1st March 2016

Czech Legislation Update February 2016

From the sessions of the Government

At its session on 24 February, the Government passed transposition of the DIRECTIVE 2014/92/EU OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 23 July 2014 on the comparability of fees related to payment accounts, payment account switching and access to payment accounts with basic features. The Czech draft legislation is available here.   

At its session on 17 February, the Government approved the National Policy of Research, Development and Innovations

The Government  expressed neutral position towards a draft amendment to the Act on Registry of Contracts. The authors of draft amendment propose exceptions for a specific group of state-owned companies (národní podnik). 


From the sessions of the Senate

At its session starting on 2 March, the Senate will debate the draft amendment to the Act on Universities (bill no. 193). The Chamber of Deputies greenlighted draft amendment on 27 January 2016. The stated intent of the bill is, among others, to regulate accreditation activities and ensure high quality of tertiary education in the Czech Republic, as well as regulate activities of branches of foreign universities operating in the Czech Republic. The Czech Republic experienced a surge in the number of university students between 2000 and 2014. In 2000, there were 8 private universities, compared with 44 private universities in 2014. The number of public universities increased by 2 (from 24 to 26) and the number of state universities decreased from 4 to 2 (3 army schools merged into 1) in the last 14 years. The number of new students entering Czech universities rised by 86 percentage points in that period and the share of those having tertiary education in the Czech population aged 25 to 64 grew from 10,96% to 19,28%. The diversity of study fields is high, with around 8829 study study fields in 2700 study programs (as of 30 June 2014).

The draft Act on Online Sales Reporting (EET) had its third reading in the Chamber of Deputies on 10 February. The stated intent of the Bill is to address tax evasion and increase the effectivity of tax collection (income tax, VAT). More details. The Senate has to debate the bill by 19 March. 


From the sessions of the Chamber of Deputies

The draft Act on Public Procurement (bill no. 637) and amendments to related acts (bill no. 638) had their second reading on 27 January and change proposals were submitted. 

The draft amendment to the Act on Business Activities on the Capital Market Business (Capital Market Undertakings Act)  (Bill no. 571) had its second reading on 19 January and change proposals were submitted. The bill is heading to the third reading. The aim of the proposal is to harmonize the Czech law with EU legislation. The proponents suggest provision of more informatio about the ownership structure of a company; shareholdres of companies with basic capital exceeding 500 mil CZK should be obliged to report to issuer and the Czech National Bank it their share of the company exceeds 1%. There should also be changes of administrative fees connected with capital market.

The Chamber of Deputies will debate draft amendment to the Act on Protection of Competition (Bill no. 702). The stated intention of the bill is alignment with the new Czech Civil Code, improved international cooperation between competition authorities, and introduction of rules for documents that contain trade or bank secrets or other confidential information, for example. The bill should be debated at the session of the Chamber of Deputies starting on 1 March.

On 18 December, draft amendment to the Act on Elections to the Parliament of the Czech Republic was submitted to MPs and the Government. The bill no. 676 proposes rules for correspondence vote. The Government expressed negative view, the Chamber of Deputies will debate the bill at its session starting on 1 March.

The draft Act on Collection of Acts and International Treaties (bill no. 646) had its first reading in the Chamber of Deputies on 20 January. The Chamber Committees recommended to pass the bill and MPs will debate it at the Chamber session starting on 1 March. The material introduces electronic process of making and adopting new legislation and allegedly lowers corruption risks related to the making of new regulations. The bill could come into effect on 1 January 2019. 

