Doing Business In - International Franchise Association

transactions to online retailers. Finally, in 2005 the Ministry of Informatics introduced
anti-Spam legislation (more information at http://www.micr.cz), which has been a benefit
to legitimate online businesses. The most popular web trading sites are listed in the web
resources section at the end of this document.
In July 2003, the EU started applying Value Added Tax (VAT) to sales by non-EU based
companies of Electronically Supplied Services (ESS) to EU based non-business
customers. U.S. companies that are covered by the rule must collect and submit VAT to
EU tax authorities. European Council Directive 2002/38/EC further developed the EU
rules for charging Value Added Tax. These rules were indefinitely extended following
adoption of directive 2008/8/EC
U.S. businesses mainly affected by the 2003 rule change are those that are U.S. based
and selling ESS to EU based, non-business customers or those businesses that are EU
based and selling ESS to customers outside the EU who no longer need to charge VAT
on these transactions. There are a number of compliance options for businesses. The
Directive created a special scheme that simplifies registering with each Member State.
The Directive allows companies to register with a single VAT authority of their choice.
Companies have to charge different rates of VAT according to where their customers are
based but VAT reports and returns are submitted to just one authority. The VAT
authority responsible for providing the single point of registration service is then
responsible for reallocating the collected revenue among the other EU VAT authorities.
Key Link: http://ec.europa.eu/taxation_customs/taxation/vat/how_vat_works/eservices/index_en.htm
Trade Promotion and Advertising Return to top
Though choosing and supporting a suitable agent is the most important factor in
achieving success in the market, companies can stimulate sales further by working with
Czech partners on effective marketing campaigns. A good agent or distributor should be
able to help you craft an appropriate strategy. The Czech market is small, and market
entry is relatively low-cost. Expensive marketing campaigns are probably not necessary,
unless promoting a consumer product. U.S. firms can spur sales through trade shows,
in-country promotions, and advertising.
A U.S. firm can craft a targeted advertising campaign to introduce new products or
support established ones for a fraction of the cost of advertising in the U.S. Retain a
local public relations/advertising firm to provide an integrated program. Foreign firms
most often pay for in-country advertising, while their local distributors provide facilities,
warehousing, and equipment.
With a history dating back to the Middle Ages, trade shows are a European way of life.
Both Prague and Brno host many international shows. A small booth is a good -- and
comparatively low-cost way -- to meet customers in the Czech Republic and neighboring
countries.
The Czech Republic is a small market, and each sector has a few key decision-makers
and opinion leaders. One way to reach these leaders quickly is to hold an innovative incountry
promotion. Examples of good programs include technical seminars or small