Czech Law Firm

Category: Czech Legal Notes

  • Registering a Trademark in the Czech Republic

    A trade mark protects a sign that distinguishes one undertaking’s goods or services from another’s. Registering one in the Czech Republic is an administrative procedure before the national industrial property office, and it is worth understanding both what registration gives and what it does not, because the second is where expectations most often go wrong.

    Three routes

    A business operating only in the Czech Republic can register a national mark. A business operating across the European Union can instead apply for an EU trade mark, which covers all member states through a single application and single renewal. A third route uses the international system to extend protection to designated countries from a base application. The choice is commercial as much as legal: national registration is cheaper, EU registration is broader, and the right answer depends on where the business actually trades and intends to trade.

    What can and cannot be registered

    A sign must be capable of distinguishing the goods or services it is applied to. Signs refused on absolute grounds include those that are purely descriptive of the goods, that have become generic, or that are deceptive as to the nature or origin of the product. Choosing a name that describes exactly what the business sells is intuitive marketing and poor trade mark strategy, because the more descriptive a sign is, the harder it is to register and the narrower its protection.

    • Search before applying. The registers are public, and a conflict found early costs nothing.
    • Classify carefully. Protection extends only to the goods and services specified.
    • Distinctive beats descriptive. Invented and arbitrary names register more easily and protect more effectively.
    • Diarise renewal. Registration runs for ten years and is renewable indefinitely, but only if renewed.

    The opposition system

    The Czech office does not refuse an application merely because an earlier similar mark exists; earlier rights are asserted by their owners through opposition within a set period after publication. The practical consequence is twofold. An applicant should search the registers themselves rather than relying on the office to catch conflicts, and an existing rights holder should monitor publications, because an unopposed application will proceed to registration.

    Use it

    A registered mark that is not genuinely used for the goods or services it covers becomes vulnerable to revocation after a statutory period. Registration is therefore not a permanent reservation of a name held against future plans; it protects a mark in actual commercial use.

    The sequence that causes fewest problems is therefore to choose a distinctive name, search the relevant registers before committing to it, apply for the territory the business will realistically trade in, and then use the mark and monitor for conflicts. Each of those steps is cheap; skipping the first two rarely is.

    This article is general information about Czech law and is not legal advice.

  • Annual Obligations for Czech Companies

    A Czech company carries a recurring set of obligations that continue regardless of whether it traded in a given year. They are individually modest and collectively easy to lose track of, particularly for a dormant entity or one whose director is not resident here. The pattern of problems is consistent: nothing goes wrong for several years, and then a single omission surfaces at the worst possible moment, usually during a sale or a financing.

    Accounts and their filing

    A company must keep accounts, prepare annual financial statements, and file them in the collection of documents held with the commercial register. The approval of the statements by the general meeting is a separate corporate step from the filing, and both are required. Whether an audit is needed depends on statutory size criteria based on assets, turnover and employee numbers. Failure to file is the single most common default, it is publicly visible, and it can attract penalties as well as questions from counterparties who check the register.

    Tax and payroll

    Corporate income tax returns are filed annually, with the deadline depending on whether a registered adviser is used. A company registered for value added tax has periodic returns and control statements on their own cycle. Where the company employs anyone, monthly payroll obligations to the tax authority, the social security administration and the health insurers run in parallel and to their own deadlines.

    • File the accounts. The most frequently missed obligation and the most publicly visible one.
    • Hold the general meeting. Approval of the statements within the statutory period is a corporate act, and it should be minuted.
    • Keep the register current. Directors, address and ownership changes must be notified.
    • Maintain beneficial ownership data. A standing obligation, separate from the commercial register entry.

    Corporate housekeeping

    Beyond the filings, a company should keep its internal records in order: the list of shareholders, minutes of decisions, and the documents underlying any change to the founding instrument. This costs almost nothing to maintain contemporaneously and is expensive to reconstruct years later. Buyers in a transaction routinely ask for it, and gaps translate directly into warranties, retentions or a reduced price.

    Dormant companies

    An entity that is not trading still files, still holds meetings, still maintains its register entries. The temptation to let a dormant company lapse quietly is understandable and creates real exposure for its directors. If a company is genuinely finished with, the correct answer is a proper liquidation and removal from the register rather than silence.

    None of this is burdensome when it is handled on a calendar. The companies that run into difficulty are almost never the ones that found the obligations onerous; they are the ones that never established a routine for them in the first year and then had several years to catch up on at once.

    This article is general information about Czech law and is not legal advice.

