under  significant  pressure 

Climate adaptation and preparedness 

Czechia  faces  significant  climate  adaptation 
challenges and substantial economic impacts 
from  weather  and  climate-related  extreme 
events,  such  as  floods,  droughts  and 
heatwaves.  Between  1980  and  2024,  1 382 
persons  died  due  to  extreme  climate-related 
events (259).  The  risk  of  floods  caused  by  the 
combined  effect  of  heavy  precipitation  and  low 
water retention of soils has significantly increased 
(in  terms  of  exposure  of  both  the  population  and 
property).  During  the  floods  of  summer  2024, 
Czechia  demonstrated  that 
it  was  very  well 
prepared in terms of prompt weather forecasts, an 
efficient  early  warning  system  and  effective 
cooperation  under  its  integrated  rescue  system. 
However, the floods showed that some key causes 
of the fatalities and damage remain to be tackled. 
For  example,  current  conventional  agriculture  and 
forestry  practices  reduce  the  quality  of  soil, 
decrease  water  retention  in  soils  and  prevent 
forests  from  becoming  resilient.  These  practices 
exacerbate not only the impacts of floods, but also 
the impacts of water and wind erosion, landslides, 
heatwaves, droughts, etc. In 2025, droughts posed 
to  economic  activities  and 
a  major 

threat 

(259)EEA,  2024,  Economic  losses  from  weather-  and  climate 
related 
Europe, 
https://www.eea.europa.eu/en/analysis/indicators/economic-
losses-from-climate-related. 

extremes 

in 

heatwaves 

ecosystems,  while 
significantly 
increased  mortality.  A  recent  study  commissioned 
by DG CLIMA (260) estimates that Czechia will need 
to  invest  almost  EUR 1.244 billion  per  year  until 
2050 (0.3% of annual GDP, below the EU average 
infrastructure  retrofitting  and 
of  0.5%)  – 
total), 
reinforcement 
ecosystems 
food 
(around 10.5%) and health (around 9.5%) (261). 

(almost  47%  of 

(around  33%), 

restoration 

the 

in 

but 

Czechia’s  adaptation  policy  (defined  by  its 
national  strategy  and  action  plan) 
is 
implementation 
faces 
developing 
challenges due to a lack of human resources 
in ministries and at regional and local levels 
and  to 
inefficient  coordination  between 
them. Czechia’s adaptation policy is embedded in 
two  key  documents:  the  national  adaptation 
the  national  action  plan  on 
strategy  and 
adaptation. 
The  Czech  Hydrometeorological 
Institute has completed the climate change impact 
and  adaptation  assessment,  which  will  serve  as 
the  basis  for  the  revised  national  action  plan  on 
adaptation  for  2026-2030.  Policies  focusing  on 
individual environmental aspects (e.g. protection of 
soil, water, forests and air) are well established in 
the key ministries. However, the implementation of 
a  comprehensive  adaptation  policy  is  not  yet  well 
established. The main reason for this is a systemic 
lack  of  human  resources  working  on  climate 
resilience  in  ministries  and  at  regional  and  local 
levels (262).  The  adaptation  policy 
rather 
comprehensive,  but  implementation  often  only 
consists  of  a  group  of  separate  policies  rather 
than  mutually  reinforcing  measures  based  on  a 
risk  assessment.  The 
comprehensive  climate 
division  of  responsibilities  for  implementing  the 

is 

(260)European  Commission  (2026),  Assessment  of  adaptation 
investment  needs,  Table  25,  https://op.europa.eu/en/publication-
detail/-/publication/d2039eac-f742-11f0-b9bc-
01aa75ed71a1/language-en%20(Table%208). 
study 
provides  detailed  estimates  of  adaptation  investment  needs  at 
the  level  of  the  EU  and  individual  Member  States  per  type  of 
measure.  It  relies  on  a  common  methodology  that  makes 
estimates  comparable  across  the  EU.  Four  accompanying 
methodological reports provide a detailed description of how the 
results were estimated to ensure full transparency. 

The 

(261)Typical  investments  in  ecosystems  include  soil  restoration, 
wildfire  prevention,  biodiversity  protection  and 
coastal 
ecosystems  restorations  while  typical  investments  in  health  are 
linked to occupational health and safety, wastewater treatment 
facilities upgrade and wildfire disaster response. 

(262)It  has  been  identified  by  CZ  authorities  in  the  questionnaire 
on climate resilience submitted on 02/12/2025 and reconfirmed 
during the Semester work trip in December 2025 

93 

 
 
 
 
 
adaptation policy is not clear among ministries or 
(national-regional-
between  governance 
local).  At  sub-national  level,  some  self-governing 
regions  have  drafted  climate  change  adaptation 
plans or strategies. 

levels 

The adoption of Czechia’s landscape policy is 
likely to support adaptation efforts. The share 
of  Czechia’s  population  covered  by  the  EU 
Covenant  of  Mayors  signatories  has  remained  at 
(EU-27: 34%).  Only  14%  of  Czechia’s 
30% 
signatories  have  submitted 
their  sustainable 
(SECAP).  46%  of 
energy  and  action  plan 
signatories have submitted at least one monitoring 
report  within  the  recommended  timeframe  (i.e.  at 
least 
their 
two  years  after  submission  of 
SECAP) (263). 

recorded  EUR 21.7 billion 

Climate  risks  have  a  direct  and  significant 
effect  on  Czechia’s  economy,  but  insurance 
coverage  remains  low.  Between  1980  and 
2024,  Czechia 
in 
loss (264)  caused  by  weather  and 
economic 
climate-related  extreme  events.  It  therefore  has 
one  of  the  highest  ratios  of  natural  catastrophes 
damages  in  relation  to  GDP  in  the  EU (265).  Flood 
events were particularly damaging, accounting for 
over  half  of  total  economic  loss (266).  The  latest 
studies  show  that  extreme  weather  events  are 
likely to have a prolonged and intensifying impact 
on  economic  activity  in  Czechia (267).  However, 
Czechia’s  rate  of  insurance  coverage  against 

(263)European 
mayors.ec.europa.eu/en/explorer. 

Commission, 

https://eu-

(264)EEA,  2024,  Economic  losses  from  weather-  and  climate-
related 
Europe, 
https://www.eea.europa.eu/en/analysis/indicators/economic-
losses-from-climate-related. 

extremes 

in 

catastrophe 

(265)ECB  and  EIOPA,  2024,  Towards  a  European  system  for 
natural 
2, 
https://www.eiopa.europa.eu/document/download/d8c87070-
f602-4bf7-b8d8-726ec0b5c173_en?filename=eiopa-ecb-
climate-insurance-protection-gap.pdf. 
This 
earthquakes which happened in 2020-2023.  

risk  management, 

includes 

figure 

Chart 

(266)EEA,  2024,  Economic  losses  from  weather-  and  climate 
Europe, 
related 
https://www.eea.europa.eu/en/analysis/indicators/economic-
losses-from-climate-related. 

extremes 

in 

(267)Usman,  Parker  &  Vallat,  2025,  Dry-roasted  NUTS:  early 
estimates  of  the  regional  impact  of  2025  extreme  weather, 
pp. 9-14, 
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5484206. 

weather-related  and  climate-related  extreme 
events in the EU is just 13% and one of the lowest 
in  the  EU  (EU-27: 19%) (268).  Czechia  currently 
does  not  have  a  national  insurance  scheme  in 
place (269)  that  could  improve  insurance  coverage 
and reduce the insurance protection gap (270). 

Neither climate resilience by design approach 
nor climate proofing methodology have been 
systematically  applied  across  sectors  and 
key  infrastructure  so far.  The  Expert  Group  on 
Sustainability  and  Resilience  of  Investments  has 
investment 
been  established  to  align  public 
planning with climate risks. 

the 

in 
Significant  progress  has  been  made 
climate-proofing  web 
developing 
application.  The  aim  is  to  provide  end  users 
(primarily  applicants  for  EU  funds)  with  a 
climate-screening 
tool 
systematic 
for 
line  with  EU 
investments 
infrastructure 
regulations  and  national 
It  would 
provide  project-screening  based  on  sensitivity, 
exposure  and  vulnerability  to  climate  risks.  It  will 
also  support  the  implementation  of  climate  risk 
assessments  by  evaluating  both  the  likelihood  of 
climate  hazards  and  their  potential  impact  on 
infrastructure. 

legislation. 

in 

The  transport  vulnerability  index  of  the  TEN-T 
network  to  climate  change  in  Czechia  has  been 
assessed  as  ‘medium’  and  well  above  the  EU 
average.  This  is  mainly  due  to  poor  quality  of 
transport  infrastructure,  limited  logistic  capacity, 
insufficient  ´social  capacity´  (readily  deployable 
means  to  effectively  respond  to  climate-related 
disruptions)  and  a  generally 
level  of 
adaptation  preparedness (271).  Czechia’s  transport 

low 

(268)EEA,  2024,  Economic  losses  from  weather-  and  climate-
related 
Europe, 
https://www.eea.europa.eu/en/analysis/indicators/economic-
losses-from-climate-related. 

extremes 

in 

(269)These  type  of  schemes  supplement  private  insurance  cover 
for  natural  catastrophes  by  improving  risk  awareness  and 
prevention,  while  increasing  insurance  capacity  through  more 
affordable (re)insurance. 

catastrophe 

(270)ECB  and  EIOPA,  2024,  Towards  a  European  system  for 
natural 
4b), 
https://www.eiopa.europa.eu/document/download/d8c87070-
f602-4bf7-b8d8-726ec0b5c173_en?filename=eiopa-ecb-
climate-insurance-protection-gap.pdf. 

risk  management, 

Chart 

(271)European  Commission,  2024,  Support  study  on  the  climate 
adaptation  and  cross-border  investment  needs  to  realise  the 

94 

 
 
 
 
infrastructure  has  been  particularly  exposed  to 
floods  in  the  past,  but  extreme  temperatures  are 
likely  to  play  an  important  role  in  the  future.  The 
highest costs are expected for adaptation to floods 
and heatwaves. An estimated EUR 500 million will 
need  to  be  invested  in  TEN-T  until  mid-century, 
mostly in railways (EUR 369 million) (272). 

than the EU average. This lower value is primarily 
related  to  abstraction  patterns  and  water-use 
efficiency  This  is  due  to  abundant  renewable 
freshwater 
resources.  Water  utilities,  energy 
production  and  manufacturing  are  among  the 
Their 
most  water-dependent 
economic  sustainability 
from 
increasing water efficiency. 

sectors (275). 
could  benefit 

widely 

(NbS)  more 

There  is  scope  to  tap  into  nature-based 
and 
solutions 
systematically. NbS have not been deployed at a 
large  scale  and  widely  across  different  sectors  in 
Czechia. This is despite the efforts of the Ministry 
of the Environment to strengthen inter-ministerial 
coordination,  facilitate  access  to  methodological 
support  and  make  full  use  of  available  funding 
instruments.  NbS  are  also  supported  within 
Czechia’s  recovery  and  resilience  plan  (RRP)  (the 
components  focusing  on  nature  protection  and 
climate change adaptation (2.6)  and promotion of 
fight  against  drought (2.9)). 
biodiversity  and 
Preparatory  works  are  underway 
the 
implementation of the EU Nature Restoration Law 
(NRL), whereby NbS are expected to play a central 
role  in  delivering  ecosystem-based  outcomes  and 
enhancing landscape resilience. 

for 

Water resilience 

The  risk  of  drought  in  Czechia  is  not  yet 
alarming  but  is  increasing.  A  prolonged  period 
of  dry  weather  between  2014  and  2020  resulted 
in  one  of  the  most  severe  droughts  in  recent 
Central 
history, 
Bohemian  Region,  parts  of  the  Ústí nad Labem 
Region  and  the  South  Moravian  Region  (273). 
Nevertheless, the national water exploitation index 
plus  (WEI+) (274)  indicates  lower  overall  pressure 

particularly 

affecting 

the 

TEN-T  network,  Table  4.6,  Publications  Office  of  the  European 
Union, 2024, https://data.europa.eu/doi/10.2832/7839720. 

(272)European  Commission,  2024,  Support  study  on  the  climate 
adaptation  and  cross-border  investment  needs  to  realise  the 
TEN-T  network,  Table 4.28.  Publications  Office  of  the  European 
Union, 2024, https://data.europa.eu/doi/10.2832/7839720. 

(273)Copernicus, 
https://www.copernicus.eu/en/media/image-day-gallery/drought-
czech-republic. 

Drought 

Czechia, 

in 

(274)Eurostat, Water Exploitation Index, plus, 
https://ec.europa.eu/eurostat/databrowser/view/sdg_06_60/defa
ult/table?lang=en. The WEI+ is a measure of how much water is 
being used compared with the total renewable freshwater 
resources available for a given territory and period. 

95 

Abstraction-intensive sectors like energy and 
water  utilities  face  competitiveness  risks  in 
the  event  of  water  scarcity.  Czechia’s  low 
water  productivity (276),  at  EUR 152 per  m³  of 
abstracted  water  in  2023  (below  the  EU-27 
average of EUR 195 per m³), can be an additional 
burden.  It  is  partially  mitigated  by  the  clear 
hierarchy  of  water  uses  established  by  the 
national 
critical 
infrastructure, energy supply and water services in 
the  event  of  water  scarcity.  In  2023,  the  sectors 
abstracting the most freshwater were public water 
supply (55%), 
and 
manufacturing (6%) (277). However, abstraction has 
decreased  by  20%  since  2014,  particularly  in 
surface water.  

production (23%) 

that  prioritizes 

legislation, 

energy 

The  ecological  status  of  Czechia’s  surface 
water bodies  has  continued  to decline.  In  the 
third  river  basin  management  plan  (RBMP),  only 
5.9%  of  surface  water  was  reported  as  having 
good  ecological  status  (compared  with  19.2%  in 
the  second  RBMP).  This  means  that  Czechia’s 
surface  waters  are  among  the  most  degraded  in 
the  EU.  About  39%  of  water  bodies  had  a  good 
ecological status at EU level according to the data 
in the Member States’ third RBMPs (278). This limits 
access  to  high-quality  water  for  industrial  and 

EEA, 2025, Water abstraction by economic sector, 

(275) 
2000-2023, 
https://www.eea.europa.eu/en/analysis/indicators/water-
abstraction-by-source-and/water-abstraction-by-economic-
sector. 

(276)Water  productivity  is  a  metric  that  is  calculated  by  dividing 
GDP  (in  chain-linked  volume)  by  total  water  abstraction.  It 
indicates  the  average  economic  value  (GDP)  a  Member  State 
creates for each unit of water it takes from nature. 

(277)EEA,  2025,  Water  abstraction  by  economic  sector,  2000-
2023, 
https://www.eea.europa.eu/en/analysis/indicators/water-
abstraction-by-source-and/water-abstraction-by-economic-
sector. 
(278)WISE, Surface water bodies: ecological status or potential, 
https://water.europa.eu/freshwater/resources/metadata/wfd-
dashboards/surface-water-bodies-ecological-status-or-potential-
group-table. Note that the deterioration can be also partially due 
to more accurate monitoring methodology. 

 
 
 
agricultural  use  and  therefore  has  a  negative 
impact on productivity and costs. 

Nature restoration 

the 

Ensuring 
reliability  and 
long-term 
resilience  of  Czechia’s  drinking  water 
infrastructure remain a challenge. Investments 
are  being  implemented  through  a  combination  of 
EU and national funding. Alongside cohesion policy 
the  RRP,  national  programmes 
support  and 
focusing  on  network  renewal,  reduction  of  water 
losses, and the interconnection and reinforcement 
of  water  supply  systems  to  increase  resilience  to 
is also progressively 
water 
deploying  smart  metering  technologies,  which 
improve  water  management  efficiency  and 
strengthen  consumer  protection.  Measures  to 
improve  water  management  in  the  industry  like 
more  efficient  use  of  water  resources  (e.g. water 
recycling  in  production  sectors  with  high  water 
consumption) and measures to optimise water use 
in utility plants and reduce water losses have also 
been promoted by the RRP.  

scarcity.  Czechia 

Compared  with  2020,  Czechia  has  increased 
its  compliance  rate  with  the  Urban  Waste 
(UWWTD)  by 
Water  Treatment  Directive 
treatment  of 
improving 
level  of 
the 
therefore  made 
wastewater.  Czechia  has 
significant  and  rapid  progress  by  treating  almost 
96% of its sewage in line with the requirements of 
the  UWWTD  in  2022  (up  from  just  78.11%  in 
2020).  Czechia  still  has  some  wastewater  that  is 
not  collected  nor 
treated  or  collected  and 
discharged without treatment mainly in small and 
dispersed settlements not connected to centralised 
systems, where individual or alternative treatment 
solutions  are  applied  in  accordance  with  EU 
legislation.  The  additional  funds  (EUR 52 million) 
allocated  for  water management infrastructure in 
‘Operational  Programme  Environment’  of 
the 
cohesion  policy  in  the  last  mid-term  review  in 
2025  are  intended  to  close  the  compliance  gap 
with 
the  energy 
efficiency of water infrastructures. Looking ahead, 
the  annual  financial  needs  of  new  and  renewed 
urban  wastewater  infrastructure  (including  the 
additional 
the 
to  EUR 858 million. 
revised  UWWTD)  amount 
Investments  will  cover  only  part  of  this, leaving  a 
gap of about EUR 238 million. 

requirements  associated  with 

the  UWWTD  and 

improve 

in  Czechia 

Nature 
is  under  significant 
pressure from intensive agriculture, forestry 
and  urbanisation  –  and  the  resulting  highly 
fragmented natural landscape.  Degradation of 
habitats is widespread. Approximately 80% have a 
poor or bad conservation status. Most ecosystems 
(including  soil,  grasslands,  wetlands  and  forests) 
are  at  risk.  Czechia’s  forests  are  under  particular 
pressure and none of them are reported as having 
a  favourable  conservation  status  (compared  with 
approximately  22%  at  EU  level) (279).  Healthy 
ecosystems are a prerequisite for stable growth in 
Czechia.  44%  of  its  gross  value  added  (GVA)  is 
directly  dependent  on  them (280)  (this  is  the  same 
share  as  the  EU  average).  This  vulnerability  is 
particularly  acute  for  healthcare,  agriculture,  the 
construction sector and the food industry, which all 
have  a  very  high  downstream  dependency  on 
healthy 
of 
ecosystems  might  therefore  directly  impact  the 
competitiveness  of  companies  working  in  these 
sectors. 

ecosystems (281). 

Degradation 

Czechia  has  hardly  extended  the  proportion 
of  its  territory  designated  as  a  protected 
area in the last ten years. Its national target is 
to  reach  28.3%  by  2030,  but  the  share  barely 
increased  from  21.4% 
in 
2024 (282). 

in  2015  to  21.9 

Nature  degradation  is  further  amplified  by 
invasive  alien  species.  32were  recorded  in 
Czechia  in  2024,  inflicting  estimated  damages  of 
to  2020 (283).  However, 
EUR 80 million  up 

(279)European Commission, 2025, Environmental Implementation 
Review,  Czechia  country  report,  https://eur-lex.europa.eu/legal-
content/EN/TXT/?uri=CELEX:52022SC0264. 

(280)Hirschbuehl  et  al. 
(JRC),  2025,  The  EU  economy’s 
dependency  on  nature,  Vasilakopoulos,  P.  editor(s),  European 
Commission, 
https://publications.jrc.ec.europa.eu/repository/handle/JRC140304
?mode=full. 

(281)Ibid. 

(282) Eurostat, Protected Areas Indicator, 

https://ec.europa.eu/eurostat/databrowser/view/env_bio4/def
ault/table?lang=en&category=env.env_biodiv. 

