Czechia and Germany: the closest trade partner and the heaviest history

A Škoda is a German-owned car built in Czechia by a company that was a going concern long before Volkswagen arrived. Germany is the neighbour the Czechs trade with most, and the one with whom they share the hardest past. Read a little Czech history and you soon see why the relationship cannot be reduced to trade statistics.

A long entanglement

For centuries the Czech lands and the German-speaking world belonged to the same political systems: the Holy Roman Empire, in which the Bohemian king was an elector, and later the Habsburg monarchy. German speakers lived in Bohemia and Moravia as townspeople, nobility and, in the border regions, the majority. Prague was bilingual, with a cultural life that was Czech, German and Jewish, and German universities, theatres and newspapers sat beside Czech ones. The longer arc is in our short history of Czechia.

The national revival of the nineteenth century brought a political contest over language rights, schooling and administration. When Czechoslovakia was founded in 1918, roughly three million German speakers found themselves citizens of a state they had not chosen, and their status stayed contentious throughout the interwar years.

1938 to 1946: the break

The decisive rupture came in 1938 and 1945. At Munich on 30 September 1938, Britain, France, Italy and Germany agreed that the Sudeten border regions of Czechoslovakia, where German speakers were the majority, should go to Germany, with Czechoslovakia taking no part in the decision (see the Munich Agreement and the occupation). In March 1939 Germany occupied the rest of the Czech lands and set up the Protectorate of Bohemia and Moravia, which lasted until 1945. The occupation brought repression, the closure of Czech universities in November 1939 and the persecution and murder of Czech Jews.

After the war the Czechoslovak government decided to remove most of the German-speaking population. Under presidential decrees, citizens of German or Hungarian ethnicity lost their citizenship and property, and the great majority of Germans were expelled or transferred in 1945 and 1946, a process the Allies endorsed in principle at Potsdam. The first months involved violence and loss of life, and Germany remembers the events as the Vertreibung. A small number stayed, mainly those regarded as essential workers or as anti-fascists. Our explainer on the Beneš decrees covers the legal side.

Property, compensation and the standing of the 1945 decrees troubled relations for fifty years, not least because the expellees' organisations in Germany, notably in Bavaria, were politically influential.

Prague, 1989

One episode shows how fast the relationship could change. In the summer and autumn of 1989 thousands of East Germans, unable to leave their country legally, took refuge in the grounds of the West German embassy in Prague, in the Malá Strana district. On 30 September 1989 the West German foreign minister Hans-Dietrich Genscher came to the embassy and told the crowd from the balcony that they could leave for the West. Trains carried them through East Germany. It was weeks before the fall of the Berlin Wall and the Velvet Revolution in Prague.

Reconciliation

After 1989 both governments tried to close the bitterest chapters. A treaty on good neighbourship between Czechoslovakia and Germany was signed on 27 February 1992. The deeper step was the Czech-German Declaration on Mutual Relations and their Future Development, signed on 21 January 1997 by the prime ministers Václav Klaus and Helmut Kohl. Germany acknowledged its responsibility for the Nazi policy that destroyed Czechoslovakia, and the Czech side expressed regret for the postwar expulsions and the injustices committed in them. Both sides agreed not to burden their relationship with political and legal claims from the past. A Czech-German Future Fund was set up in 1998 to finance projects, including support for victims of Nazi persecution and work on cooperation and dialogue (check the Fund for its current programmes).

The declaration did not end the debate. The legal force of the Beneš decrees kept surfacing, including in the years before Czech accession to the EU, and some expellee groups remain critical. Still, the centre of gravity moved to shared membership of the EU and NATO and to practical matters.

The economic relationship

Germany is Czechia's largest trading partner, for exports and imports alike (as of 2026; check the Czech Statistical Office, czso.cz). Manufacturing is the base. Škoda Auto, headquartered in Mladá Boleslav, has been part of the Volkswagen Group since Volkswagen took a stake in 1991, and was fully integrated into the group over the following decade. Much of the Czech car industry and its component suppliers works as part of German manufacturing chains, and other German investors are present in engineering, retail, chemicals and banking.

The Czech economy therefore moves with the German one. When German industrial demand is strong, Czech exports rise; when German factories slow, Czech suppliers feel it quickly. It is one reason the Czech National Bank and governments watch German data closely, and part of the background to the single market and the euro question. Tax on cross-border income is governed by a double tax treaty (see double tax treaties and Czechia), and cross-border workers and companies deal with the rules of both countries.

Everyday ties

The border regions show the connection best. Czech workers commute to Saxony and Bavaria, Germans shop and refuel in Czech border towns, and universities and cities cooperate in cross-border programmes backed by EU money (see Czech EU funds and cohesion policy). Since Schengen reached the Czech-German land border on 21 December 2007 there have been no routine passport checks, though Germany has at times introduced temporary checks for specific reasons.

German-language institutions in Prague, such as the Goethe-Institut, are active, and the Czech-German Discussion Forum, a civil-society body created after the 1997 declaration, brings together historians, politicians and others.

Transport tells the same story. The railway along the Elbe valley runs from Prague through Ústí nad Labem and Děčín to Dresden and on to Berlin, and the D8 motorway from Prague continues on the German side as the A17 to Dresden. In the west, links through Cheb and Plzeň lead to Nuremberg and Munich. Czechia's other neighbours get the same treatment in our pieces on Poland, Austria and Slovakia.

Frequently asked questions

Who is Czechia's biggest trading partner?

Germany, for both exports and imports (as of 2026; check the Czech Statistical Office).

What was the Munich Agreement?

An agreement of 30 September 1938 between Germany, Italy, France and Britain, under which the Sudeten border regions of Czechoslovakia were handed to Germany.

What is the Czech-German Declaration?

A declaration of 21 January 1997 in which the two governments acknowledged their past wrongs and agreed not to burden relations with claims from the past.

Does Škoda belong to a German company?

Škoda Auto has been part of the Volkswagen Group since 1991, and it is headquartered in Mladá Boleslav.