Investment and Doing Business. in the Czech Republic

Transcription

1 Investment and Doing Business in the Czech Republic

2 8 Residence permit The matters related to foreigner s stay in the Czech Republic are regulated by the Act No. 326/1999 Coll., Act on Foreigner s Stay and Residence in the CR, as amended. Members and Statutory Body of Limited Liability Company or Joint Stock Company (non-eu national) To be a member of Limited Liability Company (Ltd.) or Joint Stock Company (JSC) incorporated in the Czech Republic is basically considered to have property rights or voting rights in it. There is no special requirement which would relate to citizenship; even non-eu nationals do not need a residency permit or any other type of visa to be a member of Ltd. or JSC if he just has property right and is not active for Ltd. or JSC. Non-EU person entered in the Commercial Register as authorized person to act on behalf of the company and not regularly present in the Czech Republic needs no working and residency permit. However, if a non-eu person (member or statutory body) will be active for Ltd. or JSC (providing activities for running its business, i.e. dealing with day to day business), a working permit and residency permit will be required. Following to the above, the Czech Ltd. or JSC could be established and registered into the Czech Commercial Register without its founder s and statutory body member s residency permits. However, if the non-eu person intends to be active in his Czech company as its member or statutory body, it is necessary obtaining his long term residency permit and working permit for the Czech Republic. The time-limit for issuing a decision on an application for a long term residence permit for the purpose of business is 60 days.

3 Acquisition of Real Estate Foreign natural and legal persons are allowed to acquire realty under the same conditions as Czech persons. The most frequent title for the transfer of the ownership right is a written purchase agreement. The purchase agreement is valid if it contains a specification of the real estate according to the records of Cadastre of Real Estate and certified signatures on the same deed. Property rights to real estate are acquired on its entry in the Cadastre of Real Estate; this process usually takes 1-2 months. For the security reasons it is usual for the buyer to transfer funds which form the purchase price to an attorney, notarial or bank custody until they acquire the property rights The tax on the acquisition of real estate amounts to 4 % of the tax base. It is generally paid by the seller (in this case, the acquirer is the guarantor). However, the parties may agree in the purchase agreement that the taxpayer will be the purchaser. 9

4 12 Value Added Tax (VAT) Taxpayers are Entrepreneur (natural or legal person) is liable to pay VAT if evolving economic activity and its turnover for the previous 12 months exceeds the amount of CZK 1,000,000 Anyone who provides services internationally within the EU Another alternative is to become a voluntary VAT payer. This means that a company or an individual applies as a VAT payer of its own volition, in spite of the fact that its turnover has not exceeded the sum required by the law Subject matter of the tax is delivery of goods, provision of services, acquisition of goods from another member state of the European Union or import of goods with a place of supply in the country. Tax base is the price of the taxable supply, which do not include tax. Tax rate: 21 % generally, the reduced rate of 15 % for food, books, accommodation, arts and sports activities, etc. Taxation period: basic tax period is calendar month Other Business-related Taxes Capital duties: there is no capital duty levied in the Czech Republic Stamp duties: only on certain legal transactions during administrative or court proceedings Customs duties: in general, all goods crossing the Czech border are subject to customs duties, except from EU Other excise duties: e.g. on tobacco, alcoholic drinks and mineral oils Environmental taxes: for electricity, natural gas or coal contributions Advertising duty: there is no advertising duty levied in the Czech Republic Road tax: for vehicles registered and operating in the Czech Republic Tax immovable property: tax on land and buildings located in the Czech Republic