(283)Neobiota,  Economic  cost  of  invasive  alien  species  across 
https://neobiota.pensoft.net/article/58196/.  
Europe, 
Implementation 
European  Commission,  2025, Environmental 
Report, 
Country 
Czechia 
Review, 

2021, 

96 

 
 
 
eutrophication  –  a  threat  to  biodiversity  and 
ecosystem integrity – has partially improved, with 
the areas at risk declining from 99% to 88% (284). 
Nitrogen deposition from agriculture and industrial 
combustion  remains  a  critical  driver  of  this 
degradation. 

support 

the  Water 

Czechia  has  recently  taken  steps  to  help 
meet the EU Biodiversity Strategy’s objective 
of making at least 25 000 km of rivers free-
flowing  by  2030.  Czechia  is  contributing  to  the 
objective  of  making  rivers  flowing  free  by 
removing  long-standing  obsolete  barriers  in  order 
to restore river ecosystem connectivity (285). These 
efforts 
Framework 
Directive’s (286)  objectives  of  restoring  freshwater 
ecosystems  (the  natural  function  of  rivers)  and 
mitigating the impact of floods. Free-flowing rivers 
also  generate  broader  socio-economic  benefits. 
These  include  enhanced  rural  landscape  quality; 
tourism  opportunities; 
new 
strengthened  local  job  creation;  improved  water 
quality;  and  better  sediment  transport,  which 
protects  deltas  and  coastal  areas  against  erosion 
and  rising  sea  levels.  Czechia  is  also  investing  in 
protecting  river  ecosystems  within  its  RRP  by 
prioritising  nature-based  solutions 
flood 
protection  projects  and  promoting  natural  water 
retention  of  torrents  in  forested  areas.  Czechia  is 
continuing to invest about EUR 1 billion per year in 
its  ecosystems,  but  an  additional  EUR 251 million 
is  needed  to  address  conservation  priorities  and 
accelerate nature restoration (287). 

recreation  and 

for 

Sustainable agriculture and land use 

https://ec.europa.eu/transparency/documents-
register/detail?ref=SWD(2025)305&lang=en. 

(284)EEA,  2024,  Eutrophication  caused  by  atmospheric  nitrogen 
Europe, 
deposition 
https://www.eea.europa.eu/en/analysis/indicators/eutrophication-
caused-by-atmospheric-nitrogen. 

in 

Europe 

(285)South-Eastern 
https://damremoval.eu/wp-
content/uploads/2025/10/SOUTHEASTERN-EUROPE-BARRIER-
REMOVAL-MOVEMENT-PROGRESS-REPORT-2024-2025.pdf. 

Removal 

Barrier 

Progress, 

(286) Directive 2000/60/EC. 

(287)European Commission, 2025, Environmental Implementation 
Review, 
report, 
https://environment.ec.europa.eu/law-and-
governance/environmental-implementation-review_en. 

Czechia 

country 

97 

Czechia  is  expected  to  overachieve  its  2030 
target  for  land  use,  land-use  change  and 
forestry  (LULUCF).  While  its  LULUCF  sector 
shifted  from  a  carbon  sink  into  a  carbon  source 
between  2019  and  2022,  the  most  recent 
reporting from 2023 shows that it has once again 
become  a  net  carbon  sink,  with  carbon  removals 
exceeding  carbon  emissions.  The  latest  available 
projections  show  an  overachievement  of  some 
4 MtCO2-eq for 2030(288)(). Further investments in 
healthy  forests  and  soils  are  key  to  building 
resilient  bio-based  product  value  chains  and 
enabling a growing, competitive EU bioeconomy. In 
particular, 
the 
monitoring  system  of  net  removal  data  would 
significantly support timely and effective action in 
the sector in the future. 

improvements 

continuing 

to 

Czechia  faces  environmental  and  public-
health  risks  due  to  persistent  agricultural 
pollution  pressures  and  rapid  transfer  of 
systems. 
in  groundwater 
contaminants 
Czechia’s 
(FUA)  has 
functional  urban  area 
considerably  expanded  in  recent  years.  Net  land 
taken  between  2018  and  2021  accounted  for 
819 ppm per year of the total urban surface of the 
country  (above  the  EU  average  of  670 ppm/year). 
Most of this land had previously been arable. This 
ongoing ‘land take’ and the associated soil-sealing 
has  made  the  ecosystem less  resilient,  decreased 
carbon 
flood 
protection (289). 

sequestration 

impaired 

and 

Water  quality  pressures  are  intensifying. 
Under the EU Nitrates Directive, 23% of Czechia’s 
groundwater monitoring stations recorded average 
nitrate  concentrations  above  25 mg/l 
(11.7% 
above  50 mg/l) (290).  This 
trend  underscores 
systemic  agricultural  pressures,  despite  Czechia’s 
relatively low livestock density (0.46 livestock units 

action 

(288)Climate 
progress 
https://climate.ec.europa.eu/eu-action/climate-strategies-
targets/progress-climate-action/eu-climate-action-progress-
report-2025_en. 

2025, 

report 

Fig. 

20, 

(289)EEA,  2022,  Land  take  and  land  degradation  in  functional 
urban 
areas, 
https://www.eea.europa.eu/en/analysis/publications/land-take-
and-land-degradation. 

2025,  Nitrate 

(290)EEA, 
https://www.eea.europa.eu/en/analysis/indicators/nitrate-in-
groundwater-8th-eap/nitrate-in-groundwater-nitrates-directive-
reporting. 

groundwater 

in 

in 

Europe, 

 
 
 
per  hectare  in  2023 (291).  A  14%  reduction  in 
ammonia  emissions  between  2018  and  2023(292) 
underscores improvements in emission control, but 
the  persistence  of  nitrate  pollution  indicates  gaps 
in Czechia’s nutrient management strategy. 

Pesticide  contamination  remains  a  critical 
issue.  Most  surface  water  bodies  exceed 
regulatory  thresholds  for  pesticide  residues (293) 
(66%  of  rivers  and  75%  of  lakes).  This  is  above 
the  EU  average  of  27%  for  rivers  and  18%  for 
lakes. Pesticide contamination also affects 25% of 
Czechia’s groundwaters (above the EU average of 
19%).  The  aquatic  ecosystem’s  contamination 
requires long-term additional efforts to ensure the 
safety of drinking water and the food chain. 

Over  73%  of  Czechia’s  soils  are  highly 
contaminated.  The  concentration  of  pesticides 
exceeds  0.05 mgkg-1 (294).  With  time,  this  can 
reduce  agricultural  productivity,  decrease  land 
value and result in high remediation costs. 

(291)Eurostat, Livestock density, 
https://ec.europa.eu/eurostat/databrowser/view/ef_fsi_lskds/defa
ult/table?lang=en. 

Ammonia 

(292)Eurostat, 
agriculture, 
https://ec.europa.eu/eurostat/databrowser/view/tai07/default/tabl
e?lang=en.  

emissions 

from 

(293)EEA,  2024,  Pesticides  in  rivers,  lakes,  and  groundwater  in 
Europe, 
https://www.eea.europa.eu/en/analysis/indicators/pesticides-in-
rivers-lakes-and. 

(294)Vieira  et  al.  (JRC),  2023,  Pesticides  residues  in  European 
agricultural  soils  –  Results  from  LUCAS  2018  soil  module, 
Publications Office of the European Union. 

98 

 
 
 
Table A10.1:Key Adaptation Indicators 

(1) EFFIS (European Forest Fire Information System). https://forest-fire.emergency.copernicus.eu/apps/effis.statistics/estimates.  
(2) The climate protection gap refers to the share of non-insured economic losses caused by climate-related disasters, based on modelling of the risk from floods, wildfires and windstorms and on 
the insurance penetration rate. Scale: 0 (no protection gap) – 4 (very high gap). EIOPA, 2025, Dashboard on insurance protection gap for natural catastrophes. 
(3) This measures total water consumption as a percentage of the renewable freshwater resources available for a given territory and period. Values above 20% are generally considered to be a 
sign of water scarcity, while values equal to or greater than 40% indicate severe water scarcity. 
(4) European Commission, 2024, Seventh Implementation Report from the Commission to the Council and the European Parliament on the implementation of the Water Framework Directive 
(2000/60/EC) and the Floods Directive (2007/60/EC) (Third River Basin Management Plans and Second Flood Risk Management Plans). 
(5) Indicator refers to concentrations of nitrate (NO3) in groundwater, measured as milligrams per litre (mgNO3/L). Nitrate can persist in groundwater for a long time and accumulate at a high level 
through inputs from anthropogenic sources (mainly agriculture). The EU drinking water standard is limited to 50 mgNO3/L to avoid threats to human health. 
(6) Net removals are expressed in negative figures and net emissions are expressed in positive figures. Reported data are from the 2025 GHG inventory submission. 2030 value of net GHG 
removals as in Regulation (EU) 2023/839 – Annex IIa.  
Sources: Eurostat, EEA and JRC. 

99 

Climate adaptation and preparedness:EU-27201920202021202220232024latest dataDrought impact on ecosystems10.191.740.035.860.27-2.76[area impacted by drought as % of total]Forest fires burned area (1)-          -          -          1 436       -          -           354 510             [burned area in ha. per year]Economic losses from extreme events-          183          687          79            22            2 625       40 452               [EUR million at constant 2022 prices]Insurance protection gap (2)---1              1              1               -[composite score between 0 and 4]Sub-national climate adaptation action23            24            27            32            33            34            34                       [% of population covered by the EU Covenant of Mayors for Climate & Energy]Water resilience:EU-27201920202021202220232024latest dataWater Exploitation Index Plus, WEI+ (3)3.40         2.35         2.34         3.24         2.16         -4.53                    [total water consumption as % of renewable freshwater resources]Water productivity132          138          145          139          152          -151[EUR per m3]Water abstractionWater abstraction by source (% from surface water)76.15%74.02%73.15%75.35%73.01%-Water abstraction by sectorAgricultureElectricity coolingManufactu-ringPublic water supplyMining and QuarryingConstru- ction 3.90%23.15%15.51%55.37%2.06%0.01%Status of water bodies (4)[% of water bodies in a good status]Surface water bodies (ecological)-----6%38%Groundwater bodies (quantitative)-----94%93%Nature restoration:EU-27201920202021202220232024latest dataEcosystem dependency---44%--44%[% of direct dependency]Protected area21.921.921.921.921.926.4[% of terrestrial protected areas]Invasive alien species (IAS)-----3229.2[number of IAS of Union concern]Damage cost of IAS----0.081.69[EUR billion]Eutrophication 324324295[AAE of area at risk of euthrophication]Sustainable agriculture and land use:EU-272012-20182018-2021latest dataYearly net land taken by Member State576          819          670                     [ppm of total urban surface per Member State]Land conversion in functional urban area [% of total land taken from 2018-2021]Arable land59%Complex and mixed cultivation0%Forests6%Herbaceous vegetation associations3%Open spaces with little or no vegetation0%Pastures29%Permanent crops2%Water1%Wetlands0%201920202021202220232024latest dataNitrates in groundwater (5)19.519.419.419.619.6[mgNO₃/l]Livestock density0.470.460.75(number of livestock units per hectare of utilised agricultural area)Ammonia emissions 96%96%96%96%96%-94%[% of total utlised agricultural area]Pesticide contamination on rivers and lakes water bodiesrivers66%27%[% of monitoring sites with pesticides exceeding thresholds, 2018-2023]lakes75%18%Pesticide contamination in soil 73%57%[% of samples with a concentration over 0.5 mg/Kg⁻¹]Net greenhouse gas removals from LULUCF (6)4762.57459.64427.21447.1-3568.4--198 421 [ktCO₂-eq] 
 
     
 
FAIRNESS 
ANNEX 11: LABOUR MARKET 

Czechia’s labour market remains resilient, yet 
some  structural  challenges  persist.  The  2025 
country-specific 
recommendations  for  Czechia 
highlighted  the  need  to  reduce  the  tax  burden  on 
low-income  workers,  improve  the  incentives  for 
people nearing retirement age to continue working, 
lower the tax and benefit disincentives for parents 
to  returning  to  work  and  improve  the  supply  of 
childcare  and  care  services  to  encourage  more 
women  to  enter the  labour  market. Moreover, the 
recommendations stressed the need to strengthen 
the  competitiveness  of  the  economy  and  reduce 
labour  shortages  by  tackling  skills  mismatches, 
simplifying the recognition of foreign qualifications 
the  participation  of  under-
and 
represented  groups  in  the  labour  market.  While 
overall  employment 
remains  strong,  women 
continue  to  face  barriers  to  full  participation, 
despite  recent  steps  to  improve  the  tax  and 
benefit incentives and increase the supply of early 
childhood  education  and 
to 
care.  Access 
employment  also 
limited  for  other 
remains 
disadvantaged  groups,  such  as  Czech  citizens  of 
Roma  background  and  persons  with  disabilities. 
The 
to  place  a 
disproportionate  burden  on  low-income  and  part-
time workers, exacerbating income inequality.  

framework  continues 

increasing 

tax 

regional 

Czechia  has  some  of  the  most  favourable 
employment  and  unemployment  rates  in  the 
EU,  although  regional  disparities  persist  and 
demographic  challenges  could  arise.  In  2025, 
the  employment  rate  of  people  aged  20-64 
reached  82.9%,  well  above  the  EU  average  of 
76.1%,  and  above  Czechia’s  national  2030  target 
of  82.2%.  In  2025,  the  unemployment  rate  of 
people aged 15-74 was 2.8%, the lowest in the EU 
the  Prague 
(EU:  6.0%).  At 
metropolitan  region  and  the  Střední  Čechy  region 
continue to have exceptionally low unemployment: 
1.8%  and  1.5%,  respectively.  In  contrast,  the 
northern  industrial  areas  in  Severozápad  and 
Moravskoslezsko  are  consistently  affected  by 
higher 
4.3% 
respectively) (295) – more than double the level  of 
the  capital  area,  which  points  to  structural  issues 
and  slower  economic  diversification 
in  those 
regions. The persistence of this gap indicates that 
measures such as upskilling, attracting investment 
and industrial transformation in regions which lag 

unemployment 

(4.8% 

level, 

and 

(295) [tgs00010] Unemployment rate by NUTS 2 region 

behind  the  rest  of  the  country  remain  crucial  for 
convergence.  Unemployed 
individuals  face  a 
significantly  higher  risk  of  poverty  compared  with 
the EU average (60% vs EU:  49.3.% in 2025).(296) 
In  the  long  term,  Czechia's  labour  market  faces 
strong  demographic  pressures.  In  2024,  Czechia's 
total  fertility  rate  was  1.36  child  per  woman, 
slightly above the EU average (297), but well below 
the  replacement  rate  of  2.1  and  the  lowest  in 
Czech history. 

labour  taxation  structure  places  a 
The 
heavier burden on low-income and part-time 
workers,  encouraging  non-standard  forms  of 
employment (298).  The  tax  wedge  on  labour 
remains comparatively high for low-wage earners: 
36.8% for those earning 50% of the average wage 
(EU 31.8%), and only 7.5% of workers aged 25-64 
have part-time jobs (EU: 17.1%). At the same time, 
Czechia  has  one  of  the  highest  shares  of  self-
employed  workers  in  the  EU  (13%  vs  EU:  9%  in 
2024) (299), and self-employed people earning less 
than EUR 82 200 have benefited from a generous 
lump-sum  tax  regime  since  2021.  Survey  data 
from  the  Czech  Statistical  Office  indicate  that  in 
Q4-2025,  nearly  1.5  million 
labour-law  work 
agreements were in place which also have a lower 
tax  burden.(300)  These  included  agreements  to 
complete a job (dohoda o provedení práce), which 
are  designed  for  short-term  employment,  and 
agreements  to  perform  work  (dohoda  o  pracovní 
činnosti), designed for longer-term part-time work. 
The  difference  in  tax  pressure  can  encourage 
lower-tax  work 
bogus  self-employment  and 
agreements,  which  reduces  social  contributions 
and  potentially  leads  to  lower  retirement  pension 
benefits. 

Women  continue  to  encounter  significant 
obstacles  to  accessing  and  remaining  in  the 

(296) [tesem210] At-risk of poverty rate of unemployed persons 

(297) Eurostat, DOI: https://doi.org/10.2908/DEMO_FIND, URL: 

https://ec.europa.eu/eurostat/databrowser/bookmark/b70204
a6-cd4b-4d29-9dc0-
717453cc842c?lang=en&createdAt=2026-02-
28T20:44:46Z 

(298) 2025 country-specific recommendations for Czechia (1.4): 

Reduce the tax burden on low-income workers. 

(299) Proposal for a Joint Employment Report 2026 

(300) Persons working under agreements on work performed 

outside an employment relationship | Products 

100 

 
 
 
 
 
 
 
In  2024, 

labour  market (301). 
the  gender 
employment  gap  reached  12.6  pps  but  has 
decreased  to  10.7  pps  in  2025  (EU  9.6  pps) (302). 
The  gender  pay  gap  was  18.5%  in  2024  (EU: 
11.1%),  driven  by  differences 
in  economic 
activities and occupations, long parental leave and 
over-representation  of  women  in  part-time  and 
non-permanent  forms  of  work.  In  2024,  a  tax 
reform  restricting  the  use  of  the  dependent-
spouse tax credit to households where one spouse 
is caring for a child under three years of age was 
introduced  with  a  view  to  reducing  financial 
to 
disincentives  for  second  earners.  Access 
childcare is a key barrier to women’s participation 
in the labour market. Only 7.9% of children under 
three  years  of  age  were  enrolled  in  formal 
childcare  in  2025,  an  improvement  of  3.5  pps 
compared  with  2023,  but  still  far  below  the  EU 
average of 40.5% (303). Funding from EU structural 
investment funds (304)  is supporting the expansion 
of  affordable  and  accessible  childcare  services. 
Despite  a  Technical  Support  Instrument  project 
titled ‘Developing a comprehensive framework for 
the  monitoring  and  evaluation  of  early  childhood 
education  and  care’,  which  was  concluded  in  July 
2025, Czechia does not have accurate data on the 
required  early  childhood  education  and  care 
capacity (Annex 13).  

(301) 2025 country-specific recommendations for Czechia (6): 

Lower the tax and benefit disincentives for parents to return 
to work and improve the supply of childcare and care 
services to encourage more women to enter the labour 
market. 

(302) Social Scoreboard. 

(303) See the 2025 country report for Czechia. 

(304) https://reforms-investments.ec.europa.eu/technical-support-
instrument-0/skills-education-and-training/developing-
comprehensive-framework-monitoring-and-evaluation-early-
childhood-education-and-care_en. 

Graph A11.1: Employment rates by NUTS-2 region 

Source: Eurostat: lfst_r_lfe2emprt 

Disadvantaged  groups,  including  Ukrainians 
under  temporary  protection,  Roma  and 
persons  with  disabilities,  continue  to  face 
barriers  in  the  labour  market (305).  In  2025, 
approximately  66%  (306)  of  economically  active 
Ukrainian  refugees  were  employed;  however,  half 
of  them  reported  working  in  roles  that  did  not 
match  their  qualifications.  In  addition,  47%  faced 
financial  stress,  37%  experienced  unstable 
employment, and 33% lacked appropriate legal or 
social  protection (307).  Czech  citizens  of  Roma 
background  remain  particularly  vulnerable  in  the 
labour market, with an employment rate of about 
55% in 2024, compared with 82.3% in the general 
population. Moreover, in 2024, the share of young 
people neither in employment nor in education and 
training  (NEETs)  was  8.6%  for  young  people 
overall  (EU:  11%),  compared  with  48%  among 
young  Roma (308).  The  disability  employment  gap 
increased  by  2.1  pps  in  2025  reaching  23.8  pps 
(EU:  24.2  pps).  In  2023,  Czechia  introduced  a  5% 
tax  reduction  in  social  contributions  for  part-time 
employment of target vulnerable groups, including 
parents  and  informal  carers.  The  act  on  Work 
Integration Social Enterprises entered into force in 
January  2025,  and  in  July  2025  the  government 
approved  the  Strategic  Framework  for  Social 
Entrepreneurship for 2026-2030.  

Labour  shortages  are  close  to  the  EU 
average  overall,  with  significant  differences 

(305) Integrace ukrajinských uprchlíků: trh práce, bydlení, znalost 

češtiny a vzdělávání dětí. 

(306) Document - High employment rates, but low wages: a 

poverty assessment of Ukrainian refugees 
in neighboring countries  

(307) Integrace ukrajinských uprchlíků: trh práce, bydlení, znalost 

češtiny a vzdělávání dětí. 

(308) Roma and Travellers Survey - 2025 - Country Data - Czechia. 

