1st September 2016

Czech Legislation Update July, August 2016

On 27 July 2016, the President signed the amendment to the Czech VAT Act. The law has been effective since end July; some of the provisions have deferred effectiveness. The amendment mitigates the sanctions for non-submission of the control statement, reverse charge for non-established companies, the use of commercial invoice as the tax document in cases of export of goods. Companies, which are not seated, but VAT registered in the Czech Republic, will newly fall under the jurisdiction of the Tax Office for Moravian-Silesian region. More details in English are available here. Information in Czech are available here

Also, the President signed legislation related to the amendment of the Customs Code of the EU and its implementing regulations. The new Code brings extensive changes in the areas of the computerization of customs procedures, special customs procedures and the confirmation of concrete benefits for the holders of certain economic authorizations. Read details in English here (scroll down the page after clicking).

From the sessions of the Senate

At its session on 24 August, the Upper Chamber of the Czech Parliament, the Senate, approved amendment to the Act on Auditors. Earlier, seven non-profit organizations protested against the material, saying that the proposed changes would weaken internal audit in big state- and municipality-owned companies. Read details here (in Czech).

Also on 24 August, the Senate passed amendment to the Act on Association in Political Parties and Political Movements that deals with the issue of political party financing. 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. As of January 2017, an independent body seated in Brno will be in charge of oversight of political party financing. Amendments to election laws were sent back to the Chamber of Deputies with change proposals. The Chamber could vote on them in October 2016. The limit for a donation of an individual to a political party could be 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 City Council. The proposed limit for elections to the European Parliament remains at 50 million CZK. Read details in Czech here.  

Also, the Senate approved 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.

On 14  July, the Senate greenlighted new rules related to taxing the acquisition of immovable property. As of 1 November 2016, the tax will be paid by the buyer of the immovable property. The tax rate of acquisition of immovable property remains at the level of 4%. More details in Czech are available here.

From the sessions of the Chamber of Deputies

Draft amendment to the Act on Insolvency (bill no. 785) had its first reading on 3 June and has been reviewed by the Chamber Committees. The debate over the bill was postponed.

Draft amendment to the Act on the Conflict of Interest (bill no. 564), had its second reading in the Chamber of Deputies on 29 June 2016. The bill is being debated at the Chamber Committee level, change proposals were submitted. 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.

A group of MPs is proposing exemptions from the Act on the Registry of Contracts (bill no. 699). The second reading of the bill started on 1 June 2016; the debate was postponed. Among others, the material proposes exemption for state-owned Budějovický Budvar n.p. from the obligation to disclose (both sales and purchase) contracts.

Representatives of the Liberecký 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. The Government expressed disapproval. The Chamber of Deputies could debate the bill at its session starting on 6 September. Also, the Government disagreed with another proposal aiming at exemptions from EET.

At its session on 18 May, the Government approved draft amendment to the Act on Sickness Insurance (Bill no. 821) allowing for paid paternity leave, among others. The Chamber of Deputies could debate the bill at its session starting on 6 September.

Draft amendment to the Labor Code suggests eliminating the institute of "karenční doba" related to sickness insurance in the first three days of sickness. The bill no. 744 could be debated in the Chamber of Deputies after 6 September.

The Chamber of Deputies will debate the draft Act on State Prosecution (bills no. 789790). The Chamber of Deputies could debate the bill at its session starting on 6 September.

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 of Deputies could debate the bill after 6 September.

From the sessions of the Government

At its session on 11 July, the Government passed draft material related to the protection of whistleblowers. The Government prefers their protection within the existing legislation (i.e. amending the Labor Code and other employment related legislation) to writing a brand new act on whistleblowing. Read details here (pravni-prostor.cz), here (Minister Dienstbier), here (Transparency International Czech Republic) and here (Confederation of Industry and Trade of the Czech Republic).

On 11 July, the Government passed updated National Research and Innovation Strategy for Smart Specialisation. The aim of the strategy is to allocate up to CZK 70bn into the most perspective fields of research and development,and business. Another goal is the promotion of cooperation between academia and the business sector.  

At its session on 24 August, the Government adopted the Initiative Industry 4.0

Also on 24 August, the Government approved draft amendment to the Labor Code submitted by the Ministry of Labor and Social Affairs; proposing changes related to chief executive employees, regulation of homeworking, teleworking, and contracts for work performed outside an employment relationship, among others.More (summary by the Legislative Council of the Government, in Czech).

Also on 24 August, the Government passed material intent of the Act on Support of Research, Development and Innovations.  The aim behind the material is to create conditions to improve the quality of the country’s research and development. More (summary by the Legislative Council of the Government, in Czech). 

The Government passed a draft directive related to the areas of university education, including characteristics of profiles of graduates and a draft material on transport infrastructure, including a draft list of priorities

Also on 24 August, the Government passed draft amendment to the Act on Employment.  The purpose of the amendment is to regulate temporary employment and job agencies.

Also, the Legislative Council passed the draft amendment to the Building Act aiming at, among others, more efficient and faster administrative proceedings, and proposing the institute of a combined building and planning permission proceedings. Click here to view the material. More (summary by the Legislative Council of the Government, in Czech).

The Legislative Council of the Government postponed the debate over the the draft amendment to the Act on the Residence of Foreigners in the Czech Republic. The material, among others, proposes the introduction of the so-called "foreign investor card", a special type of a long-term residence permit, and improved rules for employees-foreigners assigned within a corporation, for example.

Members of the American Chamber of Commerce in the Czech Republic