5 Foreign Permanent natural Establishment and legal persons are allowed to acquire realty under the same conditions as Czech persons. The most There frequent is the potential title for the that transfer a permanent of the ownership establishment right is could a written be created purchase a agreement. result of longer-term The purchase activities agreement of extended valid if business it contains travellers, a specification but this would of the real be dependent estate ac- is cording on the type to the of services records performed, of Cadastre the of Real length Estate of stay and in certified Czech signatures Republic, on the the structure same deed. under Property which the rights extended to real the estate business are travellers acquired on work its in entry the in Czech the Cadastre Republic, of and Real the Estate; level this of authority process usually the employees takes 1-2 have. months. For the security reasons it is usual for the buyer to transfer funds which form the purchase price to an attorney, notarial or bank custody until they acquire the property rights The tax on the acquisition of real estate amounts to 4 % of the tax base. It is generally paid by the seller (in this case, the acquirer is the guarantor). However, the parties may agree in the purchase agreement that the taxpayer will be the purchaser. Double Taxation Treaties In addition to Czech domestic arrangements that provide relief from international double taxation, the Czech Republic has also entered into double taxation treaties with more than 70 countries to prevent double taxation and allow cooperation between the Czech Republic and overseas/eu tax authorities in enforcing their respective tax laws. 13

6 16 Strategic investment in Manufacturing industry is considered to be an investment wherein the value of the minimum amount invested in long-term assets reaches the value of CZK 500 million, of which at least CZK 250 million is invested in new machinery and at least 500 new jobs are concurrently created. As for Technology centres, the minimum amount of investment in long-term assets is CZK 10 million, of which at least CZK 5 million must be invested in new machinery and at least 40 new jobs must be created. Strategic investment in the field of Technology centres requires the minimal amount of CZK 200 million, of which at least CZK 100 million must be invested in new machinery and creation of 120 new jobs. Business Support Service Centres need to create at least 40 new jobs in the case of software-development centres or at least 100 new jobs in the case of other business support services centres. Further Basic Conditions In order to receive investment incentives, the investor shall not start work on the project prior to issuance of the confirmation of project registration by CzechInvest and it shall retain the required assets and created jobs throughout the entire period of utilising state aid (at least for a period of five years).

7 Procedure for Completing the Investment Incentives Application The applicant and recipient of investment incentives are two different entities The applicant shall submit to CzechInvest a complete application for acquirement investment incentives CzechInvest draw up a report on the submitted plan and transmit it to the Ministry of Industry and Trade (MOP) MOP asses in cooperation with other ministries investment plan and prepare an offer of investment incentives After the applicant for the provision of investment incentives can submit an application for investment incentives = acceptance of the offer of investment incentives MOP prepares the decision to grant investment incentives This process usually takes six months. The applicant is a recipient of investment incentives The applicant shall submit to CzechInvest a complete application for acquirement investment incentives CzechInvest draw up a report on the submitted plan and transmit it to the Ministry of Industry and Trade (MOP) MOP asses in cooperation with other ministries investment plan and prepare the decision to grant investment incentives This process usually takes three months. 17

8 Services for Foreign Investors 18 Bělina & Partners Law Firm is very pleased to provide potential foreign investors with all legal services associated with the implementation of investments in the Czech Republic or provide the foreign investors with details of doing business in the Czech Republic. We may help with the establishment of companies, purchase of companies or businesses, representation with state authorities, preparation of contractual documents, processing the application for investment incentives or obtaining a residence permit or possibly working permit. Bělina & Partners Law Firm could also arrange for providing additional services through proven partners with whom we cooperate on long-term basis. These additional services include for example tax consultancy or property management. Bělina & Partners Law Firm may arrange for help with finding investment opportunities in the Czech Republic based on the specific requirements of foreign investors and we may represent foreign investors in negotiations with sellers or Czech business partners and analyse legal conditions of the investment. Bělina & Partners Law Firm has many years of experience in providing legal services in the area of investments, establishment of companies, purchase of companies or businesses and shares of them. We successfully implemented a number of mergers and acquisitions for Czech and foreign clients for example in the area of energy or real estate.

9 19 Bělina & Partners Law Firm Pobřežní 370/ Praha 8 Tel.: Fax: recepce@belinapartners.cz