101 

60708090100TotalMalesFemales 
 
 
  
 
real  estate  activities 

between  sectors.  The  job  vacancy  rate  stood  at 
1.9% in Q4-2025, slightly below the EU average of 
2.0% (309).  In  some  sectors,  however,  job  vacancy 
rates  are  significantly  higher  –  especially  in 
administrative  and  support  service  activities 
(6.9%)  and 
(9.6%), 
accommodation and food service activities (5.3%). 
Employers’  perceptions  of  labour  shortages  vary 
by  sector:  in  October  2025,  42%  of  construction 
firms  considered  such  shortages  to  be  a  major 
production  constraint  (EU:  28%),  compared  with 
12% in both industry (EU: 18%)  and services (EU: 
23%) (310).  In  parallel,  although  a  comparatively 
high share of the population possess at least basic 
digital skills (70.45%, well above the EU average), 
the  share  of  ICT  specialists  in  total  employment 
(4.5%)  remains  below  the  EU  average  (5.0%), 
pointing 
the 
to  persistent  bottlenecks 
development of a workforce with advanced digital 
skills,  which  may  constrain  productivity  growth  in 
skill-intensive  sectors.  The  European  Social  Fund 
Plus  (ESF+) 
is  allocating  EUR 293  million  to 
facilitate  labour  market  access  for  jobseekers, 
particularly 
for  disadvantaged  groups,  and 
EUR 275  million  is  being  invested  under  the 
Recovery  and  Resilience  Facility  in  upskilling  and 
reskilling  initiatives.  The  2025  amendment  to  the 
Czech  Higher  Education  Act  simplifies 
the 
recognition  of  academic  qualifications  obtained 
abroad,  but  Czechia  has  the  second  highest 
reported  number  of  regulated  professions  in  the 
EU. (311).  The  Czech  public  employment  service 
(UPCR) is undergoing an ambitious transformation 
which involves modernising its operations through 
digitalisation, streamlined counselling and stronger 
remain, 
employer 
including work uncertainty among staff due to the 
restructuring, 
employer 
feedback,  gaps  in  youth  outreach,  and  skills 
mismatches.  

engagement. 

Challenges 

systematic 

limited 

in 

Skills  mismatches  are 
low. 
Macroeconomic  skills  mismatches  remained 
broadly  unchanged  in  2024,  at  around  17%, 
slightly  below  the  EU  average  of  19% (312). 

relatively 

(309) Methodological changes in official job vacancy rate statistics 
for Czechia collection took place starting from Q1-2025.  

(310) European Business and Consumer Surveys, data until 

Q4-2025 (i.e. they refer to October 2025). 

(311) Regulated Profession Database. 

(312)The macroeconomic skills mismatch indicator measures the 
discrepancy between employment outcomes for workers 
with low, medium and high levels of skills (represented by 

Moreover, 
relatively  few  Czech  workers  are 
overqualified  for  their  jobs:  in  2025,  13.2%  of 
higher  education  graduates  worked  in  jobs  below 
their  qualification  level,  against  21.4%  in  the  EU. 
The  overqualification  rate  was  below  the  EU 
average  in  nearly  all  sectors.  The  Ministry  of 
Labour  and  Social  Affairs  has  piloted  individual 
learning  accounts 
the  Database  of 
through 
Retraining and Further Training Courses, an online 
platform created under the recovery and resilience 
plan,  which  brings  together  course  providers, 
applicants  and  labour  offices.  In  April  2025,  the 
Czech  authorities  approved  a  framework  for  the 
operation of the database during the sustainability 
period,  using  ESF+  financing.  By  the  end  of 
October  2025,  153,395  people  had  already 
completed training through the system.  

in 

The labour market is characterised by limited 
mobility,  with  low  job  transition  rates.  The 
quarterly  likelihood  of  changing  jobs  in Czechia  is 
around  1.5%,  well  below  the  EU  average  of 
3.1% (313).  The  reasons  for  this  may  include  low 
unemployment  benefits,  which  may  encourage 
people  to  accept  a  job  offer  quickly  rather  than 
finding  a  more  appropriate  match.  Another 
possible  factor  is  limited  returns  from  skills 
development 
terms  of  career  or  wage 
progression  and  low  regional  mobility,  which  is 
linked both to the affordability of housing in cities 
and transport infrastructure (see Annex 19). These 
conditions hinder an efficient allocation of labour, 
low-productivity  sectors  to  continue 
enabling 
operating  due  to  low  wages,  while  the  emerging 
high-productivity  industries  struggle  to  attract 
qualified  workers.  Several  measures  entered  into 
force in January 2026 to support job transitions by 
increasing  early  unemployment  benefits  and 
extending  support  periods,  especially  for  older 
people.  Unemployment  benefits  have  been 
increased to 80% of previous earnings during the 
initial  phase  of  the  support  period,  but  payments 
drop  more  sharply  in  the  final  months,  reducing 
the  level  of  long-term  support.  At  the  same  time, 
retraining benefits have been recently set at 80% 
of the average wage in the national  economy (up 
from 60% previously); they are now also paid out 
for days spent attending courses.  

qualification levels, with ISCED 0-2 – low, 3-4 – medium and 
5-7 – high). 

(313) IDEA_PB_Strnulost_trhu_prace_0614A.pdf 

102 

 
 
 
 
28.4%  between  2019  and  2024  due  to  the  coal 
phase-out.  

Real wages continued to increase and finally 
reached  their  pre-pandemic  levels  in  2025. 
Nominal wages grew by 6.1% in 2024 and 6.5% in 
2025,  and  are  expected  to  increase  by  5.4%  in 
2026(314).  Following  a  sharp  decline  of  4.1%  in 
2023, real wages grew by 3.4% in 2024 and 4.5% 
in  2025,  and  are  projected  to  further  increase  by 
2.6%  in  2026  (315).  The  statutory  minimum  wage 
went  up  38%  between  2022  and  2026,  a  rather 
modest  increase  of  9%  in  real  terms  due  to  the 
relatively  high  inflation  rates  in  recent  years.  n 
2024,  collective  bargaining  coverage  stood  at 
43.2%,  and  although  both  higher-level  collective 
agreements  and  company-level  agreements  are 
legally  binding,  the  most  common 
level  of 
collective  bargaining  is  at  company  level  (316). 
While  trade  union  density  was  9.4%  in  2023,  the 
employer organisation density stood at 67.8%. The 
recently  adopted  action  plan  to  support  collective 
bargaining 
to 
strengthen  the  capacity  of  social  partners  and 
support  activities  promoting  social  dialogue  and 
collective bargaining. 

increased 

foresees 

funding 

the  emission 

Czechia  faces  considerable  labour  market 
challenges  in  the  transition  towards  climate 
neutrality.  While 
intensity  of 
employment  across  all  economic  activity  has 
decreased (-21.3% from 2019 to 2024), and jobs 
in the environmental goods and services sector are 
expanding  (+30.4%  from  2018  to  2023),  Czechia 
still  employs  the  highest  share  of  workers  in 
energy-intensive industries in the EU (7.0% vs EU: 
2.7%  in  2025).  This  is  driven  by  automotive 
manufacturing, which employed 4.2% of the Czech 
workforce  in  2024  –  the  highest  share  in  the  EU 
(1.5  in  2025).  While  this  subsector  generates  a 
substantial  share  (above  40%)  of  the  sector’s 
value  added,  it  is  highly  affected  by  the  shift 
towards clean mobility. As the skills required in the 
automotive  sector  evolve  due  to  the  ongoing 
automation  and  transition  to  electric  vehicle 
production,  upskilling  and  reskilling  investment  is 
essential to maintaining the workers’ employability 
and the country’s competitiveness. Training is also 
crucial  for  workers  leaving  the  mining  sector, 
which  experienced  an  employment  decline  of 

(314) Based on the European Commission Spring 2026 economic 

forecast. 

(315) Nominal wages from AMECO. For real wages, the HICP is 

used as deflator. 

(316) Collective bargaining in Czechia | Eurofound 

103 

 
 
 
 
 
 
 
ANNEX 12: SOCIAL POLICIES 

Overall, Czechia has low risks of poverty and 
social  exclusion,  but  some  groups,  such  as 
children,  Roma  communities  and  single 
parents, face increasing challenges. Czechia is 
its  2030  poverty 
towards 
making  progress 
reduction  target  but  still  lags  behind  in  reducing 
child  poverty.  Long-term  care  remains  heavily 
oriented  towards  residential  care.  Unmanageable 
levels  of  household  debt  remain  a  significant 
social  challenge  and  continue  to  hinder  labour 
market  participation  for  many  people.  Tackling 
these  issues  would  help  strengthen  Czechia’s 
competitiveness and inclusive growth.  

is 

low  but 

increasing 

in  Czechia 
The  risk  of  social  exclusion 
remains 
in  some 
regions. In 2025, 11.5% of the population was at 
risk  of  poverty  or  social  exclusion 
(AROPE), 
significantly  below  the  EU  average  of  20.8%.  The 
risk  of  poverty  or  social  exclusion  remains 
low  across  all  degrees  of 
comparatively 
urbanisation: 11.9% in cities (EU 21.0%), 11.6% in 
towns and suburbs (EU 20.5%), and 11.1% in rural 
areas  (EU  21.4%).  However,  poverty  and  social 
exclusion  are  unevenly  distributed  across  Czechia, 
with marked regional  disparities. In 2025, poverty 
rates ranged from 8.8% in Jihovýchod to 14.5.% in 
the  most 
Moravskoslezsko,  which 
vulnerable  area,  followed  by  Jihozápad  (13.7%) 
and  Severozápad  (13.5%)  (317).  The  coal regions 
and 
of Ústí nad Labem, 
lower 
Moravian Silesia experience 
income  levels,  higher  unemployment  and  poverty, 
and 
to 
poverty 
the decline of heavy industry and mining.  

Vary, 
persistently 

concentration due 

remains 

Karlovy 

greater 

in  2025 

Single  parents  and  quasi-jobless  households 
face  higher  poverty  risks.  The  situation  for 
single-parent  households  has  deteriorated,  with 
the AROPE rate rising from 30.8% in 2022 to  the 
EU average of 34.1% in 2025 (318). In 2025, single 
people  experienced  an  in  work  at  risk  of  poverty 
rate of 5.7%, well below the EU average of 11.8%. 
The  risk  was  even  lower  for  households  without 
dependent children (2.2% vs 7.0% in the EU), while 
households  with  dependent  children  faced  a 
poverty  risk  of  6%,  compared  with  9.8%  at  EU 
level.(319)  However,  the  situation  is  significantly 
worse for single-parent households, where the in-
work  poverty  rate  increased  from  16.4%  in  2022 
(EU  20.5%).(320)This 
to  23.4% 
deterioration  makes  single  parents  the  only 
household  type  where  Czechia  now  performs 
worse than the EU average, due to rising food and 
housing  prices,  high  relative  taxation  for  low-
income  workers,  and  greater  difficulties  returning 
to the labour market and balancing paid work with 
childcare,  particularly 
low 
participation in early childhood education and care 
(see  Annex  13).  Moreover,  between  2021  and 
2024, the at-risk-of-poverty rate for quasi-jobless 
households  rose  much  more  sharply  in  Czechia 
than in the EU overall, increasing by 15.3 pps from 
59.0%  to  74.3%  but  has  decreased  to  69.4%  in 
2025  (321).  Although  Czechia  initially  performed 
better  than  the  EU  average,  in  2025  its  rate  was 
3.1 pps above the EU level, showing a comparative 
deterioration.  A  comprehensive  approach,  as  set 
out  in  the  EU  anti-poverty  strategy,  could  help 
address  the  multiple  dimensions  of  poverty  and 
achieve the national anti-poverty target. 

in  the  context  of 

Czechia is making progress towards its 2030 
poverty  reduction  target  but  remains  behind 
on  reducing  child  poverty.  By  2030,  Czechia 
aims  to  reduce  the  number  of  people  at  risk  of 
poverty or social exclusion by 120 000, including a 
reduction  of  50 000  in  the  number  of  children 
affected. The overall population at risk of poverty 
or  social  exclusion  fell  by  51 000  between  2019 
and  2024,  but  the  number  of  children  at  risk  of 
poverty  increased  by  63 000.  To  mitigate  child 
poverty,  Czechia  is  implementing  the  European 
Child Guarantee (ECG) under its 2022 action plan. 
The European Social Fund Plus (ESF+) is providing 
EUR 434  million  over  2021–2027  to  support 
active inclusion and improve equal opportunities.  

(318) [ilc_li03] At-risk-of-poverty rate by poverty threshold and 

household type 

(319) [ilc_iw02] In-work at-risk-of-poverty rate by household type 

(320) [ilc_iw02] In-work at-risk-of-poverty rate by household type 

(317) [ilc_peps11n] Persons at risk of poverty or social exclusion by 

(321) [tespm060] At risk-of-poverty rate for the population living in 

NUTS 2 region 

(quasi-)jobless households 

104 

 
 
 
 
 
Graph A12.1: In-work at-risk-of-poverty rate by 
household type 

Source: Eurostat, SILC (ilc_iw02) 

a 

linked 

gradual 

indicating 

is  closely 

Over-indebtedness  and  debt  enforcement 
continue to push many people in Czechia into 
poverty  and  undeclared  work.  The  number  of 
people  subject  to  debt  enforcement  proceedings 
declined  from  646 000  in  2023  to  596 000  in 
2025, 
improvement. 
Nevertheless, this number represents 5.5% of the 
Czech  population,  and  375 000  people  are 
involved in multiple debt enforcement proceedings 
(322).  Over-indebtedness 
to 
poverty,  housing 
insecurity  and  poor  mental 
health. 
Indeed,  55%  of  people  facing  over-
indebtedness  live  in income  poverty  (vs  10.2%  of 
the  overall  population),  71%  live  in  rental  or 
unstable  housing  (vs  27%),  52%  live  in  poor-
quality  housing 
(vs  26%),  and  50%  report 
depression or anxiety (vs 17%) (323). Awareness of 
available debt relief options remains limited, which 
may hinder their effective and consistent use. Over 
40% of individuals affected  by  over-indebtedness 
are  unfamiliar  with  the basic  eligibility  conditions, 
45% are unaware that remaining debt is generally 
written  off,  and  68%  do  not  know  that  the  30% 
repayment  requirement  was  abolished  in  October 
2024.  Debt 
proceedings  are 
in  structurally 
disproportionately  concentrated 
disadvantaged  regions,  with  Ústecký  (12.5%)  and 
Karlovarský  (11.2%)  displaying  rates  more  than 
double  the  national  average,  while  Liberecký 
(8.1%)  and  Moravskoslezský  (8.0%)  record  higher 
rates than wealthier regions such as Praha (5.6%) 
and Středočeský (5.2%) (324). 

enforcement 

exclusion 

labour-market 

(325).  Furthermore, 

Roma  people  continue  to  face  significant 
social and economic challenges despite some 
improvements.  They  remain  disproportionately 
affected  by  discrimination,  poverty,  educational 
and 
segregation, 
overcrowded  housing 
the 
proportion  of  Roma  people  who  complete 
secondary  education  decreased 
significantly 
between  2024  and  2026  (see  Annex  13).  These 
interlinked  challenges  perpetuate  a  wide  gap 
between  Czech  citizens  of  Roma  background  and 
the  general  population,  despite  improvements  in 
material  deprivation  and  employment  outcomes. 
Poverty  remains  systemic,  with  52%  of  Czech 
citizens  of  Roma  background  at  risk  of  poverty, 
compared  with  11.3%  in  the  general  population. 
Severe  material  deprivation  still  affects  around  a 
quarter  of  Roma  households,  although 
the 
situation  has  improved  compared  with  2016.  By 
contrast, the proportion of Roma children at risk of 
poverty  has  increased  to  70%,  compared  with 
14%  in  the  general  population,  mirroring  the 
upward  trend  observed  for  children  overall.  The 
number  of  Czech  citizens  of  Roma  background  is 
estimated  at  250 000,  but  the  absence  of 
it 
comprehensive,  disaggregated  data  makes 
difficult 
targeted 
measures.  More  detailed  and  targeted  data 
support 
evidence-based 
collection 
policymaking, 
and 
progress 
help  monitor 
strengthen  the  evaluation  of  reforms,  including 
inclusive  education.  Full 
those 
compliance  with  the  Race  Equality  Directive  is 
essential  to  guaranteeing  equal  treatment  and 
preventing  discrimination  across  all  sectors, 
particularly  education.  Effective  implementation 
could  help  dismantle  structural  barriers  and 
promote  inclusive  policies  that  uphold  the  rights 
and  employment  prospects  of  Roma  communities 
and other vulnerable groups. 

to  design  and 

focused  on 

implement 

could 

The  social  integration  of  people  fleeing  the 
war in  Ukraine remains  uneven.  At  the  end  of 
November 2025, the ratio of temporary protection 
beneficiaries 
the 
population  in  Czechia  was  the  highest  in  the  EU 
(36.0  per  1 000  people).  Although  66%  of 
economically  active  refugees  are  employed  (326), 
only 20% of households report incomes above the 

from  Ukraine 

relative 

to 

(322) Statistiky exekucí | IPŘP. 

(323) Vstupu do oddlužení brání stres, neznalost i obavy. Téměř 

polovina dlužníků nezná základní smysl procesu. 

(324) Podíl osob v exekuci po krajích (Q3 2025) / Mapa zadlužení. 

(325) Roma and Travellers Survey - 2025 - Country Data - Czechia. 

(326) Document - High employment rates, but low wages: a 

poverty assessment of Ukrainian refugees in neighboring 
countries 

105 

0510152025Single personSingle person with dependent childrenTwo or more adults without dependentchildrenTwo or more adults with dependent childrenHouseholds without dependent childrenHouseholds with dependent childrenCzechiaEU 
  
 
 
in 

from  Ukrainian 

national median (327). In Q3-2025, refugees under 
temporary  protection  contributed  CZK 8.2 billion 
(about  EUR 337 million) 
taxes  and  social 
contributions,  while  related  state  spending  was 
CZK 3.9 billion  (about  EUR 160 million)(328).  Since 
early  2024,  revenues  from  taxes  and  social 
contributions 
refugees  have 
consistently  exceeded  costs.  Approximately  two 
thirds of Ukrainian refugees have reached at least 
an  intermediate  level  of  Czech  (B1)(329).  The 
growing  number  of  Ukrainian  citizens  under 
temporary  protection  who  plan  to  remain  in  the 
country long term could benefit from better access 
to  language  training,  suitable  jobs  and  social 
inclusion measures.  

The  long-term  care  system  remains  heavily 
oriented  towards  residential  services,  which 
poses risks linked to high care costs. In 2022, 
60.2%  of  public  long-term  care  spending  was 
allocated  to  residential  care  (EU:  46.2%),  while 
only 8.3% went to home care (terénní služby), far 
(330). 
below 
the  EU  average  of  28.8% 
Approximately  63%  of  people  with  disabilities 
between 18 and 64 do not used field services due 
to  systemic  issues  such  as  insufficient  capacity, 
inflexible  services,  and  high  costs,  rather  than 
personal  preference(331).  Furthermore,  65%  of 
for  people  with 
residential  social  services 
disabilities  is  provided  in  large  institutional-type 
facilities  (332).  The  percentage  of  the  population 
over  65  and  those  with  severe  difficulties  who 
receive  home  care  services  is  substantially  lower 
than  the  EU  average  (16.2%)  vs  28.6%)  (333). 
residential  care 
(23.5%)  of 
Around  18 000 

(327) Spurný, M. & Tabery, P. (2025). Integration of Ukrainian 

Refugees: Labour Market, Housing, Knowledge of Czech and 
Children's Education. Hlas Ukrajinců Research, Waves 8 and 
9. Prague: Institute of Sociology of the Czech Academy of 
Sciences. 

(328) Uprchlíci z Ukrajiny dál posilují českou ekonomiku: příjmy do 

rozpočtu převyšují výdaje na pomoc | MPSV. 

(329) CVVM 2025. Prezentace aplikace PowerPoint. 

