Tax Regimes vs. Venture Capitalism in Central Europe

Abstract

This article briefly assesses the “venture capital friendliness” of four Central European tax/legal jurisdictions (Poland, Hungary, the Czech and Slovak Republics) following their European Union (EU) accession – in May 2004. It is noteworthy that, notwithstanding the heated debate on tax harmonization currently sweeping across the EU (unsurprisingly drummed up by countries with notoriously overtaxed economies), fiscal policy is, for the foreseeable future, a national domain and its shape offers a powerful incentive to any form of foreign investment, including venture capital. Similarly, the relatively limited extent of venture capital regulation on a pan-European scale works to the advantage of those that are able to deliver an optimal framework for venture capital growth in an otherwise relatively homogenous market.