At its session on 29 July 2015 the Government passed draft amendment to the Act on Association in Political Parties and Political Movements that deals with the issue of political party financing. The Bill no. 569 had its first reading on 20 January 2016 and both the Committee for Constitution and Controlling Commitee of the Chamber have interrupted their debate over the bill. The stated intent of the draft act is to introduce more transparent control of financing of political parties and political movements. This includes using transparent bank accounts, setting limits for donations from physical and legal entities, providing detailed overview of incomes and expenditures within annual reports, including elections-related expenditures, and publishing annual reports on the internet. The draft act also gives political parties and movements the opportunity to set up research-oriented political institutes or think-tanks that would be eligible for state contributions. The draft act also provides for the foundation of an independent authority for controlling financing of political parties, based on GRECO (Group of States against Corruption under Council of Europe) recommendations. According to the draft amendment, the limit for a donation of an individual to a political party is set at 3 million CZK. The proposed limits for election campaign financing are following: 90 million CZK for general elections, 40 million CZK for presidential elections, 7 million CZK for regional elections, No limits were set for municipal elections, including the Prague Magistrate. The limit for elections to the European Parliament remains at 50 million CZK. Also, the Government passed draft act introducing changes to election-related acts and other related acts.

Draft amendment to the Act on the Conflict of Interest, bill no. 564, had its first reading in the Chamber of Deputies on 16 December 2015. The Chamber Committees interrupted their debate over the bill and the Chamber should debate itl at its session starting on 1 March. The material proposes the introduction of an obligation to submit a declaration proving the origin of assets owned by public service officers/politicians on the very first day of his/her service in the new function. The current obligation requires submission of such declaration after one year in office.

Draft amendment to the Act on Criminal Liability of Legal Entities, Bill no. 304 had its first reading in the Chamber of Deputies in November 2014 and its review at the level of standing committees of the Chamber was interrupted (in January and again in March 2015). On 7 December 2015, the Committee for Constitution recommended the Chamber of Deputies to pass the bill. The bill had its second reading on 10 February and it is heading to the third reading. It should take place at the session of the Chamber starting on 1 March 2016. The Act entered into force on 1 January 2012 and comprises a list of acts for which a legal entity bears criminial liability. The intent of the draft amendment is to replace this list (comprising a limited number of criminal acts) by a list of criminal acts with which legal persons cannot be charged. This approach should cover a much wider range of criminal breaches, the proponents suggest.

The draft Act on Proving the Origin of Assets (Bill no. 235): the Government submitted its position (neutral) on the bill to the Chamber on 15 July 2014 and the first reading started in February 2015, postponed; continued on 9 February 2016. The bill was rejected.

At its session on 6 May 2015 the Government passed a draft amendment to the Act on the Support of Research, Experimental Development and Innovation. The material had its first reading in the Chamber of Deputies (Bill no. 489) on 16 September. The second reading started on 25 November 2015 and was interrupted; changing proposals are being submitted. The aim of the bill is to harmonize the Czech law with the new EU legislation and thus increase clarity and applicability of the national legislation. The draft amendment comprises changes in terminology, definitions (industrial research, applied research, experimental development, research organizations), conditions for subsidies and cummulation thereof, etc.


Legislation drafts:
At its session on 11 February, the Legislative Council of the Government approved the draft amendment to the Bankruptcy (Insolvency) Act. The stated intent of the draft amendment is to increase control over insolvency administrators, courts and increase transparency of insolvency proceedings, including better protection from bullying behavior and more effective submission of documents into data boxes. Find out more on technological progress in the insolvency area in a survey conducted by Právní prostor.

At its session on 25 February, the Legislative Council passed the draft Act on State Prosecution, with objections. MPs have already indicated that in its current wording, the bill cannot pass the legislative process in the Parliament. Read details (in Czech).

The Ministry for Regional Development has been reviewing comments from the interministerial review of its draft amendment to the Construction Act. Click here to view the material.

The interministerial review of the draft amendment to the Act on Employment ended on 9 June. The purpose of the amendment is to regulate temporary employment, including chaining of fixed-term contracts, quotas for temporary employees and protection of temporary employees against insolvency of their employer. Click here to read the draft amendment.

The interministerial review of the draft amendment to the Act on the Residence of Foreigners in the Czech Republic ended on 6 June. The stated intent of the draft amendment is to make the Act simple, compact and user-friendly. For example, the proponents of the bill suggest separation of the EU agenda (entry, residence) from the agenda related to third countries' nationals. The new system should pass more responsibility on foreigners/applicants and/or entities that need these foreigners to enter and reside in the Czech Republic. Click here to read the draft amendment. 

Members of the American Chamber of Commerce in the Czech Republic