(330) The EU Monitoring Framework on the Council 

Recommendation on access to affordable high-quality long-
term care 

(331) PAQ research: Living Conditions of Persons with High Care 

Needs — Research Report 

(332) Analýza základních dat o kapacitách a financování sociálních 
služeb pro osoby se zdravotním znevýhodněním (a seniory) v 
Česku 

(333) 2024 Ageing Report. Economic & Budgetary Projections for 

patients  in  retirement  and  special  care  homes 
have low or moderate needs and could potentially 
live  at  home  with  appropriate  support.  The 
deinstitutionalisation  process  continues  to  face 
significant  administrative  and 
implementation 
obstacles  due  to  varying  levels  of  commitment 
among  regional  governments,  with  home  and 
community service capacity being roughly 3 times 
lower  in  some  regions  compared  to  others  (334). 
There  is  currently  no  accurate  way  to  determine 
real  capacity  needs,  as  waiting-list  data  count 
applications rather than people and are inflated by 
duplicates  and  applications  that  have  not  been 
cancelled.  Only  after  the  entry  into  force  of  a 
personal  identifier  in  January  2028  will  it  be 
possible to calculate the unmet demand for long-
term  care  accurately.  Maintaining  the  current 
service model is estimated to require 35 000 beds 
by 2035 as a result of population ageing (335). The 
Ministry  of  Labour  and  Social  Affairs 
is 
undertaking  an  analysis  that  will  compare  future 
long-term care costs under the current institutional 
model  with  scenarios  that  expand  home  and 
community (ambulantní služby) provision. Between 
2021  and  2027,  the  recovery  and  resilience  plan 
and  ESF+  are  investing  EUR 365  million  and 
EUR 197 million, respectively, to improve access to 
high-quality,  sustainable  and  affordable  care, 
while the European Regional Development Fund is 
providing  EUR 233  million  to  support  outpatient 
care and deinstitutionalisation. However, long-term 
progress  will  require  sustainable  national  funding 
and  stronger  involvement  from  the  private  and 
social economy sectors. A new long-term care law 
came  into  force  in  2025  under  the  recovery  and 
resilience  plan.  It  aims  to  integrate  health  and 
social  care,  set  service  quality  standards,  expand 
home  and  community-based  options,  and  ensure 
adequate  financing.  Home  care  costs  are  among 
the  highest  in  the  OECD.  Without  public  support, 
the  cost  of  long-term  care  for  older  people 
represents  a  large  percentage  of  their  national 
median  disposable  income  (86%  for  home  care 
with low needs, 299% for home care for moderate 
needs, 548% for home care for severe needs and 
143% for institutional care for severe needs) (336). 
Effective from 1 January 2026, an amendment to 

(334) Analýza základních dat o kapacitách a financování sociálních 
služeb pro osoby se zdravotním znevýhodněním (a seniory) v 
Česku 

(335) Predikce potřeb dlouhodobé péče: Česko čeká jeden z 

největších úkolů příštích desetiletí | MPSV. 

the EU Member States (2022-2070). 

(336) Social protection for older people with LTC needs | OECD. 

106 

 
 
 
the  Social  Services  Act  sets  monthly  care 
allowance  amounts  for  adults  at  approximately 
EUR 54  (CZK 1 300)  for 
low  needs,  EUR 223 
for  moderate  needs,  EUR 610 
(CZK 5 400) 
(CZK 14 800) 
and 
EUR 947(CZK 23 000)  for  full  dependence  if  care 
is provided by a residential social services provider, 
or EUR 1 114 (CZK 27000) (337) 

severe 

needs, 

for 

The  reform  of  the  social  benefits  system 
aiming  to  simplify  support  has  entered  into 
force.  The  reform,  which  combines  four  means-
tested  benefits  into  a  single  payment,  will  reduce 
the  overall  proportion  of  households  eligible  for 
social  benefits,  particularly  among  households  in 
the  second 
income  decile  and  single-person 
households (338), which could lead to an increase in 
income poverty among these vulnerable groups. To 
help  more  households  receive  support,  more 
proactive  and  better  targeted  outreach  is  needed. 
Adjusting  the  subsistence  minimum,  which  is 
currently  low,  revising  housing  costs  to  reflect 
regional  rent  differences  and  broadening  the 
vulnerability  criteria  could  ensure  the  reform  is 
better  targeted  (339).  The  law  took  effect  on 
1 October 2025  and  is  currently  in  a  nine-month 
transition phase.  

protection,  with 

Energy poverty remains comparatively low in 
Czechia. In 2025, 4.1% of the population reported 
being  unable  to  keep  their  homes  adequately 
warm,  well below the EU average of 8.8%.(340). To 
address  energy  poverty,  Czechia  has  introduced 
national  energy  efficiency  programmes.  However, 
existing  policies  focus  primarily  on  social  and 
targeted 
consumer 
initiatives addressing underlying structural drivers. 
Price  pressures  from  the  EU  emissions  trading 
system for buildings and road transport (ETS2) are 
projected to be relatively limited. Heating spending 
is  projected  to  increase  by  less  than  the  EU 
average,  reflecting  lower  use  of  fuels  covered  by 
ETS2 in household energy use, although solid fuels 
in  many  other 
remain  more  prevalent  than 
Member  States.  From  2026,  the  Social  Climate 
Fund  will  help  mitigate  these  impacts  through 

fewer 

(337) Příspěvek na péči | MPSV. 

(338) Superdávka pomůže rodinám čerpat více podpor. Ohrozí ale 

jednočlenné domácnosti. 

(339) Superdávka pomůže rodinám čerpat více podpor. Ohrozí ale 

jednočlenné domácnosti. 

(340) [sdg_07_60] Population unable to keep home adequately 

warm by poverty status+ 

targeted 

energy 

efficiency 

investments.  

Transport 

households. 

Transport  affordability  is  a  moderate  issue 
overall but remains a significant concern for 
fuels 
low-income 
spending  is  projected  to  rise  by  less  than  the  EU 
average as a result of ETS2. However,  vulnerable 
households with limited alternatives may continue 
to  face  significant  pressure.  Cross-regional  public 
transport is not interconnected due to the presence 
of  different  public  providers,  which  also  results  in 
different  fare  systems  (see  Annex  18  (341)).  In 
many  rural  or  remote  districts,  public  transport 
options are limited or slow, and people rely on cars 
instead  (342).  Strengthening  the  affordability  and 
availability  of  public transport  would  therefore  be 
beneficial,  for  example  by  deploying  on-demand 
transport services (343). 

(341) Koncepce veřejné dopravy 2020-2025, Ministry of Transport. 

(342) https://csu.gov.cz/produkty/over-three-quarters-of-employed-
persons-commute-to-work-at-leastfive-times-a-week-most-
often-by-car. 

(343) No data on public transport accessibility in Czechia exist on 
the Commission’s Transport Poverty Hub, because only 
partial data are available on Czechia’s national access point 
(set up under Delegated Regulation (EU) 2017/1926 (the 
Multimodal Travel Information Services Regulation)), which 
are not usable as they do not include stop coordinates. 

107 

 
 
 
 
ANNEX 13: EDUCATION AND SKILLS 

reduce 

Skills  mismatches,  low  tertiary  educational 
attainment  and  low  adult  learning  combined 
with  educational  inequalities  pose  a  risk  for 
competitiveness  and  for  the  green  and 
digital  transitions.  The  2025  country-specific 
recommendations  (CSRs)  for  Czechia  pointed  to 
the need to strengthen the competitiveness of the 
economy  and 
labour  shortages  by 
addressing  skills  mismatches.  Moreover,  the  CSRs 
stressed  the  importance  of  boosting  educational 
outcomes  by  increasing  participation  in  tertiary 
education,  reducing  dropout rates and  providing 
more student support. They also called to increase 
the number of students and graduates in science, 
technology, engineering and  mathematics  (STEM), 
especially for women. Czechia was also invited to 
expand  access  to  general  secondary  education, 
enable students to transition between general and 
vocational education, and provide more support for 
disadvantaged  schools  and  pupils, 
including 
in  enhancing 
Roma. Efforts  have  been  made 
access to general secondary and higher education, 
but support for students to complete their tertiary 
education  remains  limited,  including  in  STEM 
to  support 
fields.  Steps  have  been 
disadvantaged  schools,  but  challenges  persist.  In 
the  declining  number  of  Roma 
particular, 
the 
education 
completing 
segregation of Roma pupils are pressing concerns. 
Czechia  combines  a  very  high  number  of  people 
who  have  completed  vocational  education  and 
training  (VET)  with  strong  employment  outcomes 
despite  limited  work-based  learning  experience. 
in  education  and  training 
Adult  participation 
learning 
low.  Greater  emphasis  on 
reskilling  and  upskilling  would  help  to  adapt  to 
changing  skills 
requirements  and  strengthen 
competitiveness. 

secondary 

remains 

taken 

and 

Increasing  participation  in  high-quality  early 
childhood education and care (ECEC) requires 
further policy action. In 2024, 85.2% of children 
between  the  age  of  three  and  the  start  of 
compulsory  primary  schooling  in  Czechia  were 
enrolled  in  ECEC  (EU  average:  95.0%)  (344).  The 
participation of Roma children in ECEC is very low 
(48% in 2024 vs 85% of Czech children in general; 
EU average: 53%) and has slightly decreased (by 3 
percentage points (pps), down from 51% in 2021) 
(345).  Furthermore,  the  share  of  children  under 

increasing 

three  who  attend  formal  childcare  in  Czechia  is 
among  the  lowest  in  the  EU  (7.9%  in  2025;  EU 
average:  40.5%),  but  slightly 
(up 
3.5 pps  compared  with  2023).  The  ECEC  capacity 
shortages (346) decrease naturally in coming years 
due  to  demographic  developments.  At  the  same 
time,  further  policy  attention  is  needed  to  ensure 
high  quality,  against  generally 
lower  formal 
qualification  levels  for  ECEC  teachers  than  in  the 
EU average (347) and missing unified standards for 
ECEC.  A  new  framework  programme  for  pre-
education will be implemented in all kindergartens 
in 2027. With the support of the Technical Support 
Instrument,  a  new  Framework  for  the  Monitoring 
and  Evaluation  of  Early  Childhood  Education  and 
Care  was  developed  (348).  However,  it  is  a  non-
The 
binding, 
implementation will require further investments in 
data  collection  and  monitoring  tools.  According  to 
a  recent  Education  Act  amendment  (2025)  (349), 
school  entrance  deferrals  are  granted  only  in 
exceptional cases (see Annex 11). 

recommendatory 

document. 

Declining  basic  skills  among  disadvantaged 
students,  particularly  in  mathematics,  and 
regional  disparities  exacerbate  inequalities. 
One  in  four  15-year-old  students  (25.5%;  EU 
average:  29.5%)  fail  to  reach  basic  proficiency  in 
mathematics, and one in two fail to do so among 
disadvantaged students (48.5%), according to PISA 
2022.  In  Děčín,  Most  and  Teplice  (350),  Ústí  nad 
Labem  region,  more  than  8%  of  pupils  fail  to 
complete lower secondary school each year, while 
in  Prague-West  it  is  only  1%.  Czech  students  are 
tracked 
into  different  education  programmes 
earlier compared to some other countries. Limited 
availability  and  accessibility  of  general  education 
disproportionately affect students with less family 
support.  In  2023,  a  higher  share  of  students  with 
some  or  severe  limitation  or  disability  left  school 
early  in  comparison  with  those  without  limitation 
(18.4% vs 5.1%), and this is larger than in the EU 
(351).  A  new 
on  average 
(19.1%  vs  9.3%) 
framework  education  programme  introduces  an 

(346) https://csu.gov.cz/births. 

(347) Eurydice, 2025. 

(348) Developing a comprehensive framework for the   monitoring 
and evaluation of early childhood education and care in the 
Czech Republic - Reforms and Investments. 

(349) Act No. 561/2004 Coll. 

(344) Eurostat: educ_uoe_enra21. 

(350)According to Commission’s own information  

(345) Fundamental Rights Agency, 2025. 

(351) EU-SILC 2023 (2024) 

108 

 
 
 
 
 
updated  curriculum  in  all  primary  schools  from 
September  2028  (352).  It  includes  strengthening 
key  competences,  STEM  subjects  and  English 
language  learning.  To  enhance  general  education 
options, Czechia has introduced a new educational 
pathway  ‘lyceum’  in  the  2025/2026  school  year, 
which combines general secondary education with 
later  specialisation 
in  professional  subjects. 
Furthermore,  the  country  is  piloting  a  reform  to 
enable school management to dedicate more time 
to pedagogical leadership.  

leavers 

(18-24)  completed 

Further  action  to  address  the  increasing 
segregation  of  Roma  children  in  education 
and  to  improve  their  educational  outcomes. 
Around 58% of Roma children in Czechia attended 
a  school  where  all  or  most  pupils  are  Roma  in 
2024,  compared  to  29%  in  2016  (353)).  Schools 
with  a  high  concentration  of  Roma  pupils  are 
found  more  often  in  poorer  regions  such  as  the 
Ústí nad Labem Region and the Moravian-Silesian 
Region, but segregated schools are also present in 
the Central Bohemian, Liberec and Zlín Regions, as 
well  as  in  Prague.  A  report  showed  that  36%  of 
Roma  pupils  left  education  before  age  16;  and 
64,6%  of  Roma 
lower 
secondary education (ISCED-2) (against 6.2%(354)() 
early  school 
in  general  education). 
Furthermore,  the  share  of  Roma  with  upper-
secondary  education 
significantly  decreased 
between  2016  and  2024  (see  Graph  A13.1).  In 
2024,  just  17%  of  young  Roma  in  Czechia  had 
completed upper-secondary education, down from 
38%  in  2016  (EU  average:  32%),  compared  with 
90% of the general population. A new methodical 
to 
portal 
municipalities  and  schools.  The  2025  amendment 
to the Education Act establishes the possibility for 
differentiated  school  funding  based  on 
the 
‘complexity  of  education’  provision  (part  of  a 
reform  under  Czechia’s  recovery  and  resilience 
plan).  However,  the  financial  resources  necessary 
for its implementation have not yet been secured. 
From  2026,  the  funding  of  support  positions  at 
schools  such  as  psychologists  and  social  workers 
are embedded in this act and covered by the state 

(Desegregace.cz) 

available 

is 

(352) https://mojeedu.npi.cz/. 

(353) Fundamental Right Agency, 2024. Furthermore, according to 

the PAQ research (2025), there are more than 130 
segregated schools, of which in 78 of them Roma children 
make up more than half of the students. It should be noted 
that there are methodological differences in the data 
collection for FRA and PAQ research. 

(354) vz_555.pdf. 

budget.  Collecting  data  on  Roma  pupils  would  be 
crucial  to  evaluate  the  impact  of  measures  on 
desegregation.  Overcoming  inequalities in  primary 
and  secondary  education  is  key  to  increasing 
enrolment in higher education.  

Czechia  faces  staff  shortages 
in  STEM 
subjects.  Across  Czechia,  teacher  shortages  are 
(physics, 
particularly  acute 
mathematics and information and communication 
technology 
regional 
(ICT) 
disparities  occur 
in  the  shares  of  non-fully 
qualified teaching. 

in  STEM  subjects 

(355).  Significant 

Graph A13.1: Roma people aged 20-24 who 
completed at least upper-secondary education 
between 2016 and 2024 (in %) 

Source: Fundamental Rights Agency, Rights of Roma and 
Travellers in 13 European countries, 2024 

The lowest proportion of qualified teachers is 
in  the  Central  Bohemian  Region  (82.7%, 
Prague (83.4%) and the Karlovy Vary Region 
(84.3%) (356). The ratio of teacher salaries to the 
earnings  of  those  with  tertiary-education  has 
increased  (from  0.66  in  2018  to  0.72  in  2024), 
although  it  remains  lower  than  the  EU  average 
(0.85)  (357).  From  January  2026,  teacher  salaries 
increased  by  7%,  following  a  similar  increase  in 
to  some 
September  2025 
projections, the need for teachers in schools might 
decrease  by  around  one  tenth  over  the  next 
decade because of a decline in students (359). Just 
slightly  more  than  half  of  teachers  in  Czechia 

(358).  According 

(355) OECD Economic survey Czechia, 2025. 
(356) https://msmt.gov.cz/file/65003. 
(357) OECD’s Education at a Glance 2025. 
(358) Ministry of Education, Youth and Sport, 2025. 
(359) Koucky, 2025. Teacher Shortage: How to Identify,              

Solve and Prevent It.  

109 

382217282732849002040608010020162021/20192024CzechiaEU totalGeneral population 
 
   
 
(360).  A 

in  2024) 

(57.2%)  report  having  participated  in  impactful 
professional  learning  (around  the  EU  average  of 
56% 
transfer  of 
competences  has  placed  new  responsibilities  on 
municipalities,  including  in  the  area  of  teacher 
training,  even  though  some  small  municipalities 
may  have  limited  financial  and  administrative 
capacity to provide it.  

recent 

Graph A13.2: Students who have completed 
secondary education 

Source: Vývoj počtu absolventů SŠ a VOŠ | Infoabsolvent.cz 

Czechia is improving teachers’ initial training 
and  education.  A  programme  to  increase  the 
capacity  of  public  universities  in  teaching,  special 
education and psychology started in 2026 (361). In 
2025,  a  programme  was  announced  aiming  to 
support universities in offering study programmes 
for future teachers in high-demand subjects, such 
as computer science and mathematics (362).  

The  VET  system  shows  strong  results  in 
terms  of  participation  and  employability, 
despite limited work-based learning.  In 2025, 
the employment rate for people who had recently 
completed  VET  was  high  at  85.7%  (EU  average: 
80.2%),  but  only  15.2%  of  people  who  had 
recently completed VET in Czechia had work-based 
learning  experience,  far  below  the  EU  average  of 
66.0%  (363).  Clear  rules  for  training,  enhanced 
collaboration 
and 
stakeholders  and  financial  incentives  for  both 
schools and employers could help to expand work-
based  learning  opportunities  and  increase  the 

between 

schools 

VET 

(360) OECD TALIS 2024 

(361) https://msmt.gov.cz/vzdelavani/vysoke-skolstvi/program-na-
podporu-navyseni-kapacit-verejnych-vysokych-skol-1. 

(362) https://msmt.gov.cz/vzdelavani/vysoke-skolstvi/program-na-
podporu-navyseni-kapacit-verejnych-vysokych-skol-1. 

and 

(Výuční 

long-term  employability  of  VET  participants.  In 
2025,  75.7%  of  all  those  who  had  completed 
secondary school had completed VET programmes: 
(25,903  students)  held  a  vocational 
27.4% 
certificate 
48.3% 
list) 
(45,690 students)  had  completed  baccalaureate-
oriented VET (Maturita) (364). Among medium-level 
VET  pupils,  42.7%  were  enrolled  in  STEM  fields 
(above  the  EU  average  36.6%).  Only  12.7%  of 
STEM  pupils  in  VET  were  female  (EU  average 
15.9%).  Only  25%  of  medium-level  VET  pupils 
completed  general  secondary  education.  (365)This 
pattern is  related to long-term structural features 
of  the  Czech  system  and  economy,  such  as 
industry-oriented  training,  early  tracking  and  low 
permeability  between  educational  pathways.  In 
2025, the National Pedagogical Institute published 
a  new  structure  of  upper-secondary  education 
programmes reducing the number of programmes 
from 283 to 186, aiming to increase transparency, 
permeability and flexibility in VET. (366) 

Czechia  performs  well  on  digital  skills,  but 
some  groups  still  require  further  training.  In 
2025,  70.5%  of  the  population  had  at  least  a 
basic  level  of  digital  skills  (EU  average:  60.4%) 
(367). Among older adults, 56.1% of men aged 55-
64  and  61.5%  of  women  aged  55-64  have  basic 
or  above  basic  overall  skills  levels  (EU  average: 
46.5%  and  42.4%,  respectively).  Among  adults 
with  lower  levels  of  education,  58.6%  report 
having  at  least  a  basic  level  of  digital  skills  (EU 
average:  33.6%)  (368).  Data  from  the  International 
Computer  and  Information  Literacy  Study  show 
similar  results  the  younger  generation,  as  Czech 
the  highest  among 
eighth  graders 
participating EU countries. The gap in digital skills 
between  students  with  lower  and  higher  parental 
education 
relatively  small  suggesting  a 
consistent level of digital competencies among all 
students. 69% of Czech pupils in lower secondary 
education  use  artificial  intelligence  (AI)  regularly 

ranked 

is 

(364) Vývoj počtu absolventů SŠ a VOŠ | Infoabsolvent.cz 

(365) Eurostat, based on UNESCO-OECD-Eurostat administrative 

data collection, data code [educ_uoe_enrs10] (% calculated 
by EMPL). 

(366) https://revize.rvp.cz/sov/navrh-ios. 

(367) Eurostat: [isoc_sk_dskl_i21] Individuals' level of digital skills 

(from 2021 onwards). 

(363) EC Education and training monitor 2025 – Comparative 

(368) Eurostat: [isoc_sk_dskl_i21] Individuals' level of digital skills 

report.2025, https://data.europa.eu/doi/10.2766/2221794. 

(from 2021 onwards). 

