3rd August 2017

Czech Legislation Update July 2017

On March 3, 2017, the Act No. 64/2017 Coll., Amending Act No. 182/2006 Coll., On Bankruptcy and the Methods of its Resolution (Insolvency Act), as amended, was published in the Collection of Laws and some other laws. The purpose of the amendment to the Insolvency Act, which entered into force on July 1, 2017, is primarily to strengthen the transparency of insolvency proceedings, reduce administrative acts of insolvency courts, and change the insolvency allocation system in the area of ​​debt relief. Read more in Czech (by TaylorWessing) and English (by Weinhold Legal). 

President Zeman signed amendment to the Construction Act that enables to integrate planning, building permit and EIA processes, among others. He also signed amendment to the Act on Electronic Communications (bill no. 1053), draft Act on compensation of damage incurred by breach of competition rules (bill no. 991).

President Zeman signed amendment to the Act on Foreigners‘ Residence in the Czech Republic that makes the conditions for foreigners‘ residence in the country stricter. Read more. Some of the provisions could be brought to the Consitutional Court by members of the Senate, the Upper Chamber of the Czech Parliament.

The Chamber of Deputies‘ Committee for Foreign Affairs and Committee for Economy recommended the ratification of the Canada-EU Comprehensive Economic and Trade Agreement CETA. The Senate has already approved the ratification. The Chamber could pass the Agreement in September 2017. Meanwhile, the Chamber approved strategic partnership between EU and Canada, an agreement on cooperation in fight against terrorism, money laundering and proliferation of nuclear weapons, aomg others.

The Chamber of Deputies‘ Committee for Foreign Affairs and Committee for Environment recommended the ratification of the Paris Agreement. The Senate has already approved the ratification. The Chamber could pass the Agreement in September 2017.


From the sessions of the Senate

The next session of the Senate will be held on 16 August.

The Senate has returned an amendment to the Chamber of Deputies to simplify environmental impact assessment (EIA) and suggested that it should be better aligned with the recently approved amendment to the Construction Act.

Draft amendment to the Act on International Cooperation in Tax Administration will be debated by the Senate. The bill no. 999  introduces the obligation for multinational enterprises with annual consolidated group revenues above EUR 750 million to report to respective tax authorities.


From the sessions of the Chamber of Deputies

The Senate returned draft amendment to the Act on Registry of Contracts (bill no. 699) to the Chamber of Deputies. Change proposals of the Senate rejected most of the Chamber changes made to the original version of the bill. The exemption for state-owned Budějovický Budvar n.p. from the obligation to disclose contracts as well as exemptions for some pharmaceuticals and medical devices remained in the bill. Read more details in Czech. The Chamber final debate over the bill started on 28 June and MPs have not voted on the bill in July.......But managed to vote on another draft amendment to the same act that was passed in the first reading on 28 June (bill no. 1124) and later in July, the Senate has not adopted any resolution, i.e. allowed submission to the President who signed it. Some state-owned enterprises will receive a partial exemption from the mandatory publication of contracts in the Internet Register. The same will apply to Budweiser Budvar National Enterprise. In addition, contracts related to the handling of explosives and collective agreements will also not be included in the record. (Source: epravo.cz). The Senate has criticized the Chamber of Deputies for the way it has handled the situation around the two draft amendments to the Act on the Registry of Contracts.

Draft amendment to the Act on Banks (bill no. 1061) has been reviewed by the Chamber  committees. The proposal sugests introducing exchange of information on cyber attacks among banks. Change proposals have been submitted.

The second reading of the draft amendment to the Act on the Czech National Bank (bill no. 1009), proposing that the Czech National Bank’s recommendation on mortgage parameters to banks, currently non-binding, become binding, started on 6 June, but was postponed.

The Chamber of Deputies received draft proposal of Act on eHealth and draft amendment to the Act on Health Services (bill 1043) that deal with issues related to technology use in health care. One of the goals is to establish the National eHealth Centre. The Government expressed disapproval with the draft proposal due to high costs.

