Strong Laws, Uneven Results: How Czech Cities Shape the Real Business Environment

The World Bank’s Subnational Business Ready 2025: Czechia finds that while Czech business laws are strong and uniform nationwide, their impact depends heavily on how well cities implement them. Improving local execution, especially in permits, utilities, courts, and insolvency could boost investment and growth without changing the legal framework.

As Europe struggles with slow growth and weak productivity, a new World Bank study suggests that the solution may lie closer to home, inside city halls, local courts, and municipal offices. Produced by the World Bank’s Regulatory Efficiency Unit in partnership with the European Commission’s Directorate-General for Regional and Urban Policy (DG REGIO) and the Czech Ministry of Regional Development, the Subnational Business Ready in the European Union 2025: Czechia report takes a close look at how businesses actually experience regulation across seven Czech cities, including Prague, Brno, Ostrava, Plzeň, Olomouc, Liberec, and Ústí nad Labem. Its core message is simple: strong national laws matter, but local implementation ultimately determines whether businesses thrive or stall.

Starting a Business Is Easy, Staying Efficient Is Harder

Czechia performs strongly in terms of starting a business. Registering a limited liability company is fast, affordable, and largely digital across all cities studied. Entrepreneurs rely on notaries, electronic registries, and automatic data sharing between institutions, which keeps costs low and procedures predictable. Differences between cities are minor and mostly linked to how quickly local tax offices process VAT and payroll registrations.

Yet even this well-functioning system shows signs of unnecessary friction. Symbolic minimum capital requirements, affidavits for company directors, and multiple post-registration steps still add complexity. The report argues that many of these could be removed or simplified through greater use of digital verification and consolidated online forms, small changes that would further reduce the burden on new firms.

Land and Construction: Where Delays Begin

Once firms move from registration to investment, the picture becomes more uneven. Property transfers, building permits, and environmental approvals follow the same national laws everywhere, but the time it takes to complete them varies widely by city. Property transfers are a striking example: although checks and paperwork take only a few days, a mandatory 20-day waiting period pushes total timelines close to a month.

Building permits are even more challenging. Despite a new Building Act and the launch of a national digital Builder’s Portal in 2024, approval times range from under six months in Olomouc to well over a year in Prague. Digital tools are not yet fully operational, many authorities remain outside the system, and municipalities face staff shortages. Environmental permitting has improved with the introduction of a unified environmental statement, but clearance times still differ sharply across cities, reflecting uneven coordination and administrative capacity.

Utilities Show the Power of Good Coordination

Utility services, electricity, water, and internet, highlight how much local coordination matters. National regulations are consistent, but business experiences differ significantly. Brno stands out as a national leader, thanks to advanced planning tools and strong coordination of excavation permits that reduce delays and disruptions.

In other cities, firms face longer connection times, limited information about costs and timelines, and more frequent service interruptions. Extreme weather events have exposed weaknesses in electricity networks in some regions, underlining the need for more resilient infrastructure. The report makes clear that better data sharing, transparent service standards, and smarter coordination could deliver major improvements without changing the law.

Courts and Insolvency: The Weakest Links

The biggest concerns emerge in dispute resolution and business insolvency. Commercial disputes often take more than a year to resolve, partly because courts lack specialized commercial divisions and clear deadlines for key procedural steps. Digital justice tools remain underdeveloped, weakening confidence in the system. Brno again performs best, while other cities lag.

Insolvency shows the widest gaps of all. While Czech insolvency laws are modern, reorganization procedures, which can save viable firms and jobs, are rarely used outside major cities. Liquidations often drag on for years, destroying value. The report points to late intervention, creditor preference for liquidation, and the lack of simplified procedures for small firms as key problems.

A Reform Agenda That Doesn’t Break the Bank

Business surveys reveal that Czech firms worry most about skills shortages, access to finance, and political uncertainty, not regulation itself. Still, inefficient permits, utilities, courts, and insolvency systems quietly shape investment decisions and regional competitiveness.

The report’s conclusion is pragmatic and hopeful. Czechia doesn’t need new laws. It needs better implementation. Cities like Brno show what is possible when institutions work well together. Strengthening local capacity, fully deploying digital tools, and spreading good practices across cities could deliver meaningful growth, without straining public budgets or rewriting the rulebook.