110 

050001000015000200002500030000350004000020202021202220232024Upper secondary vocational education (with apprenticeship certificate)General Academic secondary education (grammar school/ GymnaziumUpper secondary professional education with school-leaving exam (Maturita) 
  
 
 
for  school-related  purposes,  while  62%  of  them 
believe that AI should be taught in schools (369).  

the 

among 

including 

countries  with 

Participation  in  tertiary  education  remains 
low, 
students  with 
among 
disabilities,  and  affordable  housing  is  a 
major  challenge  for  students.  In  2025,  only 
36% of young people aged 25 - 34 held a tertiary 
degree, below the EU-level target of 45% by 2030 
(EU  average:  44.8%)  (370).  The  share  of  students 
enrolling  in  tertiary  education  has  grown  since 
2015  (371).  4.4%  of  all  doctoral  students  pursue 
ICT,  more  than  in  the  EU  on  average  (3.8%),  but 
only  19.4%  of  them  are  women  (EU  average: 
24.3%),  although  their  share  has  substantially 
increased  (from  12.0%)  since  2015.  Czechia  is 
low 
also 
intergenerational  education  mobility:  children  with 
low  parental  education  face  higher  barriers  to 
tertiary  qualifications  (372).  In  2023,  the  share  of 
persons  with  disabilities  (aged  25-34)  who  had 
completed  tertiary  education 
in  Czechia  was 
29.8%  (EU  average:  36%),  lower  than  among 
people  without  disability  (373)  (36%;  EU  average: 
45.8%). Furthermore, by 2050, student cohorts are 
projected to shrink by 10.5%. In Czechia, over one 
third  of  students  drop  out  of  tertiary  education 
without  obtaining  a  degree.  Reasons  for  high 
dropout  rates  from  tertiary  education  include  low 
financial 
student 
employment, 
insufficient  career  guidance  and 
mismatches between the programme and student 
expectations. In 2023, 24.9% of all students were 
enrolled  in  STEM  programmes,  below  the  EU 
average of 26.9%, and the proposed EU target of 
32%  (374).  The  share  of  women  graduating  from 
higher  education  is  steadily  growing,  including  in 
STEM programmes (from 34.5% in 2015 to 37.7% 
in  2023)  (375).  However,  there  is  still  a  significant 
gap between female enrolment in STEM and 33%) 
their  enrolment  in  tertiary  education  in  general 
(57%).  About  70%  of  students  work  during  term 
time, one of the highest rates in the EU, with two 

support,  high 

levels  of 

(369) AI Kompas study, 2025.AI-Kompas-2025.pdf 

https://scioresearch.com/media/d1zmsmjq/scioreserch_2025
_final.pdf 

(370) Eurostat, edat_lfse_03. 

(371)Eurostat: educ_uoe_entr03. 

(372)According to Commission’s own information 

(373) EU-SILC 2023 (release 2024 v1). 

(374) Eurostat: educ_uoe_entr03. 

(375) Eurostat: educ_uoe_grad02. 

thirds  working  to  cover  living  costs.  Affordable 
housing  remains  a  major  challenge  for  university 
students,  with  government  grants  accounting  for 
just  2%  of  their  income,  compared  to  12%  on 
average  in  the  EU  (376).  Supporting  young  people, 
enhancing their motivation and addressing teacher 
shortages are key for attracting students to STEM. 
The drivers behind young people’s choices to study 
STEM  subjects  are  not  systematically  mapped. 
However,  available  regional  data  suggest  that 
societal  perceptions  of  STEM  studies  (e.g.  their 
perceived difficulty) and professions (e.g. expected 
earnings),  as  well  as  access  to  high-quality 
information  on  STEM  career  opportunities,  shape 
Czech students’ interest and motivation (377). 

Czechia is expanding flexible study options to 
improve  access  to  tertiary  education  and 
strengthen  doctoral  programme  quality  and 
participation.  Micro-credentials  and  short-cycle 
tertiary education are being introduced to increase 
the  access  to  tertiary  education.  In  2026,  a  new 
evaluation methodology (HEI2025+) will be put in 
place  in  higher  education  (378).  An  amendment  to 
the  Higher  Education  Act  (2024)  (379)  aims  to 
improve  the  quality  of  doctoral  programmes  and 
increase 
rate  of  doctoral 
candidates. The minimum net income for doctoral 
students  (received  as  a  scholarship,  contractual 
payment,  or  a  combination  of  both)  has  been  set 
at  1.2 
the  national  minimum  wage. 
Furthermore, Czechia provides targeted funding to 
stimulate  interest  in  STEM  disciplines,  including 
programmes  specifically  designed  to  encourage 
female participation (380).  

completion 

times 

the 

in 

lifelong 

Adult  participation 
learning 
remains  low,  limiting  the  development  of 
skills for the green and digital transitions. In 
2022,  only  21.2%  of  adults  aged  25-64  had 
participated  in  formal  or  non-formal  learning 
(excluding  on  the  job  training)  in  the  previous  12 
months,  compared  to  an  EU  average  of  39.5%. 
This is 23.8 pps short of the national 2030 target 
of  45%.  However,  Czechia’s  on  the  job  training 
rate  was  24.5%,  the  highest  in  the  EU  and  likely 

(376) Eurostudent survey. 

(377) Trexima et al., 2024. 

(378) Methodology of Evaluation of Research Organisations in the 
Segment of Higher Education Institutions 2025+ (2024). 

(379)52/2025 Sb. 

(380) https://irt.zcu.cz/en/about-us/projects/girls-labs/. 

111 

 
 
 
different 

statistical 

indicating 
training 
classifications  at  national  level.  When  included, 
Czechia’s overall training rate is 45.7%, compared 
to  an  EU  average  of  46.6%.  Czechia  has 
experienced  a  decline  in  literacy  skills  in  the  last 
decade but is still performing slightly above the EU 
average.  However,  more  recent  data  from  the 
labour  force  survey  suggest  that the  participation 
rate  in  education  and  training  increased  between 
2022 and 2024.  

Strengthening  the  quality  and  efficiency  of 
spending  in  education  will  contribute  to 
improving skills in Czechia. The expenditure on 
education  in  Czechia  has  slightly  decreased  from 
4.7% in 2020 to 4.5% of GDP in 2023 and stands 
below  the  EU  average  (EU:  4.7%).  The  share  of 
total  government  spending 
remained  almost 
stable  during  the  same  period,  reaching  10.3% in 
2023  (vs  9.6% in  the  EU)  (381).  Improving  skills  in 
Czechia  requires  enhancing  educational  outcomes 
for  all  students  by  addressing  inequalities  and 
increasing the quality and efficiency of spending in 
education (382). This includes further investments in 
high-quality  and  affordable  early  education  and 
care,  improving  teachers’  working  conditions  and 
increasing  the  efficiency  of  the  school  network. 
Also, while tertiary attainment is in Czechia below 
remains 
the  EU  average, 
relatively underfunded at 0.8% as a percentage of 
GDP  (including  R&D)  vs  0.9%  in  the  EU25  (2022) 
(383). 

tertiary  education 

(381) Eurostat, gov_10a_exp__custom_16025691 
(382) OECD Economic Surveys: Czechia, 2025. 
(383) OECD, Education at Glance (2025) Table C1.2.; Economic 
Strategy Czechia: Country for the future 2.0, 2026.  

112 

 
 
 
 
 
 
ANNEX 14: SOCIAL SCOREBOARD 

Table A14.1:Social Scoreboard for Czechia 

Update of 4 May 2026. Members States are categorised based on the Social Scoreboard according to a methodology agreed with 
the EMCO and SPC Committees. Please consult the Annex of the Joint Employment Report 2026 for details on the methodology 
(https://employment-social-affairs.ec.europa.eu/joint-employment-report-2026_en). 
Source: Eurostat 

113 

21.26.170.58.010.73.3482.92.80.8125.211.515.440.023.88.27.90.3Critical situationTo watchWeak but improvingGood but to monitorOn averageDynamic labour markets and fair working conditionsSocial protection and inclusionShare of individuals who have basic or above basic overall digital skills(% of the population aged 16-74, 2025)Impact of social transfers (other than pensions) on poverty reduction(% reduction of AROP, 2025)Children aged less than 3 years in formal childcare (% of the under 3-years-old population, 2025)Self-reported unmet need for medical care (% of the population aged 16+, 2025)Disability employment gap (percentage points, population aged 20-64, 2025)Housing cost overburden (% of the total population, 2025)Adult participation in learning (during the last 12 months, excl. guided on the job training, % of the population aged 25-64, 2022)Equal opportunities and access to the labour marketBest performersBetter than averageEarly leavers from education and training(% of  the population aged 18-24, 2025)Young people not in employment, education or training(% of the population aged 15-29, 2025)Gender employment gap(percentage points, population aged 20-64, 2025)Income quintile ratio (S80/S20, 2025)At risk of poverty or social exclusion (AROPE) rate (% of the total population, 2025)Employment rate(% of the population aged 20-64, 2025)Unemployment rate(% of the active population aged 15-74, 2025)Long term unemployment(% of the active population aged 15-74, 2025)Gross disposable household income (GDHI) per capita growth(index, 2008=100, 2024)At risk of poverty or social exclusion (AROPE) rate for children(% of the population aged 0-17, 2025) 
 
 
 
  
 
 
ANNEX 15: HEALTH AND HEALTH SYSTEMS 

Czechia’s  health  system  faces  challenges 
that  negatively  affect  the  health  of  its 
population,  social  fairness  and  productivity. 
Key  challenges  include  comparatively  low  life 
expectancy,  driven  by  high  preventable  and 
treatable  mortality  and  low  spending  on  disease 
prevention. Workforce shortages, combined with a 
reliance  on  hospital-based  care  and 
strong 
low  bed  occupancy  rates,  highlight 
relatively 
inefficiencies in  service  delivery.  These  challenges 
are  compounded  by  an  ageing  health  workforce 
and  regional  disparities  in  access  to  primary, 
outpatient  and  specialised  care,  contributing  to 
uneven health outcomes across the country. 

Graph A15.1: Treatable mortality 

still largely exceeds the average at EU level. 
Cardiovascular  diseases  (CVDs)  were  the  leading 
cause  of  deaths  in  Czechia  in  2023  (39%), 
followed  by  cancers  (24%),  in  particular  lung 
cancer and colorectal cancer. Respiratory diseases 
constitute the third leading cause of death (385). To 
address the heavy burden from its top two causes 
of death, Czechia launched a national cancer plan 
in  2022  and  in  2024  adopted  a  national  plan  on 
cardiovascular  health  (CVD),  depending  on  the 
formal  national  designation.  This  is  also  partially 
addressed  by  the  Czech  recovery  and  resilience 
plan (RRP), through, for example, (i) the setting-up 
(ii)  preventive 
of  an  oncological 
screening; 
(iv) 
diagnostic  and  treatment  tools  for  CVDs;  and  (v) 
also 
development. 
research 
participates  in  EU4Health-funded  joint  actions 
aimed  at  cancer,  CVDs,  diabetes  and  mental 
health. 

care  medicine; 

(iii) intensive 

institute; 

Czechia 

and 

and 

Czechia’s  high  rate  of  preventable  mortality 
is  a  cause  for  concern.  In  2023,  the  share  of 
spending  on  prevention  dropped  sharply  from 
5.2% in 2022 to 2.7% of total spending on health, 
below  the  EU  average  of  3.7%.  Low  funding  can 
be  linked  to  high  levels  of  preventable  mortality. 
Behavioural  risk  factors  account  for  many  deaths 
in  Czechia  and,  similarly  to  other  EU  countries, 
they  are  unevenly  distributed  across  socio-
economic groups, with people with lower levels of 
disproportionately 
income 
education 
presenting  health-risky  behaviour  (386).  Unhealthy 
lifestyles  and  dietary  habits  and 
insufficient 
physical  activity  contribute  to  high  adult  obesity 
(387).  Czechia’s  public  health  agenda 
rates 
prioritises  tackling  behavioural  risk  factors,  with 
healthier  lifestyles  and  health  literacy  as  core 
goals  of  the  Health  2030  strategy.  To  address 
childhood  obesity,  the  Ministry  of  Health  has  also 
rolled  out  significantly 
improved  nutritional 
standards for school canteens. Furthermore, a new 
programme,  Be  Fit  2024,  was  launched  in  2024, 
with  a  focus  on  increasing  physical  activity  levels 
among overweight children.  

Tobacco  use,  alcohol  consumption  and 
immunisation  rates  present  a  mixed  picture. 
Czechia  has  made  notable  progress  in  reducing 

Age-standardised death rate - mortality that could be avoided 
through optimal quality healthcare. 
Source: Eurostat (indicator: hlth_cd_apr) 

Life  expectancy  at  birth  in  Czechia  remains 
below  the  EU  average,  with  2022  treatable 
mortality  among  the  highest  in  the  EU.  In 
2024, life expectancy at birth stood at 80.1 years 
compared  with  81.3  at  EU  level.  Women  can 
expect to live 5.9 years longer than men. However, 
women live only 1.1 years more than men in good 
health  (in  2023).  In  2024,  two  thirds  of  Czech 
adults  reported  good  or very  good  health,  slightly 
below  the  EU  average  of  68%.  However,  income 
disparities  are  pronounced,  with  82%  reporting 
good health in the highest quintile, while only 54% 
do so in the lowest (384). Despite inequalities, self-
-reported  good  health  among  low-income  groups 
has risen in recent years.  

Despite a considerable improvement over the 
last  decade,  Czechia’s  treatable  mortality 

(384) OECD/European Observatory on Health Systems and Policies 
(2025), Country Health Profile 2025: Czechia. State of Health 
in the EU. 

(385) Country Health Profile 2025: Czechia – see earlier footnote. 

(386) Country Health Profile 2025: Czechia – see earlier footnote. 

(387) Country Health Profile 2025: Czechia – see earlier footnote. 

114 

131.9120.3122.9125.9113.2107.294.889.291.793.389.786.8201420192020202120222023per 100 000 populationCzechiaEU 
 
      
 
 
 
 
Table A15.1:Key health indicators 

*The EU average is weighted for all indicators except for doctors and nurses per 1 000 population, for which the EU simple average is used based 
on 2023 data (or latest available). Doctors’ density data refer to practising doctors in all countries except Greece, Portugal (licensed to practise) 
and Slovakia (professionally active). Density of nurses: data refer to practising nurses (EU recognised qualification) in most countries except 
Portugal (licensed to practice) and Slovakia (professionally active). Latest data update on nurses for Belgium and Sweden: 2022; for France: 2021; 
for Luxembourg: 2017. 
** latest available 10-year trend: ratio 2023/2014 or 2024/2013; a factor of 2.00 means that it has doubled in 10 years. 
***‘Available hospital beds’ covers somatic care, not psychiatric care. 
Source: Eurostat 

traditional tobacco use, with daily smoking among 
adults  declining  to  16%  in  2024  –  below  the  EU 
average (388). This may partially reflect the impact 
of smoke-free legislation and higher excise taxes. 
However,  this  progress  is  increasingly  challenged 
by  a  rapid  shift  towards  alternative  nicotine 
products,  particularly  e-cigarettes,  with  uptake 
especially  high  among  adolescents  and  young 
adults.  At  the  same  time,  alcohol  consumption 
remains among the highest in the EU, at 11.6 litres 
per capita in 2022 (389), presumably reflecting high 
affordability and only recent, gradual  increases in 
excise  duties.  Immunisation  coverage  in  Czechia 
varies,  with  recent  declines  in  some  key  vaccines 
alongside  comparatively  strong  performance  in 
others.  Measles  and 
vaccination 
influenza 
in  Czechia  remains  below  the  EU 
coverage 
average,  while  human  papillomavirus 
(HPV) 
vaccination  for  15-year-old  girls  exceeds  the  EU 
average. 
linked  to  air 
pollution is high (see Annex 8).  

In  addition,  mortality 

These  poor  health  outcomes  negatively 
affect  Czechia’s  workforce  and  hence  its 
productivity  and  competitiveness.  In  Czechia, 
mortality  at  working  age  as  a  proportion  of  total 
mortality  (15.4%)  was  above  the  EU  average  in 
2023,  exacerbating  the  effects  of  population 
ageing on a shrinking labour force (see Annex 11). 
Gains  in  health  status  from  further  prevention 
efforts  could  alleviate  this  impact.  As  regards 

(388) EC/OECD, State of Health in the EU: 2025 Synthesis Report. 

(389) EC/OECD, State of Health in the EU: 2025 Synthesis Report. 

it 

(NCDs), 

non-communicable 
is 
diseases 
estimated  that  up  to  80%  of  CVDs  and  type  2 
diabetes  in  the  world,  up  to  half  of  cancer  cases 
and  most  chronic  lung  diseases  (390)  can  be 
prevented. Cancer in particular has a large impact 
on  workforce  participation  and  productivity.  For 
example,  preventing  all  deaths  from  NCDs  in 
Czechia  –  in  particular  CVDs  –  would  result  in  a 
1.1%  gain  in  working-life  years  from  2022  to 
2040  (vs  0.9%  for  the  EU).  It  would  save  about 
1 093 268  life  years  in  Czechia  over  2022-2040. 
This 
increase  would  mitigate  an  otherwise 
expected  6%  reduction  of  the  workforce  due  to 
demographic  ageing  of  the  2022  population  (7% 
(391).  Czechia  also  faces  high 
for 
absenteeism  rates  due  to  illness.  This  further 
undermines  productivity  and  competitiveness  and 
highlights the  urgency  of  stronger  prevention  and 
primary  care  investments.  Total  productivity  loss 
due  to  temporary  work  incapacity  in  2024  was 
estimated  at  EUR 10.4  billion  (CZK 263 billion), 
about 5% of Czech annual gross value added (392). 

the  EU) 

Spending  on  health  in  Czechia,  including  on 
capital  formation  in  the  health  system,  is 
low.  In  2023,  Czechia’s  health  expenditure  per 

(390) NCD Alliance, 2025: Noncommunicable Diseases (NCDs) 

overview | NCD Alliance. 

(391) OECD/European Commission (2025), EU Country Cancer 
Profiles Synthesis Report 2025, OECD Publishing, Paris, 
https://doi.org/10.1787/20ef03e1-en. 

(392) Losses in productivity due to work incapacity amount to 

hundreds of billions of Czech koruna annually 
PR_nemocenska_FINAL_aktualizovano.pdf. 

115 

2020202120222023202410-year change**EU average* (latest year) Cancer mortality per 100 000 population268.0257.0258.4250.4n.a.0.88233.1 (2023)Mortality due to circulatory diseases per 100 000 population 557.8 525.6 505.5 463.8n.a.0.75313.0 (2023)Current expenditure on health, purchasing power standards, per capita2 6662 8632 7592 9253 1041.633834.9 (2023)Public share of health expenditure, % of current health expenditure 88.2 86.8 85.0 84.5 85.11.0080.6 (2023)Spending on prevention, % of current health expenditure 3.98.45.22.7n.a.0.793.7 (2023)Available hospital beds per 100 000 population*** 572 575 566 554n.a.0.97440 (2023)Doctors per 1 000 population*4.14.34.24.2n.a.n.a.4.3 (2023)*Nurses per 1 000 population* 8.2 8.3 8.1 7.9n.a.1.017.6 (2023)*Mortality at working age (20-64 years), % of total mortality15.116.015.315.415.30.8414.3 (2023)Consumption of antibiotics in the community and hospital sectors,      defined daily doses per 1 000 inhabitants 13.4 13.7 17.1 18.1 19.0n.a.20.3 (2024) 
 
 
 
      
 
capita,  adjusted  for  purchasing  power,  was  24% 
below the EU average, while total health spending 
accounted  for  8.4%  of  GDP  (vs  10%  for  the  EU 
average)  (see  Annex  2).  The  share  of  healthcare 
expenditure  covered  by  public  funds  stood  at 
around  85%,  above  the  EU  average.  The  largest 
shares  of  health  expenditure  went  on  outpatient 
care  (around  a  third 
in  2023),  followed  by 
inpatient  care  (393).  In  2023,  out-of-pocket  (OOP) 
spending in Czechia remained  relatively  low (14% 
compared  to  EU  average  of  15%).  Most  OOP 
spending  was  for  pharmaceuticals  (41%)  and 
dental  care  (22%),  while inpatient  care  accounted 
for 10%, largely reflecting voluntary payments for 
comfort-related  amenities  (394).  Moreover,  capital 
formation,  measured  by  capital  expenditure  on 
health  as  a  percentage  of  GDP,  is  among  the 
lowest  in  the  EU,  remaining  well  below  the  EU 
average in recent years. This is reflected in the low 
availability  of  key  diagnostic  (medical  imaging) 
technology.  