  • Employment Contracts in Czechia: The Basics

    Employment in the Czech Republic is governed principally by the Labour Code, which is codified, detailed and largely mandatory. That last point is the one most often missed by employers arriving from systems where the contract is the main source of the terms. Here, a substantial part of the relationship is set by statute, and a contractual term that gives an employee less than the Code requires is simply ineffective to that extent.

    What the contract must contain

    An employment contract must be in writing and must identify at minimum the type of work, the place or places of work, and the date on which work commences. Beyond that core, a range of further information about the relationship must be provided to the employee in writing, either in the contract itself or separately within the statutory period. Remuneration may be set in the contract or by a separate internal instrument, and the two approaches have different consequences for how it can later be changed.

    Probation and fixed terms

    A probationary period may be agreed but must be agreed in writing no later than the day work starts, and it is subject to a statutory maximum which is longer for managerial positions. Fixed-term employment is permitted but constrained: the Code limits both the length of a fixed term and the number of times it may be repeated between the same parties, and exceeding those limits converts the relationship into an indefinite one.

    • Writing is not optional. The formal requirements are conditions, not administrative preferences.
    • Statutory minimums override. Leave, rest periods and notice cannot be contracted below the Code.
    • Changes need agreement. Unilateral variation of agreed terms is generally not available to the employer.
    • Agreements outside employment. The two forms of work agreement are narrower alternatives, not a way around the Code.

    Ending the relationship

    Termination is where the prescriptive character of Czech employment law is most visible. An employer may terminate only on statutory grounds, must state the ground in writing, and must deliver the notice properly. Certain protective periods prevent termination altogether while they run. A notice that gets the ground or the procedure wrong is vulnerable to challenge, and the remedy where a challenge succeeds can include continuing wage liability for the intervening period.

    Practical consequences

    Because the process requirements are strict, the practical advice that follows from the structure of the Code is to document as you go: agreements in writing, changes recorded, delivery of documents evidenced. Most employment disputes here turn on procedure and proof rather than on the underlying merits.

    For an employer used to a system where the written contract settles most questions, the adjustment required is mainly one of expectation. The Labour Code sets the floor, the contract works above it, and the paperwork surrounding a decision matters at least as much as the decision itself.

    This article is general information about Czech law and is not legal advice.

  • Buying Property in the Czech Republic

    Property transfer in the Czech Republic runs through the cadastral register, and understanding the register is most of understanding the transaction. Ownership does not pass on signature or on payment; it passes on registration. Everything else in the process is arranged around that fact.

    The register

    The cadastre records land, buildings and units, together with ownership and the encumbrances attached to them: mortgages, easements, pre-emption rights, and various notes indicating that a proceeding is under way. It is publicly accessible, and an extract is the starting point for any purchase. The register carries a degree of legal protection for a person who relies on it in good faith, which makes checking it before contracting considerably more than a formality.

    The sequence of a purchase

    A typical transaction involves a written transfer agreement with certified signatures, an application to the cadastral office, and a statutory waiting period before the entry is made. Because the gap between signature and registration carries risk for both sides, the price is normally held by a third party such as a notary, a bank or a lawyer, and released against evidence of registration. Skipping that escrow arrangement is the most common way for a straightforward purchase to become a serious problem.

    • Read the extract, including the encumbrances. Section C of the extract is where the unwelcome surprises live.
    • Check land and building separately. They are not always in the same ownership.
    • Use escrow. Payment released only against registration protects both parties.
    • Watch the notes. A pending proceeding recorded against the property is a warning to stop and investigate.

    Units and common parts

    Buying an apartment means buying a unit, which carries with it a share in the common parts of the building and membership of the owners’ association. The relevant enquiries therefore extend beyond the unit itself to the association: its financial position, its reserve fund, any planned major works, and whether the seller is in arrears on contributions. These are contractual and factual enquiries rather than register ones.

    Tax and cost

    The costs of a purchase include the cadastral fee, notarial or legal fees, and any agent commission. The Czech real estate acquisition tax was abolished in 2020, which changed the arithmetic of transactions materially; income tax questions on the seller’s side and, for those letting the property afterwards, ongoing tax obligations remain relevant considerations.

    The pattern across almost every problematic Czech property transaction is the same: something visible in the register was not read, or money moved before registration did. A purchase where the extract is examined properly and the price sits in escrow until the entry is made is, in the overwhelming majority of cases, an uneventful one.

    This article is general information about Czech law and is not legal advice.