The Chamber submitted to the Government draft amendment to the Labor Code (bill no. 1008) written by a group of MPs proposing the introduction of the institute of nursing leave. The material reacts to the ageing of the population and the need to adapt the current law to the challenges employers and employees are facing. The Government expressed disapproval. The related draft amendment to the Sickness Insurance Act (bill no. 1029) was passed on 14 July and submitted to the Senate. This bill suggests three months of paid nursery leave for those who take care of seriously ill family members.The Economic Chamber of the Czech Republic says this measure will be a burden for employers, could have a negative impact on production process in some business operations. Plus it will be misused by employees, the Economic Chamber argues. (Source: epravo.cz)

At its session on 24 August 2016, the Government approved draft amendment to the Labor Code submitted by the Ministry of Labor and Social Affairs; proposing changes related to senior managerial employees (More details in a summary by Weinhold Legal here (in English),  regulation of homeworking, teleworking, contracts for work performed outside an employment relationship, or prevention from stress at workplace, among others (bill no. 903). The Ministry of Labour and Social Affairs suggested changes (in the areas of paid holiday or telework, for example) to „bring employers and employees closer“ on these issues. The debate over the bill in the Chamber of Deputies continues, the second reading of the bill was postponed on 7 June.

The Senate’s draft amendment to the Labor Code suggests eliminating the institute of "karenční doba" related to coverage of the sickness insurance in the first three days of sickness of employees. (bill no. 744). There has been an ongoing debate within the tripartite (the government, employers and trade unions) on this issue.

The draft amendment to the Act on Social Security Insurance (bill no.1096) suggests differentiation of social security insurance contributions based on the number of children the tax payer takes care of. The contributions by parents of two and more children could decrease from the current 6.5 to 0%.

The Chamber of Deputies has not started to debate the draft Act on State Prosecution yet (bill no.789790). 

On 18 December 2015, 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 neutral view.The Chamber has not started to debate the bill yet.

Representatives of the Liberecky region submitted draft amendment to the Act on Online Sales Registration (EET, bill no. 846) to the Chamber of Deputies and the Government. The bill suggests that EET could apply only to VAT payers. Another proposal bill no.792 by a group of MPs suggests excluding small entrepreneurs, non-VAT payers. Another proposal, bill no. 867, suggests exemptions for farmers selling their home-grown products at farmers markets. Another bill proposing EET act amendment  No debate of MPs over the bills have taken place so far. At its session on 24 July, the Government rejected a proposal by KDU-CSL (Christian Democrats) and STAN (Mayors and Independent) parties to postpone by 9 months the implementation of the last two phases of EET (phase 3 to start in March, phase 4 in June 2018).


From the sessions of the Government

At its session on 24 July, the Government approved submission of Czech application for hosting the new seat of the European Banking Authority.

The Government also decided to allocate millions of CZK to fight drought. The main goal of the official concept is to reduce the drainage of water from the territory of the Czech Republic, the Government office said. 

The Government decided on 17 July to prepare legislation on the so-called shared economy, featuring such businesses as Airbnb and Uber. The move follows an analysis of the application of Internet offers to new parts of the economy which highlighted the fact that there is an impact on the traditional economy, Radio Praha writes.

The Ministry of Justice presented data on the length of court proceedings; courts in Usti nad Labem or Chomutov are facing the greatest delays. The average length of civilian proceedings reaches 344 days, criminal proceedings 196 days. The Government discussed the report on 17 July.

The Government has approved the introduction of a visa program for non-EU investors, foreign Minister Lubomir Zaoralek said at a press conference. Foreigners who invest at least 75 million Czech crowns in the Czech Republic and create at least 20 new jobs will be able to apply for a long-term residence permit. The Economic Chamber has criticized the measure saying that the conditions are too strict.

The Ministry of Industry and Trade presented their report on administrative burden for businesses. Last year, the state implemented 23 measures to reduce bureaucracy for entrepreneurs, 28 remain. The report says the administrative burden was reduced by 31.5% between 2005 and 2016. The Government discussed it on 10 July.

At its session on 10 July, the Government approved comprehensive plan for restructuring the Karlovarsky, Ustecky and Moravskoslezsky regions. The economic restructuring of the Moravian-Silesian, Usti and Karlovy Vary regions will cost approximately CZK 42 billion in the next three years (6.1 billion crowns this year, 11.4 billion next year and over 25 billion in 2019. Source: epravo.cz).

The Legislative Council of the Government passed a bill on the transposition of the DAC5 Directive of the EU law regulating the access of tax administrators to information. Read more in Czech.

Members of the American Chamber of Commerce in the Czech Republic