Graph A15.2: Healthcare infrastructure investment 
by year 

and  limitations  in  primary  and  community  care 
management,  in  a  system  where  primary  care 
doctors  do  have  a  limited  gatekeeping  role  and 
many  patients  can  access  specialist  care  directly. 
Patient-reported data indicate strong continuity in 
general practice, with most people having multiple 
chronic  conditions  remaining  with  the  same 
primary care provider for an extended period, well 
above the EU average. There is also a high level of 
trust  in  self-management  among  people  with 
chronic conditions, but comparatively lower trust in 
the  healthcare  system (396).  Taken  together,  these 
factors  help  explain  the  coexistence  of  high 
hospital  bed  capacity,  relatively  low  occupancy 
rates  and  high  avoidable  admissions.  This 
highlights  persistent 
fragmentation  between 
inpatient  care  and  primary  care  and  reflects 
insufficient  coordination  and  integration  across 
different  parts  of  the  health  system.  One  of  the 
measures  addressing  this  challenge  is  financial 
incentives introduced in 2023 which encourage the 
expansion of one-day surgery, with reimbursement 
rates aligned to promote shorter hospital stays.  

regional 

variation 

Czechia is developing  a  referral  system  that 
would  also  allow  waiting  times  to  be 
monitored.  Czechia  continues  to  record  very  low 
levels  of  self-reported  unmet  needs  for  medical 
and dental care. However, Czechia does not have a 
comprehensive  nationwide  system  for  monitoring 
waiting times, though available evidence indicates 
certain 
substantial 
diagnostics and treatments. Legislative changes in 
2025 led to the launch of e-Žádanka, an electronic 
medical referral system set to become operational 
in  2026,  which  will  allow  providers  to  issue  and 
transmit  referrals  for  laboratory  tests,  imaging 
and  specialist  consultations  digitally.  Patients  will 
be able to access their referrals via national digital 
platforms,  supporting  the  routine  collection  of 
waiting-time  data  for  key  diagnostic  services  and 
laying 
for  more  systematic 
the 
monitoring. 

foundation 

for 

Health  workforce  capacity  in  Czechia  has 
increased,  but  ageing,  regional  imbalances 
and  rising  care  needs  continue  to  pose 
challenges. In 2023, Czechia had 4.2 doctors and 
9.0 nurses (397) per 1 000 population, close to the 

Source: Country Health Profiles - Dashboard 

Czechia’s  hospital  sector  is  characterised  by 
high  bed  capacity  alongside  low  occupancy 
rates, pointing to structural challenges in the 
organisation  of  care.  In  2023,  Czechia  had  a 
relatively  high  number  of  hospital  beds  (see 
Table A15.1),  while  the  bed  occupancy  rate  stood 
at just 62%. Czechia’s hospital admission rates for 
chronic  conditions  –  including  asthma,  chronic 
obstructive  pulmonary  disease  (COPD),  congestive 
heart  failure  (CHF)  and  diabetes  –  were  18% 
above the EU average. This gap was driven mainly 
by  CHF,  for  which  admission  rates  were  nearly 
50% higher than the EU average (395). This pattern 
reflects  both  a  higher  underlying  disease  burden 

(393) Country Health Profile 2025: Czechia – see earlier footnote. 

(396) Country Health Profile 2025: Czechia – see earlier footnote. 

(394) Country Health Profile 2025: Czechia – see earlier footnote. 

(395) Country Health Profile 2025: Czechia – see earlier footnote. 

(397) Under the newly adopted Eurostat definition of nurses 

(following the EU Directive 2005/36/EC on the recognition of 
professional qualifications), the nurse density figures shown 

116 

9.27.87.97.88.59.811.211.515.619.619.519.720.421.521.421.921.922.9201520162017201820192020202120222023EUR million per 100 000 populationCzechiaEU 
      
 
 
 
creating 

of  age, 

insufficient 

EU  averages.  The  number  of  recently  graduated 
doctors is slightly above the EU average. However, 
the  number  of  nursing  graduates  is  among  the 
lowest in the EU and the pipeline of students may 
be 
to  meet  growing  needs  for 
healthcare. The workforce is also ageing: in 2023, 
39% of practising doctors and 28% of nurses were 
over  55 years 
ongoing 
replacement  challenges.  Rising  healthcare  needs, 
population  ageing  and  regional  disparities  have 
contributed  to  shortages,  particularly  of  nurses 
and  outpatient  doctors  and  have  led  to  reported 
ward  closures  in  some  hospitals.  In  addition, 
Czechia's  healthcare  system  faces  obstacles  due 
to  restricted  roles  for  nurses,  administrative 
burdens  and  low  levels  of  digitalisation,  while 
allocation  issues  stem  from  a  wide  hospital 
network  and  insufficient  incentives  for  doctors  to 
work  in  less  populated  areas  (398).  The  health 
workforce  is  unevenly  distributed,  with  some 
in  primary  care  or 
regions  facing  shortages 
outpatient  specialist  services  (see  annex  18).  The 
primary-care workforce is projected to fall steeply 
by  2035  compared  with  2022  –  by  about  40% 
among  GPs  and  55%  among  paediatricians.  To 
address these pressures, Czechia has expanded its 
training  pipeline, 
increasing  first-year  medical 
student  enrolments  by  20%  from  2019  onwards 
and boosting the number of nursing graduates. At 
the  same  time,  salary  reforms  have  raised 
physicians’  pay  significantly,  with  doctors  earning 
twice  the  national  average  wage  in  2023.  This  is 
complemented by higher reimbursement rates for 
outpatient  physicians,  making  general  practice 
increasingly  attractive.  These  combined  measures 
aim to increase the supply of health professionals, 
improve  retention  and  mitigate  regional  and 
sectoral  workforce gaps, but  their impact remains 
to  be  seen.  Czechia’s  RRP  includes  upskilling 
opportunities  for  health  professionals.  Moreover, 
Czechia participates in the EU4Health-funded joint 
action  HEROES  (399),  through  which  EU  countries 
share  best  practices  and  expertise  on  health 
workforce planning. 

The  digitalisation  of  the  health  system  has 
accelerated in recent years, although the use 
of  online  and  electronic  health  services  by 

below are significantly lower than those using a broader 
definition, such as those used for OECD health statistics. 

(398) Zdravotnictví pro budoucnost | Svaz průmyslu a dopravy 

České republiky. 

investment 

the  public  remains  comparatively  limited. 
Despite  high  levels  of  online  health  information 
searches  among  adults  (see  Annex 7),  the  uptake 
of  digital  health  services  remains 
low,  with 
relatively few people booking appointments online, 
and  some  services  coming  online  only  in  2026, 
such  as  the  RRP-funded  database  of  electronic 
health  records.  This  partly  reflects  the 
late 
development of comprehensive, user-facing digital 
platforms.  Historically, 
in  health 
information  and  communication  technology  (ICT) 
has been below the EU average, but spending has 
increased markedly since the COVID-19 pandemic, 
reflecting  a  gradual  strengthening  of  digital 
capacity.  A  key  milestone  was  reached  in  June 
2025,  with  legislation  expanding  the  national 
digital  health  infrastructure,  building  on  existing 
tools such as e-Žádanka and electronic vaccination 
records,  and 
components, 
introducing  new 
including  an  electronic  vaccination  card,  an 
electronic  referral  system  and  a  national  registry 
for  preventive  check-ups.  Additionally,  under  the 
2021-2027  cohesion  funds  and  EU4Health  joint 
actions,  the  country  dedicates  funding  towards 
e-health  services  and  applications,  along  with 
further 
the  digitalisation  of 
healthcare. 

investment 

in 

in 

employment 

is  of 
Czechia’s  pharmaceutical  sector 
comparatively modest economic significance. 
In 
pharmaceutical 
2024, 
(0.28%)  remained  among  the 
manufacturing 
lowest in the EU (EU average of 0.48%). However, 
Czechia  stands  out  as  a  clinical  research  hub, 
reporting  20.6 clinical  trials  per  million  population 
in  2024  (above  the  EU  average  of  18.3)  and 
ranking  among  the  top  European  countries,  with 
3 391 total  trials  (2015-2025)  (400).  Regarding 
trade  and  commercialisation,  extra-EU  exports 
accounted for a modest 1.3% share of the total in 
2025  (vs  EU  13.9%).  This  is  reflected  in  the  low 
number  of  European  patents  granted:  0.7  per 
million  population in  2024,  below  the  EU  average 
of  1.8  (401).  The  Czech  RRP  supports  research  and 
development for priority areas of medical sciences 
and related social sciences. 

(400) US National Library of Medicine, https://clinicaltrials.gov. 

(399) The project – JA HEROES | Health Workforce Planning Project. 

(401) European Patent Office: Statistics & Trends Centre | epo.org. 

117 

 
 
 
ANNEX 16: HOUSING 

The 

2025 

Czechia. 

Affordability of housing is a major challenge 
country-specific 
in 
recommendations already highlighted the need  to 
simplify  urban  planning  and  cut  red  tape  by 
improving 
the 
management  of  construction  offices.  They  also 
called  on  Czechia  to 
increase  revenue  from 
recurrent property taxes (see also Annex 3). 

digitalisation, 

capacity 

and 

Czechia  suffers  from  a  lack  of  affordable 
housing,  an  over-reliance  on  the  private 
housing  market,  an  underdeveloped  long-
term  rental  market  and  the  absence  of  a 
comprehensive  housing  policy.  House  prices 
and rents in Czechia recorded significant increases 
over the last ten years faster than the EU average, 
creating  affordability  problems  for  many  Czech 
households,  both  buyers  and  renters,  and  even 
more so in growth areas. There is a growing rental 
market(402).  Overall,  while  housing  supply 
is 
lagging  behind  demand  in  Czechia,  demand  side 
incentives  persist 
in  the  tax  system,  as  do 
disincentives  for  landlords  to  rent  out  properties 
on a longer-term basis.  

There are major regional differences in house 
and  rent  prices  in  Czechia,  but  affordability 
is  increasingly  a  problem  countrywide.  Prices 
and rents per square metre are among the highest 
in Europe in Prague and the surrounding region, as 
well  as  in  Brno  and  major  tourist  areas,  and  are 
increasing  in  other  major  cities.  While  prices  are 
much lower elsewhere, they have still grown more 
than income, causing affordability issues. 

Housing market developments 

House prices have recorded a steep increase 
over the past 10 years. By 2022, nominal prices 
were  over  three  times  as  high  as  in  2005. 
Following  a  small  correction  in  2023,  prices  kept 
growing,  reaching  10.4%  year-on-year  growth  in 
2025 and they are expected to continue increasing 
at  a  brisk  pace  over  the  coming  years.  In  2025, 
prices  were  estimated  based  on  the  standard 
European  Commission  methodology)  by  around 
18%. Nominal rental prices (including existing and 

new rental contracts) displayed a similar trend, but 
with  a  smoother  pace  and  significantly  lower 
overall  growth.  Despite  a  parallel  increase  in 
economic activity and household income, between 
2005  and  2024  the  house-price-to-income  ratio 
increased  by  24.4%,  with  most  of  this  increase 
occurring  in  the  last  decade.  This  indicates  that 
housing  has  become 
in  the 
country, particularly in the largest urban areas.  

less  affordable 

Graph A16.1: House prices, rents and price-to-
income evolution in CZ and EU27 since 2005 

Source: Eurostat 

supply  bottlenecks 
Significant  housing 
remain.  Investment  in  dwellings  as  a  share  of 
GDP  declined  markedly  after  the  financial  crisis, 
from  5.3%  in  2007  to  4.2%  in  2014.  Investment 
activity picked up significantly from 2017, peaking 
at  6.3%  of  GDP  in  2022,  and  falling  to  5.5%  in 
2025.  The  amount  of  residential  building  permits 
issued followed a similar pattern, but remains well 
below its pre-crisis values and the EU average. In 
this  respect,  in  2024,  permits  for  330.4 m2  per 
1000  inhabitants  were  issued,  compared  with  an 
EU average of 363.3 m2. Several factors appear to 
be  hindering  the  construction  of  new  dwellings, 
including 
labour 
shortages  and  constraints  at  municipal  level.  At 
time,  Czechia’s  population  grew 
the  same 
significantly (403),  driven  by,  among  other  things, 
migratory  flows (404).  A  considerable  share  of  the 

long  permitting  procedures, 

(402) According to the Ministry for Regional Development between 
800 000 and 1 million tenants have contracts of up to two 
years.  

(404) CNB 2025. ‘The Czech housing market in the upward phase 
of the cycle’, Appendix 1 to Monetary Policy Report, Summer 
2025.  

(403) Eurostat, https://doi.org/10.2908/DEMO_GIND. 

118 

751001251501752002252502753003253500507091113151719212325Index (2005 = 100)Nominal prices CZNominal prices EU27Rental prices CZRental prices EU27Price-to-income ratio CZPrice-to-income ratio EU27 
 
 
        
 
 
 
housing  stock  is  reported  as  unoccupied,  even  in 
the Prague region (405). 

Graph A16.2: House supply indicators in CZ since 
2005 

last quarter of 2022 to 4.59% in the third quarter 
of 2025, and (ii) an increase in borrowing capacity 
due  to  rising  household  incomes  and  savings. 
Looking ahead, supply constraints are expected to 
persist,  with  new  constructions  not  matching 
housing  demand.  Therefore,  price  pressures  are 
expected  to  remain,  especially  in  an  environment 
of looser financing conditions.  

Structural policies 

country-specific 

recommendation) 

Planning  and  permitting  procedures 
in 
Czechia  remain  complex  and  slow  and  are 
recognised  as  a  priority  for  reform  among 
stakeholders  and  politicians.  The  government 
proposal  to  reform  the  Construction  Law  would 
address  some  of  these  aspects  (and  part  of  the 
if 
2025 
implemented,  but  the  underlying  issues  are  much 
broader.  There  is  a  general  agreement  among 
stakeholders and authorities that the current very 
slow,  bureaucratic,  burdensome  and multi-layered 
urban  planning  procedures  are  a  major  factor 
slowing  down  housing  supply  in  Czechia  and 
increasing costs. Municipalities are not empowered 
to take final decisions on land-use planning in the 
event  of  disputes  between  different  public 
authorities  which  also  delays  possible  housing 
developments.  There 
limited  use  of 
inclusive  zoning  in  Czechia:  municipalities  do  not 
use  the  possibility  of  mandating  that  a  certain 
to 
share  of  housing  projects  be  dedicated 
affordable 
current 
Lastly, 
leads  to  urban 
burdensome  planning  system 
sprawl, because repurposing existing building stock 
and  brownfields  is  too  difficult  administratively. 
Municipalities  also  have 
to 
actively  capture  land  value  increases  and  engage 
in land development.  

limited  capacity 

housing. 

is  very 

the 

A major driver for the limited affordability of 
housing  in  Czechia  is  over-reliance  on  the 
private housing market. In spite of the tradition 
of municipal housing, following the privatisation of 
the  municipal  housing  stock  in  the  1990s  and  a 
lack  of  new  investment,  the  municipal  housing 
stock 
for 
municipalities to invest in affordable housing (see 
later).  There  is  no  third  housing  sector  in  Czechia 

limited,  with 

incentives 

few 

is 

(1) Figures are reported on a quarterly basis, as the average 
of the previous 4 quarters Source: Eurostat 
Source:  

together 

Productivity  in  construction  has  decreased 
significantly since 2015. Despite a broad-based 
increase in productivity in the country, in 2024 real 
labour  productivity  per  person  in  the  construction 
sector  was  23.6%  lower  than  in  2015.  Rising 
interest  rates  and  higher  construction  costs  since 
2021, 
in 
construction standards  and  composition,  have 
likely  played  a  role.  However,  structural  issues  in 
the  sector  appear  to  still  be  an  important  factor 
behind the decline in productivity. The construction 
sector  is  experiencing  severe  labour  shortages, 
recording  the  second  highest  job  vacancy  rate  in 
the  EU,  6.5%  in  2024,  albeit  on  a  declining  path 
from 15.2% in 2019. 

with changes 

Demand  for  housing  continues  to  grow,  as 
mortgage  interest  rates  decline.  The  number 
of  apartment  purchases  has  been  growing  since 
2023.  Purchases  of  new  apartments  more  than 
doubled between Q1-2023 and Q1-2025, while in 
the  same  period  new  mortgages  issued  grew  by 
over  221%,  also  due  to  a  remarkable  increase  in 
the average mortgage size (406). This surge in new 
housing  loans  was  driven  by  (i)  a  reduction  in 
borrowing costs, which declined from 6.08% in the 

(405) https://scitani.gov.cz/number-of-dwellings. 

(406) CNB Statistics and CNB, 2025 ‘The Czech housing market in 
the upward phase of the cycle’, Appendix 1 to Monetary 
Policy Report, Summer 2025. 

119 

45675070901101301501701900507091113151719212325% of GDPIndex (2005 = 100)Residential building permits in m2, indexResidential buildings producer prices, indexInvestment in dwellings (right-hand side axis) 
       
 
limited  profit  (407)),  which 
(e.g.  non-profit  or 
contributes  to  the  affordability  problem.  There  is 
also  no  accurate  data  –  neither  on  flats  nor  on 
actual  residence 
(as  opposed  to  permanent 
residence) – which makes it difficult to assess the 
share  of  underutilised  properties,  thus  potentially 
increasing housing supply.  

Czechia  does  not  have  a 
long-term, 
sustainable  financing  model  for  affordable 
housing  to  succeed  the  EU-funded  recovery 
plan.  Czechia  was  able  to  revive  municipal 
housing  construction  in  2025,  with  a  steady 
pipeline  of  projects  under  preparation  thanks  to 
financing  from 
the  Recovery  and  Resilience 
Facility.  An  affordable  housing  system  was 
launched,  which  consists  of  a  legal  definition  of 
affordable  housing  with  a 
for 
investments and State aid. With the August 2026 
deadline  to  commit  Recovery  and  Resilience 
Facility  funds,  the  existing  support  programmes 
for  affordable  housing  from  the  State  Fund  for 
Investment 
the  National 
Development Bank will run out. At present, there is 
no funding in place to continue and expand these 
instruments.  There  is  clearly  an  opportunity  to 
draw  first  lessons  learned  and  to  develop  a  cost-
effective  financing  model,  potentially  with  the 
assistance of EU funds.  

framework 

Promotion 

and 

Czech  tax  systems  favour  home  ownership 
and  contribute  to  pushing  up  house  prices. 
Czechia  has  an  above-average  share  of  property 
owners  (75%)  compared  with  the  EU  average 
(68%),  although  getting  onto  the  property  ladder 
has  become  more  difficult.  The  Czech  tax  system 
favours  home  ownership  in  several  ways.  First, 
[recurrent]  property  taxation  remains  very  low. 
Second,  the  mortgage  deductibility  of  interest 
payments persists in the Czech tax system, in spite 
of  its  regressivity,  with  the  effect  of  pushing  up 

(407) The Czech cooperative cannot be considered a non-profit nor 
limited profit for several reasons. Cooperative shares are 
freely transferable, allowing members to capitalise on the 
market value of their membership; the law permits the 
distribution of up to one third of profits to members; there is 
no general obligation to reinvest all surpluses into affordable 
housing; and there is no legal regime requiring cost-based 
development with a limited margin. In light of the European 
understanding of the social economy, a Czech housing 
cooperative can therefore be regarded as a social-economy 
actor only if these principles are secured voluntarily in its 
statutes or through a specific public-law framework. Such a 
status cannot be inferred from the legal form of a housing 
cooperative alone. 

house  prices  and  debt.  Third,  when  selling  a 
property,  there  is  zero  capital  gains  tax  even  for 
short  ownership,  making  it  more  attractive  to  put 
savings 
into  real  estate  than  other  capital 
investments. 

an 

and 

The  Czech  rental  market  is  characterised  by 
short-term,  insecure  tenancies  due  to  tax 
underdeveloped 
differentials 
institutional  tenant/landlord  framework.  The 
income  tax  framework  favours  short-term  rentals 
over  long-term  ones,  because  deductibility  rates 
for  short-term  rental  services  are  higher  than  for 
long-term rental. Using short-term rental contracts 
brings instability and insecurity into the market for 
both landlords and tenants. The fact that there are 
no  templates  for  rental  contracts  or  procedural 
assistance  reinforces  insecurity  for  tenants  and 
discourages  small  landlords  from  participating  in 
the rental market. There is no specialised court for 
rental  relations  and  the  use  of  mediators  is  very 
limited,  meaning  dispute  resolution  relies  on 
lengthy judicial procedures.  