  • An Overview of Czech Residence Permits

    Czech residence rules divide sharply along one line: whether the person concerned is a citizen of an EU member state, or of a state outside it. Almost everything about the procedure, the documentation and the timescale follows from which side of that line an applicant falls on, and much of the confusion in circulation comes from advice written for one being applied to the other.

    EU citizens and their family members

    Citizens of EU member states exercise a right of free movement and do not require a permit in the same sense. Registration obligations exist, and a certificate of temporary residence can be applied for, but the underlying right does not depend on the document. Family members of EU citizens who are themselves third-country nationals have a distinct and generally more favourable route than other third-country nationals.

    Third-country nationals

    For everyone else the structure is a sequence. Short stays fall under the Schengen visa rules. Stays beyond that threshold require a long-term visa, which is typically the entry point, and which is later converted into or replaced by a long-term residence permit tied to a stated purpose: employment, business, study, family reunification, or research. After a qualifying period of continuous lawful residence, permanent residence becomes available, with its own conditions including a language examination.

    • Purpose is central. The permit is granted for a stated purpose, and the purpose ending affects the permit.
    • Apply in time. Renewal applications have windows, and applying outside them causes avoidable problems.
    • Documents expire. Criminal record extracts and similar supporting documents have limited validity.
    • Report changes. Changes of address, employer or family status generally carry notification duties.

    Employment-linked routes

    Several permits combine work authorisation with residence in a single document, which simplifies matters but ties the holder to the arrangement recorded in it. Changing employer or position during the currency of such a permit generally requires notification or a fresh application rather than nothing at all, and treating a job change as a purely private matter between employee and employer is a frequent and consequential error.

    Procedure and appeals

    These are administrative proceedings with statutory decision periods, formal service rules and a right of appeal against an adverse decision within a short period. Because the deadlines are short and strictly applied, an unfavourable decision is a matter for immediate attention rather than for reflection over a fortnight.

    The general lesson is that Czech residence law is procedural rather than discretionary in character. Most difficulties encountered by applicants are not refusals on the merits but consequences of timing, of a document that expired while the file sat, or of a change in circumstances that was never reported.

    This article is general information about Czech law and is not legal advice.

  • S.r.o. or Branch Office? Comparing Structures

    A foreign company that wants a presence in the Czech Republic generally chooses between establishing a Czech subsidiary, almost always a limited liability company, and registering a branch of the existing foreign entity. The two look similar from the outside and behave quite differently in law, so the choice deserves more than a default.

    What each one is

    A subsidiary is a separate Czech legal person. It has its own identity, its own assets and liabilities, its own governing body and its own obligations. A branch is not a separate legal person at all; it is an organisational unit of the foreign company, registered in the Czech commercial register so that it can operate visibly here. Everything a branch does is done by the parent, legally speaking.

    The consequences that follow

    Liability is the first and largest difference. A subsidiary limits the parent’s exposure to its investment in it, subject to the usual exceptions; a branch does not limit anything, because obligations incurred through the branch are obligations of the parent. The second difference is disclosure: registering a branch generally requires filing information about the foreign parent, including its constitutional documents and in many cases its accounts, in Czech translation.

    • Separate liability. The main argument for a subsidiary in almost every case.
    • Parent disclosure. The main practical cost of a branch, and often underestimated.
    • Perception. Czech counterparties and public authorities are more familiar with dealing with a local company.
    • Exit. Selling a subsidiary is a share transfer; unwinding a branch is a deregistration and a set of parent-level questions.

    Tax, briefly and carefully

    Both structures can create a taxable presence, and the analysis differs between them and is affected by any applicable double taxation treaty. A branch generally gives rise to a permanent establishment of the parent, taxed on the profits attributable to it; a subsidiary is taxed as a Czech resident company. Which produces the better outcome depends on the group’s circumstances and is a question for a tax adviser rather than a general note.

    Where each tends to fit

    In practice a subsidiary suits almost every case where the Czech activity will have employees, contracts with local customers, or any meaningful liability exposure. A branch fits a narrower set of situations, usually where regulatory or sectoral reasons make operating through the parent entity necessary or where the activity is limited and closely controlled.

    The decision is worth making deliberately at the outset, because converting from one structure to the other later is not a formality. A branch that has grown into a substantial operation cannot simply be relabelled a subsidiary; the assets, contracts and employees have to be moved across, which is a transaction in its own right.

    This article is general information about Czech law and is not legal advice.

  • Common Commercial Lease Terms in Czechia

    Commercial leases in the Czech Republic are governed by the Civil Code, with a distinct set of provisions applying to premises used for business purposes. Compared with residential tenancy, where much of the regime is protective and mandatory, commercial leasing leaves considerably more to the parties, which means the drafting carries correspondingly more weight.

    Term and termination

    The first structural question is whether the lease runs for a fixed term or indefinitely, because the exit rights differ substantially. An indefinite lease is generally terminable on notice by either party, with statutory notice periods applying where the parties have not agreed otherwise. A fixed term gives certainty and restricts early exit, which is an advantage or a trap depending on which side of it you are on. Break rights, if wanted, have to be drafted; they are not implied.

    Rent and its adjustment

    Rent is freely agreed. What is not automatic is indexation: unless the lease provides a mechanism, rent does not rise with inflation, and a great many disputes have followed from an indexation clause that named an index imprecisely or failed to say who calculates it and when. Service charges are a separate head from rent and should be defined as to what is included, how they are apportioned and how they are reconciled.

    • Define the premises precisely. Area, measurement standard and what is included beyond the demised space.
    • Allocate repairs explicitly. Who maintains what is the most common source of ongoing friction.
    • Address fit-out and reinstatement. What the tenant may install, and what must be removed at the end.
    • Deal with assignment and subletting. Silence is not the same as permission or prohibition.

    Security and transfer of the business

    Landlords commonly require a deposit or a guarantee, and the terms on which security may be drawn down and must be replenished belong in the lease rather than in correspondence. A related question worth settling in advance is what happens if the tenant’s business changes hands, since the Czech concept of the transfer of a business establishment can carry lease rights with it in ways the parties may not have anticipated.

    Registration and third parties

    A lease may in appropriate cases be recorded in the cadastral register, which affects its position against a subsequent purchaser of the property. Whether to do so is a commercial question, but it is one the parties should decide deliberately rather than by omission, particularly where the tenant is investing substantially in fit-out.

    Because the Civil Code leaves so much of a commercial lease to the parties, the document really does govern the relationship. A short lease is not a simple lease; it is one in which the questions that were not addressed will be resolved later, more expensively, and by someone else.

    This article is general information about Czech law and is not legal advice.

  • Debt Recovery Through the Czech Courts

    Recovering an unpaid debt in the Czech Republic follows a fairly predictable route: a demand, a court proceeding that in straightforward cases is largely documentary, a judgment, and then enforcement, which is a separate process with its own machinery. Each stage has its own timescale, and understanding where the delays actually occur helps in deciding whether a claim is worth bringing at all.

    Before proceedings

    A written demand serves several purposes beyond the obvious one. It establishes the claim clearly, it starts default interest running in a documented way, and in practice it resolves a meaningful proportion of debts without further steps. It also produces the evidence that the debtor was given the opportunity to pay, which matters to costs. Checking the debtor’s position in the insolvency register and the commercial register before spending money on proceedings is an obvious step that is skipped surprisingly often.

    The court stage

    For a documented monetary claim, the usual route is an order for payment, issued by the court on the papers without a hearing. If the debtor does not object within the period allowed, the order becomes enforceable. If the debtor does object, the order is set aside and the matter proceeds as ordinary litigation with hearings and evidence, which is where the cost and the delay live. Court fees are calculated on the value of the claim, and a successful claimant is generally entitled to costs against the debtor, subject to the court’s assessment.

    • Check limitation first. A time-barred claim is unenforceable if the point is raised, and the periods are not long.
    • Assemble documents early. The documentary route depends on having a clean paper trail.
    • Verify the debtor still exists. Enforcement against a dissolved or insolvent entity recovers nothing.
    • Consider proportionality. Small claims can cost more to pursue than they return.

    Enforcement

    A judgment is a right, not money. Enforcement is carried out through a court or, more commonly, through an authorised bailiff who locates and realises the debtor’s assets, typically by attaching bank accounts, wages or property. The realistic outcome depends far more on whether the debtor has attachable assets than on the strength of the underlying claim.

    Insolvency

    If the debtor enters insolvency, individual enforcement stops and the claim must be registered in the insolvency proceeding within the period set by the court. That deadline is strict, and a claim registered late is generally not considered at all, which makes monitoring the insolvency register a practical necessity for anyone with an outstanding judgment.

    Viewed as a whole, the system rewards preparation far more than persistence. A claim supported by clean documents, brought before limitation becomes an issue, against a debtor who has been checked for assets, is usually resolved without drama. A claim lacking any of those three tends to consume more than it recovers.

    This article is general information about Czech law and is not legal advice.