Vulnerable groups 

Housing  affordability 
in  Czechia  has 
worsened  in  recent  years,  affecting  low-
income  households  and  single  parents  in 
particular.  In  2025,  households  experiencing 
poverty  spent  a  much  larger  share  of  their 
disposable  income  on  housing  (46%)  compared 
with  the  EU  average  for  people  experiencing 
poverty (36.3%) (408). The housing cost overburden 
has  increased  by  2  percentage  points  (pps)  to 
8.2%  since  2021  (EU  7.7%)(409).  This  situation  is 
much worse for people earning below 60% of the 
median  equivalised  income,  where  the  housing 
cost  overburden  in  Czechia  is  43.4%  (EU  29.1%), 
an  increase  of  7.1 pps  since  2022  (410).  The 
housing  cost  overburden  is  also  very  high  for 
single  parents,  where  the  situation  has  worsened 

(408) [ilc_mded01] Share of housing costs in disposable household 

income, by type of household and income group 

(409)The overburden rate  

should be read together with the 

tenure structure (homeowner, tenants), that may differ 
across country and regions.   

(410) [ilc_lvho07a] Housing cost overburden rate by age, sex and 

poverty status 

120 

 
 
 
by  3.5 pps  since  2022  to  22.5%  (EU  average 
14.6%)(411). 

Social  housing 
is  essential  to  address 
affordability  and  access  issues,  but  supply 
remains  insufficient.  Social  rental  dwellings 
account for only around 3.6% of the housing stock, 
significantly below both the EU and OECD average 
(412).  Municipal  housing,  which  forms  the  core  of 
social  and  affordable  rental  provision,  is  among 
the smallest in the OECD (413), with around 70% of 
municipalities reporting it as insufficient (414). Each 
year,  only  about  4%  of  municipal  flats  become 
available,  amounting  to  roughly  6 000  dwellings 
nationwide  (415),  despite  demand  from  70 000 
households in housing deprivation (416). 

Graph A16.3: Housing cost overburden rate by 
NUTS 2 region 

Source: ESTAT [ilc_lvho07_r] 

launched 

long-awaited  housing 
Czechia 
legislation 
in  2025  to  help  the  most 
vulnerable households find housing solutions. 
This  legislation  lays  down  the  first  systemic 
framework  to  reduce  housing  deprivation.  The 
changes in legislation aim to reduce the number of 
households  in  housing  deprivation  to  60 000  by 
2028  (−10%),  50 000  by  2032  (−25%),  and 

lacked  a  systemic  solution 

41 500 by 2039 (−38%). Without this framework, 
the number of affected households is projected to 
increase  to  81 000  by  2039 (417).  Czechia  has  so 
far 
to  housing 
deprivation  and  social  housing.  This  fragmented 
approach  has  created  high  societal  and  financial 
costs, including a secondary hostel-based housing 
(418)  – 
market  serving  over  10 000  people 
including  children  –  and  making  use  of  housing 
benefits.  As  part  of  a  multi-country  project, 
Czechia  is  benefiting  from  technical  support  to 
improve housing affordability and develop housing 
solutions  for  social  inclusion.  The  project  focuses 
on  demand-  and  supply-side  approaches  to 
affordable 
for 
vulnerable  groups  and  strategies  to  fund  the 
development of affordable and social housing. 

solutions 

housing, 

housing 

and 

housing 

exclusion 

Homelessness  affects  a  significant  number 
of  people  in  Czechia,  with  certain  regions 
particularly  concerned. Around  150 000  people 
living  in  67  500  households  are  affected  by 
homelessness 
in 
Czechia (419). By living situation, 12 000 people are 
roofless,  approximately  24  800  are  houseless, 
37 500  live  in inadequate  housing,  and  nearly  66 
500  people  are  estimated  to  be  in  insecure 
housing,  making 
single 
category (420),  with  the  regions  of  Moravia  Silesia, 
Ústí  nad Labem  and  Karlovy  Vary  being  the most 
affected.  Only  about  2 400  people  living  in  more 
than  1 000  households  have  benefited  from 
Housing  First  projects  supported  by  the  European 
Social  Fund  and  the  European  Social  Fund 
Plus (421).  

largest 

this 

the 

conditions 

for  Roma 

Housing 
remain 
significantly  worse  than  for  the  rest  of  the 
population.  Around  27%  of  Roma  experience 
housing deprivation, nearly three times higher than 
the 10% recorded for the overall Czech population. 
In  addition,  81%  of  Roma  in  Czechia  live  in 
overcrowded  housing  compared  with  just  17%  of 

(411) [ilc_lvho07e] Housing cost overburden rate by household 

type 

(412) Overview of housing affordability in cities in the Czech 

Republic, OECD. 

(413) Overview of housing affordability in cities in the Czech 

Republic, OECD. 

(414) Dotaznik socialni bydleni - vysledky od MMR.pdf. 

(417) 04-Zakon-o-podpore-bydleni-zprava-RIA_1.pdf.aspx 

(418) RILSA (2024): Komerční ubytovna jako prostředek řešení 

bytové nouze. 

(419) https://socialnibydleni.mpsv.cz/download/dokumenty/156-

zaverecna-zprava-ethos_verze_6_fin.pdf Vláda ČR (2024): 
Závěrečná zpráva z hodnocení dopadů regulace (RIA), Zákon 
o poskytování některých opatření v podpoře bydlení (zákon o 
podpoře bydlení) 

(415) 04-Zakon-o-podpore-bydleni-zprava-RIA_1.pdf.aspx. 

(420) Ibid 

(416) Sčítání osob z vybraných kategorií klasifikace ETHOS. 

(421) Sociální bydlení | Housing First. 

121 

0246810121416182020212022202320242025 
     
 
 
Graph A16.4: Housing affordability selected indicators 

Source: Eurostat and European Commission calculations.  The overburden rate should be read together with the tenure structure 
(homeowner, tenants), that may differ across country and regions. 

the  general  population,  in  line  with  the  EU-wide 
Roma  average  of  83%.  Discrimination  remains  a 
major  barrier,  with  45%  of  Roma  reporting 
discrimination  when  looking  for  housing,  which 
marks a substantial decline from 65% in 2016 but 
remains  notably  higher  than  the  EU  average  of 
35% (422).  In  January  2025,  following  a  complaint 
made  by  the  European  Federation  of  National 
Organisations  Working  with 
the  Homeless 
(FEANTSA),  the  European  Committee  of  Social 
Rights  found  that  the  country’s  deficient  housing 
policy  violated  the  European  Social  Charter.  The 
Committee's 
serious 
shortcomings 
in  the  protection  of  vulnerable 
groups,  particularly  in  relation  to  evictions,  the 
provision  of 
systemic 
discrimination against the Roma community. 

social  housing  and 

revealed 

findings 

(422) Roma and Travellers Survey - 2025 - Country Data – 

Czechia. 

122 

 
 
 
HORIZONTAL 
ANNEX 17: SUSTAINABLE DEVELOPMENT GOALS 

social 

fairness 

This  annex  assesses  Czechia’s  progress  on 
the  sustainable  development  goals  (SDGs) 
along  the  dimensions  of  competitiveness, 
and 
sustainability, 
macroeconomic stability. The 17 SDGs and their 
related  indicators  provide  a  policy  framework 
under  the  UN’s  2030  Agenda  for  Sustainable 
Development.  The  aim  is  to  end  all  forms  of 
inequalities  and  tackle  climate 
poverty,  fight 
change  and 
the  environmental  crisis,  while 
ensuring that no one is left behind. The EU and its 
Member  States  are  committed  to  this  historic 
global  framework  agreement  and  to  playing  an 
active  role  in  maximising  progress  on  the  SDGs. 
The graph below is based on the EU SDG indicator 
set developed to monitor progress on the SDGs in 
the EU.  

Czechia performs well on SDG 8 (Decent work 
and  economic  growth),  but  despite  recent 
improvements it still needs to catch up with 
the  EU  average  on  other  SDGs  related  to 

Graph A17.1: Progress towards the SDGs in Czechia 

competitiveness  (SDGs 4  and  9).  Czechia’s 
long-term  unemployment  rate  (SDG 8)  was  0.8% 
in  2025,  well  below  the  EU  average  (1.9%  in 
2025).  Czechia  also  recorded  an  increase  in  its 
employment  rate  (SDG 8)  from  81.7%  of  the 
population  aged  20  to  64  in  2023  to  82.9%  in 
2025, above the EU average of 76.1%. Additional 
efforts  on  research  and  innovation  (SDG 9)  would 
be  beneficial.  The  percentage  of  GDP  spent  on 
R&D  decreased  from  1.95%  in  2020  to  1.82%  in 
2024, well below the EU average of 2.24%. While 
Czechia is performing better than the EU  average 
on  early  leavers  from  education  and  training 
(SDG 4;  6.1%  of  the  population  aged  18  to  24  in 
2024, compared to 9.1%), it needs to catch up on 
tertiary education attainment and adult education. 

While  Czechia  is  improving  on  all  SDGs 
related  to  sustainability,  its  progress  on 
SDGs 2,  9,  11  and  15  has  slowed  down 
recently.  The  circular material  use  rate  (SDG 12) 
improved,  from  12.8%  of  material  input  for 
domestic  use  in  2023  to  14.8%  in  2024  (above 

For a detailed progress assessment towards the various SDGs, see the annual Eurostat report ‘Sustainable development in the 
European Union’; for extensive data on the short-term SDG progress of EU countries, see Key findings – Sustainable development 
indicators; for an interactive visualization of SDG progress of EU countries, see SDG country overview. A high status does not 
mean that a country is close to reaching a specific SDG, but signals that it is doing better than the EU on average. The progress 
score is an absolute measure based on the indicator trends over the past five or six years. The calculation does not take into 
account any target values, as most EU policy targets are only valid for the aggregate EU level. Depending on data availability for 
each goal, not all 17 SDGs are shown for each country. 
Source: Eurostat, latest update of 29 April 2026. Data refer mainly to the period 2019-2024 or 2019-2025. Data on SDGs may 
vary across the report and its annexes due to different cut-off dates. 

123 

 
 
 
 
 
 
(SDG 12) 

the EU average of 12.2 in 2024). The average CO2 
emissions  per  km  from  new  passenger  cars 
(SDG 12)  decreased  from  144.9 g  CO2  per  km  in 
2020 to 132.6 g CO2 in 2024, but remained above 
the  EU  average  (107.9 g  CO2  in  2024).  Energy 
improved  slightly,  from 
productivity 
EUR 5.23  per  kilogram  of  oil  equivalent  (kgoe)  in 
2023  to  EUR 5.4  per  kgoe  in  2024  but  remained 
below  the  EU  average  (EUR 10.0  per  kgoe  in 
2024). On a more positive note, the recycling rate 
of municipal waste increased from 32.2% in 2018 
to  43.5%  in  2023  (below  the  EU  average  of 
47.7%). 

is 

the 

same 

time,  Czechia 

At 
still 
significantly  lagging  behind  the  EU  average 
on  SDG 13  (Climate  action).  Net  greenhouse 
gas  emissions  are  higher  (SDG 13;  8.4 tonnes  per 
capita  in  2024)  than  the  EU  average  (6.5 tonnes 
per capita), while the share of renewable energy in 
gross  final  energy  consumption  (19.2%  in  2024, 
up  from  15.1%  in  2018)  is  still  below  the  EU 
average (25.2% in 2024). 

(SDG 17;  44.3% 

in  2025),  which 

reflected mainly in low general  government gross 
is 
debt 
significantly  below  the  EU  average  (81.7%  in 
2025).  The  official  development  assistance 
(SDG 17)  which  had  reached  0.38%  of  GNI  in 
2022  due  to  large-scale  support  for  Ukrainian 
refugees,  decreased  to  0.16%  GNI  in  2024  -  far 
lower than the EU average of 0.5(423)(). Doing more 
on the percentage of environmental taxes in total 
tax  revenues  (SDG 17)  would  be  beneficial,  as 
these  decreased  in  recent  years  from  5.7%  of 
total  tax  revenues  in  2017  to  4.1%  in  2024.  The 
percentage  of  the  population  that  perceives  the 
independence  of  the  justice  system  as  very  or 
fairly good increased in Czechia from 51% in 2019 
to 64% in 2025 (compared with the EU average of 
54% in 2025). 

As the SDGs form an overarching framework, any 
links  to  relevant  SDGs  are  either  explained  or 
depicted with icons in the other annexes. 

Czechia is moving away from SDGs related to 
social fairness (SDGs 1 and 10), even though 
it  performs  better  than  the  EU  average. 
Czechia’s  positive  stance  on  reducing  poverty 
(SDG 1) is reflected in a number of indicators such 
as people at risk of poverty or social exclusion, the 
severe  material  and  social  deprivation  rate,  and 
the  in-work  at-risk-of-poverty  rate,  all  of  which 
significantly outperform the EU average.  

At  the  same  time,  there  is  a  need  for 
improvement  on  SDGs 3,  4  and  7  and  for  a 
strong  focus  on  SDG 5  (Gender  equality). 
Czechia’s  percentage  of  the  population  unable  to 
keep  their  homes  warm  enough  (SDG 7;  4.9%  of 
the  population  in  2024)  remains  below  the  EU 
average  (9.2%  in  2024).  However,  there  is  some 
room  for  improvement,  mainly  on  SDG 5  (Gender 
equality)  as  regards  employment  and  leadership 
positions. There have been some positive trends in 
closing  the  gender  gap  (SDG 5;  from  20.1%  of 
average gross hourly earnings of men in 2018 to 
18.5%  in  2024).  This  remains  above  the  EU 
average of 11.1% in 2024. 

Czechia  continues  to  improve  on  all  SDGs 
related  to  macroeconomic  stability  (SDGs 8, 
16,  17)  but  still  needs  to  catch  up  with  the 
EU  average  on  certain  indicators  related  to 
SDG 17  (Partnerships  for  the  goals).  Czechia 
maintains very positive macroeconomic standards, 

(423) OECD, Preliminary official development assistance levels in 

2024, Paris, 16 April 2025 

124 

 
 
in 

growth, 

productivity 

Disparities 
labour  productivity  persist 
across  regions and  mirror  the disparities in 
GDP  per  head. While  Praha  stands  out  with 
productivity  levels  surpassing  the  EU  average, 
other regions remain below it. From 2014 to 2024, 
labour 
although 
positive, showed  significant  regional  differences. 
Praha,  once  leading  the  charge,  recorded  the 
lowest  growth  rates  of  only  0.4%  annually. 
Meanwhile,  all  other  regions  have  now  outpaced 
the EU average annual growth, with Severovychod 
achieving  growth 
year.  By 
contrast, Moravskoslezsko and Severozápad edged 
forward  at  a  slower  pace,  with  growth  rates  of 
0.9% and 0.8%, respectively (see Graph A18.1).  

of  2% 

per 

Graph A18.1: Labour productivity growth (2014-
2024) and labour productivity (2024), Czechia 
(NUTS 2 regions) 

ANNEX 18: COMPETITIVE REGIONS 

Regional development trends 

Although Czechia has converged with the EU 
average  of  GDP  per  head  (in  purchasing 
power  standard,  PPS)  in  the  last  20  years, 
regional  disparities  have  widened.  All  NUTS  2 
regions  experienced  a  gradual  improvement  in 
GDP  per  head  compared  with  the  EU  average 
through  the  2000s,  with  a  more  pronounced 
catch-up  occurring  after  2013.  While  there  was  a 
visible  setback  in  convergence  after  a  peak  in 
2020, the pace of progress differs across regions. 
Praha stands out as a clear outlier, reaching 192% 
of EU average in 2024, while the weakest regions 
have  a  GDP  per head  (in PPS)  of  around  60-75% 
of  the  EU  average  (see  Table  A18.1).  Over  past 
two  decades  this  gap  has  been  increasing.  In 
growth  terms,  Praha  and  Jihovýchod  are  the 
standout performers, with sustained growth up to 
2020  and  continued  high 
levels  afterwards. 
However, Jihozápad, Severovýchod, Střední Morava 
and  Moravskoslezsko  show  more  modest  and 
intermittent improvements, while Severozápad has 
seen  long-term  stagnation.  This  underscores  the 
need for targeted regional development strategies 
(Map  A18.1).  In  less  developed  and  transition 
regional 
regions 
convergence 
and 
employment opportunities. 

contributes 
generating 

tourism 
by 

to 
income 

Map A18.1:  GDP per head compared with the EU 
average. 

Source: Calculations by the Directorate-General for Regional 
and Urban Policy (REGIO) based on Joint Research Centre 
(JRC) (ARDECO) data 

the 

for  Czech 

labour  market remains an  area  of 
The 
regions;  however, 
strength 
demographic  changes  have  an  adverse 
impact  outside  the  capital  region. The  overall 
good  national  picture  masks  regional  variations, 
with  Severozápad  and  Moravskoslezsko  both 
experiencing  unemployment  rates  higher  than  the 
rest  of 
(4.8%  and  4.3%), 
indicating areas  for  targeted  action  (see  Annex 
the 
11).  Population  changes  are  affecting 
macroeconomic  landscape,  with  declines  in  the 
regions  of 
working-age  populations 
Moravskoslezsko, 
and 
Střední 
there  have  been 
Severozápad.  By  contrast, 
increases  in  Praha  and Střední Čechy,  hinting  at 
potential  labour  supply  constraints  outside  the 
capital’s reach.  

Morava 

country 

the 

in 

125 

2021-2023 average GDP per head in purchasing power 
standard compared with the EU average. 
Source: Commission calculations based on Eurostat 16 July 
2025 data. 

0.71.32.01.71.61.61.01.00.80.41007973717485616969106EUCzechiaSeverovýchodStřední MoravaJihovýchodStřední ČechySeverozápadJihozápadMoravskoslezskoPrahaAverage annual growth2014-2024 (%)Productivity in 2024GDP/hour, EU27 = 100 
 
 
 
 
   
 
 
Key challenges for regional 
competitiveness  

to 

(GVA) 

heavily 

Praha's 

The structure  of  Czechia's  economy  varies 
across  the  regions,  which  is  reflected  in 
productivity  and  innovation  capacity  lagging 
behind  in  less  developed  regions. Praha  is  a 
services-dominated  hub  (48%  of  gross  value 
added 
the  highest 
in  2024),  with 
employment  rates  in  high-technology  sectors  and 
the  highest  R&D  spending  relative  to  GDP  (see 
Table  A18.1). This  strong  focus  on  services 
regional 
contributes 
competitiveness,  scoring  well  above 
the  EU 
average  (114  vs  EU:  100) (424). The  regions  of 
Střední  Čechy,  Jihovýchod,  Jihozápad,  Střední 
Morava and Severovýchod feature a balanced mix 
of  manufacturing  and  services,  where 
the 
automotive  and  engineering  sectors  play  crucial 
roles 
Finally, 
Moravskoslezsko  and  Severozápad  continue  to 
have  a  pronounced  industrial  profile.  Almost  one 
third  of  the  workforce  is  employed  (see  Graph 
A18.2) 
legacy-heavy 
industries  and  energy-intensive  branches,  which 
contributes to lower productivity levels (see Graph 
A18.1).  

in,  among  other  things, 

contributing 

to GVA. 

in 

Graph A18.2: Share of employment in different 
sectors (2024), Czechia (NUTS 2 regions) 

slower 

Table  A18.1) drives 

Development  of  innovation  centers  in  less 
developed  regions  is  halted.  Low  relative  R&D 
expenditure  in  Moravskoslezsko  and  Severozápad 
(see 
industrial 
modernisation.  The  lack  of  long-term  financing, 
evaluation  and  strategic  ownership  limits  the 
innovation  centres 
development  of 
in  these 
regions 
(see  Annex  4).  Smart  specialisation 
strategies  have  been  a  good  starting  point  to 
provide  a  strategic  framework  for 
regional 
innovation;  however,  they  are  developed  without 
sufficiently 
geopolitical 
developments  and  existing  and  new  EU  value 
chains. 

considering 

recent 

is 
The  capital  region’s  competitiveness 
the  high  availability  of 
boosted  by 
individuals  with  a  tertiary-education,  while 
less  developed  regions  trail  behind  with  a 
limited  offer  of  professional-oriented  higher 
education institutions (425). In 2025, the national 
share of tertiary education attainment among the 
youngest cohort (aged 25-34) was 36%. However, 
there is a significant disparity between the capital 
region and other parts of the country. The share of 
graduates  is  significantly  higher  in  Praha  (62%) 
and  continues  to  rise,  with  other  regions  still 
falling  below  the  national  target  of  35%,  except 
for  Jihovýchod  (42%)  (see  Table  A18.1)  (426).  The 
shortage  of  workers  with  a  tertiary  education 
might  be  the  greatest  barrier  to  innovation  and 
R&D  investment  in  regions  affected  by  industrial 
transformation. Current  financing  models  treat  all 
universities  as  research-oriented,  but  regional 
economies  would benefit from 
professionally 
oriented higher education institutions that cater to 
local  business  needs.  This  could  limit  the  number 
of  young  people  leaving  Střední  Morava  and 
Moravskoslezsko. 

Source: REGIO calculations based on JRC (ARDECO) data 

(424) Regional Competitiveness Index 2022. 

tertiary degree by 2030. 

(425) Karlovy Vary region in Severozápad is the only region without 
a public university, and Severozápad records the lowest 
population share with high educational attainment. 

(426) The EU targets for 45% of people aged 25-34 holding 

126 

0255075100EUCzechiaSeverovýchodStřední MoravaJihozápadSeverozápadStřední ČechyMoravskoslezskoJihovýchodPrahaAgricultureIndustryConstructionTrade, Transport, AccomICT, Financial, ProfPublicArts 
   
 
 
 
Table A18.1:Key regional indicators (at NUTS 2 level) for Czechia 

Dark green – the indicator is at least 120% of the EU average. 
Light green – the indicator is at least 100% but less than 120% of the EU average.  
Yellow – the indicator is at least 90% but less than 100% of the EU average. 
Light red – the indicator is at least 75% but less than 90% of the EU average. 
Dark red – the indicator is less than 75% of the EU average. 
This colour scale applies to ‘positive’ indicators where higher values are favourable. 
For ‘negative’ indicators (where higher values are unfavourable), the colours are reversed. 
Source: Eurostat and JRC 

highways 

expansion 

Transport connectivity has improved through 
the 
and 
of 
expressways (427),  but  border  and  peripheral 
regions remain poorly  accessible (428). 
Intra- 
and  inter-regional  transport  is  fragmented,  with 
incompatible  fare  systems  and  weak  cross-
regional  integration,  which  affects  social  and 
like 
labour  mobility 
Karlovarský and Jihočeský kraj (429)(430). Commuter 
burden is most pronounced in Střední Čechy, where 
more than half of those who leave Praha relocate 
to the surrounding region but continue to commute 
back to the city for work (431). The development of 

in  administrative  regions 

(427) Roads and motorways of the Czech Republic, Road and 

Motorway Directorate of the Czech Republic. 

(428) Length of roads in the regions as of 31/07/2024 (km), Czech 

Statistical Office. 

(429) Commuting data 2021, Czech Statistical Office. 

(430) Koncepce veřejné dopravy 2020-2025, Ministry of Transport. 

coordinated park & ride facilities around Praha and 
other metropolitan areas, alongside more frequent 
public transport connections, could alleviate traffic 
congestion  and  the  environmental  costs  of  high 
commuter flows.  

The 
lack  of affordable  housing directly 
impacts regional  competitiveness and  labour 
market  mobility.  Praha  currently  ranks  as 
the third-least affordable city in Europe, and prices 
continue  to  rise  (432).  There  is  still  no  stable long-
term  public  investment  framework  for  social  and 
affordable  housing.  This  results  in  a  mismatch 
among  regions  where  those  with  high  rates  of 
unemployment  have  a  surplus  of  labour  that 
cannot  afford  to  move  to  areas  with  a  high 
demand for workers (see Annex 16). 

(431) PAM Prague, Visitors and Commuters. 

(432) Deloitte Property Index 2024. 

127 

GDP per head (PPS, index)Net migration of population aged 15-39Population aged 25-34 with high educational attainmentEmployment in high-technology sectorsUnemployment rateEmployment in industryR&D expenditureEU27=100Average annual change per 1000 residents aged 15-39% of population aged 25-34% of total employment% of labour force% of total employment% of GDP20242014-202320252025202520242024EU1007.144.85.16.015.32.24Czechia9112.636.05.72.826.41.82Praha19236.361.512.91.87.52.77Střední Čechy8421.628.66.21.530.71.85Jihozápad7512.929.63.72.230.91.26Severozápad614.119.71.74.830.10.33Severovýchod757.631.54.73.334.31.2Jihovýchod8411.042.26.22.526.72.25Střední Morava743.032.94.02.733.61.51Moravskoslezsko710.732.34.44.330.51.06  
 
 
 
 
     
 
Table A18.2:Main development trends, challenges and the concentration of resources 

(1) Czechia’s territorial just transition plan identifies both of these areas as most affected by the transition away from coal 
mining and combustion for energy use. 
Source: European Commission based on Eurostat data; categories of regions based on Map A18.1. 

Regional  disparities  in  access  to  services, 
such as education and healthcare, affect the 
quality  of  life  and  hinder  social  mobility. 
While  approximately  92%  of  children  under  15 
living in cities have a primary school within a 15-
minute  walking  distance,  rural  areas  significantly 
lag behind urban centres (44%) (see Graph A18.3). 

Limited  educational  opportunities  for  students 
from  underperforming  areas,  including  those  with 
high educational potential, lead to limited regional 
innovation  capacity  and  further  hinder  economic 
growth  (see  Annex  13).  Similarly,  hospital  access 
varies  among  the  types  of  territories:   79%  of 
people in cities live within a 10-minute drive of a 

128 

Main development trendsLess developed regions(population 5 million)Severozápad, Severovýchod, Střední Morava and Moravskoslezsko are classified as less developed regions. Common features include (i) an unfavourable industrial legacy, with a strong presence of traditional manufacturing or extractive industries; (ii) a lower concentration of knowledge-intensive services; and (iii) weak innovation capacity compounded by human capital challenges. Transition regions(population 4.5 million)In the 2021–2027 EU programming period, three Czech regions moved up to the transition category. Střední Čechy benefits strongly from spillover effects from Prague, including transport links, commuting flows, investment activity and integration into the metropolitan supply chain. The Jihovýchod region, centred around Brno, combines a solid manufacturing base with expanding services, research institutions and universities, creating a more diversified and innovation-oriented economy. The Jihozápad region's export-focused industries and cross-border ties with Germany and Austria drive its steady growth. Plzeňský kraj specializes in manufacturing linked to German value chains, while Jihočeský kraj provides stability through energy production (Temelín), food processing and a relatively resilient SME sector. More developed regions (population 1.4 million)Prague, the main economic engine and the sole Czech region classified as more developed, thrives on market and knowledge-intensive services. However, its success has also led to challenges, such as rapid population growth, strains on transport infrastructure, shortages in social and educational services, and a pronounced housing crisis. Areas affected by industrial transformation Severozápad and Moravskoslezsko (1),  both less developed regions with legacy of coal mining and heavy industry, are affected by industrial transformation. Severozápad, despite its strategic location between Prague and Germany, continues to lag behind. This reflects deep-rooted economic and social problems, such as low educational attainment, an ageing population and household indebtedness. Moravskoslezsko is on a more promising development path, gradually restructuring its economy through the expansion of the automotive sector, alongside strengthening its universities and R&D activities. National cohesion aspectsCzechia's strategic transit location requires multimodal transport infrastructure. However, both the TEN-T road network and the conventional railway system are unfinished, with railways not yet fully compliant with technical specifications for interoperability. Key motorway sections, including D3, D11, D35, and D6, remain unfinished, especially in peripheral regions, which need better cross-border connections with Germany, Poland and Austria.  Czechia has made environmental progress, using EU funds effectively. However, it could  intensify its efforts to adopt a circular economy by diverting more recyclable waste from landfill. Climate action remains a challenge as ecosystems face threats from inefficient land use practices that fail to serve as net carbon sinks. Progress in transport decarbonisation and increasing the share of renewables in the electricity sector could support the country further in tackling environmental challenges.  
 
   
 
hospital,  while  this  number  drops  to  only  29%  in 
rural locations, with the worst accessibility in rural 
areas  of  Jihozápad.  Furthermore,  the  capacity  of 
the  healthcare  workforce  is  also  characterised  by 
regional 
(see  Annex  15).  These 
disparities  reflect  settlement  density  and  the 
clustering  of  services  in  metropolitan  areas  and 
underscore  the  need  to  improve  accessibility  to 
services  in  rural  areas,  particularly  in  south-
eastern Czechia.  

imbalances 

Graph A18.3: Share of children with a primary 
school within a 15-minute walk and share of 
population with a hospital within a 10-minute 
drive by car in rural areas, (NUTS 2), 2023 

administrative  regions  –  both  situated  along  the 
heavily  industrialised  Ohře  and  Elbe  (Labe)  river 
basins – have some of the poorest surface water 
quality 
from 
in  Czechia.  Nitrate  pollution 
agricultural 
industrial  effluents 
contribute  to  persistent  failures  to  meet  good 
ecological  status  under  the  EU  Water  Framework 
Directive (see Annex 10).  

run-off  and 

The  2025  country-specific  recommendation 
for  Czechia  noted  the  necessity  to  ‘provide 
support  for  administrative  capacity  building 
and  target  this  support  to  structurally 
affected  regions’.  The  Just  Transition  Fund  has 
contributed  to  that  effort  by  providing  the 
technical  assistance  to  applicants  from  coal 
regions  and  developing  a  project  pipeline.  In 
addition, 
local  action  groups,  representing  a 
partnership  of  citizens,  civil  society,  the  private 
sector  and  municipalities,  have  a  territorial  focus 
that  enables  them  to  channel  resources  into 
overlooked rural territories.  

than  500 

inhabitants (433). 

Czechia  has  one  of  the  most  fragmented 
systems  of  self-government  in  Europe.  There 
are  over  6 000  municipalities,  half  of  them  with 
less 
Czechia’s 
municipalities  are  the  smallest  among  all  OECD 
countries,  with  an  average  population  six  times 
smaller  than  that  of  other  countries (434).  About 
one  third  of  municipalities  have  no  full-time 
mayors (435). 
to 
significant  hidden  costs, 
the  duplication  of 
essential municipal activities, a lack of expertise in 
prolonged 
specialised 
for 
investment 
and 
investments, 
restrictions (436)(437)(438).  A  study  for  the  European 

fragmentation 

savings 

areas, 

leads 

This 

Source: Eurostat 

sustainability 

Environmental 
remains  a 
challenge and is driven by regional industrial 
structures and  energy profile, particularly in 
heavier  industry  regions  like  Severozápad. 
Although  renewable  energy  production,  especially 
wind and solar energy, remains low compared with 
its  technical  potential,  there  is  considerable  room 
for growth, especially in rural areas where solar PV 
production. Water  quality is  an  additional  regional 
stress:  the  Ústí  nad  Labem  and  Karlovarský 

(433) Territorial units in Czechia, 2025, Czech Statistical Office. 

(434) OECD (2025), Subnational governments' structure and 

finances in OECD countries: Key data. 

(435) PAQ Research, Neuvolněný starosta/ka (počet obcí, 2015 – 

2024) po obcích. 

(436) Sila, U. and C. de la Maisonneuve (2021), Enhancing 

Administrative and Fiscal Decentralisation in the Czech 
Republic, OECD Economics Department Working Papers, 
https://doi.org/10.1787/c1d0c9bb-en.  

(437) OECD (2023), OECD Public Governance Reviews: Czech 
Republic Towards a More Modern and Effective Public 
Administration, OECD Publishing, 
https://doi.org/10.1787/41fd9e5c-en. 

(438) OECD (2024), Optimising Public Infrastructure Investments in 
Czechia, OECD Public Governance Reviews, OECD Publishing, 
Paris, https://doi.org/10.1787/d4532316-en. 

129 

3444623842414252484530291235173933222739EUCzechiaPrahaStřední ČechyJihozápadSeverozápadSeverovýchodJihovýchodStřední MoravaMoravskoslezskoAccess to primary school% of children under 15 years old 
  
 
Parliament (439) reveals that smaller municipalities 
not  only  struggle  to  receive  subsidies  but  also  to 
implement  them,  mainly  due  to  a  lack  of  staff 
capacity. 

it 

funds 

ignores 

strong 

framework 

incentives 

redistributes 

Municipal  tax  assignment  rules  fail  to 
provide 
for 
fiscal 
municipalities to deliver quality services and 
promote growth  (440). Municipalities and regions 
receive  more  than  CZK 400  billion  (around  EUR 
9 734 billion) per year from the state budget. The 
current 
to 
municipalities primarily based on population, which 
favours  the  four  largest  cities.  This  assignment 
broadly  neglects  regional  economic  development 
as 
local  economic  activity  when 
allocating municipal tax (see Map A18.2) (441),(442). 
Local  and  regional  authorities  bear  the  economic 
and  political  costs  of  population  growth,  which 
take  the  form  of  increased  congestion,  noise  and 
infrastructure  needs,  while  revenues  are  collected 
centrally 
tax 
redistributed 
assignment.  It  could  be  beneficial  to  revise  the 
system  by  incorporating  objective  indicators,  such 
as  population  size,  alongside  metrics  designed  to 
incentivise  alignment  with  national  strategies, 
including, 
school 
development and economic growth.  

secondary 

example, 

through 

and 

for 

is 

its 

reform 

the  Community 

The  2025  country-specific  recommendations 
advise  Czechia  to  incentivise  and  simplify 
municipal 
among 
cooperation 
instrument  for  this 
administrations.  A  key 
structural 
of 
Municipalities 
(společenství  obcí).  This  model 
preserves  municipal  autonomy  and  enables  the 
joint  delivery  of  public  services  and  shared 
administrative  agendas.  Although  this  framework 
is  currently  used  by  around  18% (443)  of 
largely 
municipalities, 
untapped.  For  these  communities  to  achieve 
meaningful scale and impact, it could be beneficial 

its  potential 

remains 

(439) Wojtowicz, D 2024, Research for REGI Committee – 

Streamlining EU Cohesion funds: addressing administrative 
burdens and redundancy, European Parliament, Policy 
Department for Structural and Cohesion Policies, Brussels. 

(440) PAQ research (2025), Spolupráce, investice a silná centra. 

Reforma RUD může zlepšit život v regionech,  

(441) NERV (2025), Růst chudších regionů: Investice, motivace, 

efektivita samospráv a rozvoj služeb. 

(442) JRC Publications Repository - Local taxes on economic 

activity in municipalities in EU Member States. 

(443) Přehled společenství | spolecenstviobci.gov.cz. 

to align with the territorial scope of Administrative 
delegated 
of  Municipalities  with 
Districts 
authorities  (správní  obvody  obcí  s  rozšířenou 
působností)  and  have  access  to  stable  funding 
mechanisms.  Czech 
key 
policy 
have 
stakeholders 
discussions  to  explore  specific  reform  options  in 
this area. Furthermore, a well-designed budgetary 
tax  assignment  could  encourage  municipalities  to 
form communities of municipalities (444). 

tanks  and 
started 

think 
already 

Map A18.2:  Incentive-based tax revenues as a 
share of local government budgets 

Source: JRC, Local taxes on economic activity in 
municipalities in EU Member states  

Territorial  disparities  in  Czechia  are  even 
more  prominent  at  lower  territorial  levels 
and  are  not  fully  captured  at  NUTS  2  level. 
Stronger  use  of  regional  (NUTS  3)  and  functional 
territories  is  therefore  important  for  effective 
policy  design  and  implementation.  A  combined 
model  could  be  considered,  with  strategic 
coordination  at  national  level  and  implementation 
at  regional  level  through  existing  structures  and 
regional strategies. 

(444) OECD (2025), OECD Economic Surveys: Czechia 2025, OECD 
Publishing, Paris, https://doi.org/10.1787/7a70af5c-en. 

130 

 
 
 
 
 
 
ANNEX 19: TRANSPORT 

This  Transport  Annex  presents  the  state  of  play 
and  the  challenges  the  Czechia  faces  with  the 
implementation  of  the  Trans-European  Transport 
Network  (TEN-T)  and  the  European  railway  traffic 
management system (ERTMS). 

Two  European  Transport  Corridors  cross 
Czechia (Baltic Sea  –  Adriatic Sea and Rhine 
–  Danube).  The  Czech  TEN-T  rail  network  is 
3 200 km  long  (1 842 of  which  are  on  the  core 
network).  The  road  network  is  2 148 km  long 
(1 015 of which on the core network). Czechia has 
333 km  of 
inland  waterways,  three  airports 
(including  two  core  airports),  nine  ports  (including 
five core port) and 10 urban nodes on TEN-T (445).  

infrastructure 

The  rail 
in  Czechia  has 
improved considerably over last two decades. 
However,  significant  investments  are  still  lacking 
on the core and extended core network to ensure a 
full  compliance  with  TEN-T  requirements  and  to 
deploy  the  high-speed  network  connecting  the 
main cities in the country and further on to Berlin 
and Vienna and other EU neighbouring countries. 

and 

Brno, 

Prague 

important  high-speed 

In accordance with the TEN-T Regulation, the 
lines  to  be 
most 
constructed  in  the  next  decade  are  the  one 
connecting 
and 
modernisation  of  the  Brno  railway  node, 
including  high-speed  access  to  that  city. 
Together  with  the  cross-border  sections  Dresden-
Prague  and  Brno-Vienna/Bratislava/Katowice,  this 
line  is  an  essential  part  of  the  Rhine  –  Danube 
corridor  which  connects  Germany  to  central  and 
southeastern  Europe.  Another  priority  constitutes 
the  modernisation  of  the  Velký  Osek-Hradec 
Králové-Choceň line that has a key importance for 
the freight transport in the country. 

operational 
competitiveness of the rail sector. 

efficiency, 

increasing 

the 

By  the  end  of  2024 (446)  ERTMS  was  in 
operation  on  33%  of  the  TEN-T  network  in 
Czechia.  To  achieve  its  ambitious  national  plan, 
long-term  funding  is  lacking  to  reach  the  2035 
ERTMS roll-out target aiming to deploy the system 
on an additional length of 1 600 km. 

public 

Czechia, 

procurement 
is 

of 
In 
infrastructure  projects 
lengthy  and 
complex.  Combined  with  a  weak  administrative 
capacity  for  planning  and  implementing  major 
infrastructure projects, this often leads to delays in 
project  implementation  and  high  project  costs. 
Administrative  structures  and  processes  lack  the 
efficiency  needed  to  accelerate  the  upgrading  of 
key  corridors  and  develop  the  infrastructure  that 
high-speed rail requires. It would also be of benefit 
for Czechia to continue strengthening the National 
Safety  Authority’s  operating  conditions,  as  it  still 
faces  challenges  related  to  its  budgetary  and 
staffing  needs,  staff  retention  and  a  more 
risk -based and effective supervision. 

Czechia  recently  introduced  a  single  permit 
procedure  which  replaced  previous  separate 
procedures  for  zoning  and  building  permits. 
This change of legislation is expected to facilitate 
and  shorten  permit  procedures,  but  it  is  too  early 
to 
its  effectiveness.  Finally, 
harmonising  technical  and  operational  rules  with 
the minimisation of national  rules in line with the 
EU  directives  on  rail  interoperability  and  safety 
remains critical to ensuring seamless cross-border 
rail transport. 

conclude  on 

The  ERTMS  is  essential  to  digitalising  the 
railways and to modernising and harmonising 
railway  operations  across  Europe.  The  ERTMS 
ensures the safety of rail networks by providing a 
unified signalling system that significantly reduces 
the 
It  also  provides 
interoperability  between  national  rail  systems, 
improving  cross-border  train  movements.  Finally, 
the  ERTMS  enhances  network  capacity  and 

risk  of  accidents. 

(445) TENtec Information System, according to Reg. 2024/1679 

coordinator Matthias Ruete. 

(446) Based on ERTMS – Third work plan of the European 

131 

 
 
 
 
 
 
 
 
Map A19.1:   

Source: Based on ERTMS – Third work plan of the European Coordinator Matthias Ruete. 

Map A19.2:  TEN-T Cross-Border & National Priority Sections in Czechia. 

132