  • GDPR Basics for Small Czech Businesses

    Data protection obligations apply to businesses of every size, and the common assumption that a small company is somehow outside the scope of the General Data Protection Regulation is wrong. What is true is that the practical burden scales with what the business actually does, and a small company processing employee and customer records has a considerably lighter task than one whose business model is built on personal data.

    Start with an inventory

    Almost every sensible compliance step depends on first knowing what personal data the business holds, where it came from, why it is held, who has access, and how long it is kept. Most small businesses find this exercise produces surprises: data retained long after any reason for retaining it expired, access rights that outlived the employment that justified them, and copies in systems nobody thought of as data storage.

    Lawful basis and transparency

    Every processing activity needs a lawful basis, and consent is only one of six. For much routine activity the applicable basis is performance of a contract, compliance with a legal obligation, or legitimate interests, and reaching for consent where one of those applies creates problems rather than solving them, because consent can be withdrawn. Separately, individuals must be told what is done with their data, in clear language and at the point of collection.

    • Keep records of processing. The obligation is reduced but not eliminated for smaller organisations.
    • Have written processor terms. Every supplier that handles data on your behalf needs a contract that says so.
    • Set retention periods. Indefinite retention is the most common finding in a small-business review.
    • Prepare for requests. Access and erasure requests have a statutory response deadline.

    Breaches

    A personal data breach may require notification to the supervisory authority within seventy-two hours of becoming aware of it, and notification to affected individuals where the risk to them is high. The practical implication is that the decision-making cannot start from scratch when a breach happens. Knowing in advance who assesses it and who notifies is most of what makes the deadline achievable.

    The Czech layer

    The Regulation applies directly, and Czech implementing legislation supplements it in specific respects, with the national supervisory authority responsible for oversight and enforcement. Sector-specific rules, particularly in employment and in electronic communications, add requirements on top for the businesses they cover.

    For a small company the realistic goal is proportionate compliance rather than perfection. Knowing what data is held and why, having the supplier contracts in place, deleting what is no longer needed, and being able to respond to a request within the deadline covers the great majority of what a supervisory authority would actually look at.

    This article is general information about Czech law and is not legal advice.

  • Starting a Business in the Czech Republic: An Overview

    Setting up a business in the Czech Republic is a well-trodden administrative path rather than a legal puzzle, but it involves several separate authorities and the order in which they are approached matters. Most of the difficulty encountered by foreign founders comes from treating it as one process when it is in fact three or four that interlock.

    Choosing a form

    The great majority of small and medium businesses operate as a limited liability company, known by its Czech abbreviation s.r.o. It has a low minimum capital requirement, a straightforward governance structure and separates the liability of the owners from that of the company. The alternatives are a joint stock company, which suits larger structures and carries heavier formalities, and operating as a self-employed person on a trade licence, which is simpler but does not separate personal liability.

    The sequence

    Formation of a company generally involves a founding document executed before a notary, evidence of a registered address, arrangements for the initial capital, obtaining the relevant trade authorisation for the intended activity, and registration in the commercial register. Tax registration follows, and registration with the social security and health insurance authorities becomes relevant as soon as anyone is employed. Notaries in the Czech Republic can in many cases enter a company directly into the commercial register, which shortens the process considerably compared with the older route.

    • Registered address. A company needs a real address it is entitled to use, evidenced by the owner’s consent.
    • Trade authorisation. The activity determines whether the licence is free, notifiable or subject to qualification requirements.
    • Beneficial ownership. Registration of the ultimate beneficial owner is a separate obligation from the commercial register entry.
    • Bank account. Practical rather than legal, but it shapes the timing of the capital arrangements.

    Common problems

    Two recur often enough to name. The first is a company name that is too close to an existing entry, which the register will refuse and which is trivial to check in advance. The second is a scope of business that does not actually cover the intended activity, usually because it was copied from another company’s entry rather than derived from what the business will do; the consequences surface later, at the point of a licence check or a contract dispute.

    After formation

    Registration is the beginning of the obligations rather than the end. A Czech company files accounts, keeps its register entries current, and must notify changes to directors, address and ownership within the applicable periods. The recurring compliance load is modest but it is not zero, and it is easier to maintain from the outset than to reconstruct later.

    The overall shape is therefore straightforward but sequential, and the order in which the steps are taken determines how long the whole thing takes. Founders who treat the notary, the trade office, the register and the tax authority as one continuous process rather than four separate ones generally complete it in a fraction of the time that those who improvise take.

    This article is general information about Czech law and is not legal advice.

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