The right of every individual to transact business and to carry out other commercial activities, and the right to own property is stipulated in Article 26 of the Charter of Fundamental Rights and Freedoms, which is a part of the constitutional order of the Czech Republic. According to this article, every individual has the right to transact business and to carry out other commercial activities. The conditions and limitations for carrying out certain activities may be determined exclusively by the law.
Act No. 455/1991 Coll., on business activities (Small Business Act), as amended, is the basic public law regulating the basic relationships between entrepreneurs and the state, and the basic conditions for commercial activities in the majority of entrepreneurial activities of legal and physical entities.
The act defines business activities as continuous activities carried out independently, under one’s own name and at one’s own responsibility to achieve a profit and under the conditions stipulated by this act. Although according to the characteristics stated, this definition is identical to the definition of business activities according to the Commercial Code, the sphere of authority of the Small Business Act is narrower due to the connection to the conditions stipulated by the Small Business Act and does not include other business activities than those carried out under a trade license. An entrepreneur according to the Small Business Act means every physical and legal entity, domestic or foreign, meeting the conditions stipulated by this act. The trade licensing regulation therefore relates to commercial activities carried out by both physical and legal entities. Essentially every activity that has the characteristics mentioned above and is not expressly excluded from business activities (see Art. 3 of the Small Business Act) is a trade.
The Small Business Act regulates a range of specific duties of entrepreneurs relating to their trades and regulates in detail the course of official proceedings on declaring a trade or applying for a licence and issuing trade licence certificates. The act regulates trade inspections, how they are performed and imposes penalties for violating the act, and deals with other specific issues, such as the administration of trade registers, cooperation between individual state administration bodies on business activities, etc.
The currently valid trade licensing regulation distinguishes between declared trades, where the right to run a trade originates in most cases immediately after notifying the relevant Trade Licensing Office of the trade, and licensed trades, where the right to run a trade originates after a license has been granted. Declared trades are divided into:
- Free trades with only general conditions stipulated for their operation (Notification of Unqualified Notifiable Trades);
- Craft trades, the performance of which is conditional to professional as competence stated in Sections 21 and 22 and which are primarily percieved as crafts that are traditionally considered professional activities carried out in a particular field; special expertise acquired through training and experience of a specified duration in the particular field is therefore required (Professional Notifiable Trades); and
- Regulated trades specified in Schedule No. 2 of the Small Business Act that require the prescribed special qualification and in certain cases also a licence, certificate or a similar document issued to the entrepreneur by a competent authority according to the relevant special regulation (Notification of Vocational Notifiable Trades, Application for Trade Permit).
Particularly those activities, the operation of which depends on the permission of a materially competent state administration body according to a special legal regulation are considered licensed trades; their individual fields are specified in Schedule No. 3 of the Small Business Act. Proof of a particular professional qualification is usually required in the case of these trades. Additional requirements for entrepreneurs, such as making sure that employees do not have a criminal record, are prescribed or conditions for transacting a business specified as a selected trade.
The Small Business Act has been drafted as a public law regulating the basic conditions for business activities. It does not contain any provisions regulating the way individual activities are carried out and assumes that these are regulated by the relevant special regulations.
Administrative and other fees
- CZK 1,000 – administrative fee for issuing a trade certificate
Foreign physical entities
Foreign physical entities is that one with residecy outside the Czech Republic. For the purposes of the Small Business Act, an individual’s place of residence means their permanent address. Those with a refugee status can carry out business activities in the Czech Republic in the same manner as citizens of the Czech Republic.
General conditions for a trade operated by foreign physical entities are as follows:
Note: Foreign physical entities - citizen of EU or EEA states or Switzerland - has usually more simple way how to applied. It is because or international treaties. For detailed information about single types of trades see documents for Other foreign physical entities.
- Minimum age of 18 years
- Competence to perform legal acts
- Impeccable character
- Presenting a certificate of no tax arrears if the relevant physical entity has transacted or transacts business in the Czech Republic. This certificate will be issued by a local competent Revenue Authority.
- Presenting a certificate of no social insurance and contributions payments arrears to the state employment policy if the relevant physical entity has transacted or transacts business in the Czech Republic.
Some definitionsImpeccable character
means criminal integrity proven by an extract from the Penal Register or a similar document.
Citizens of the Czech Republic proove impeccable charakter by an extract from the records of the Penal Register not older than 3 months (hereinafter an “extract from the Penal Register”). Citizens of a European Union member state proove it by an extract from the criminal records or an equivalent document issued by the relevant judicial or administration body of the relevant state or of the member state of the last place of residence. Citizens of states other than those mentioned before proove it by an extract from the Penal Register and the relevant documents issued by the state whose citizen the relevant physical entity is, and the states in which this person resided on a long-term basis (for more than 3 continuous months) during the last 3 years. These documents must not be older than 3 months.
A foreign physical entity intending to operate a trade in the Czech Republic must have a residence permit for the Czech Republic according to Act No. 326/1999 Coll., on the stay of foreigners in the Czech Republic and amendments to certain acts, as amended, must present a certificate documenting a residence permit for the purpose of carrying out business activities when declaring a trade or applying for a licence.
A foreign physical entity – a citizen of a European Union member state or a different state of the European Economic Area Treaty or the Swiss Confederation does not need to present their residence permit to the Trade Licensing Office when declaring a trade or applying for a licence.Certificates of education issued abroad
must be accompanied by a validation clause according to a special legal regulation and documents on university education must also be accompanied by a certificate of recognition according to a special legal regulation. The issue of recognising professional qualifications acquired abroad is regulated by the Decree of the Ministry of Education, Youth and Sports No. 12/2005 Coll., on the conditions for recognising the equality and the conditions for validating reports issued by foreign schools; the act also regulates the validation of specialised education certificates of a level lower than the GCE. The recognition of foreign university education and qualifications is regulated by Act No. 111/1998, Coll., on universities and on changes and amendments to other acts (Universities Act), as amended. The duty to present documents with the affixed validation clause or a certificate of recognition does not apply to education documents.
If the duty to present a document proving certain facts arises from the law, this means presenting the relevant document including its translation into Czech by an interpreter recorded in a register of experts and interpreters
, unless the document was issued in Czech.The authenticity of the signature and the seal
on the originals of submitted documents issued abroad must be verified. The verification of documents (superlegalization) is not necessary where bilateral international treaties on legal assistance (also a treaty concluded between the CR and SR under no. 209/1993 Coll.) exist and under the Haag Treaty on cancelling the requirement of verifying foreign public documents stipulated in Collection of Acts No. 45/1999 Coll.
In the case of declared trades, a trade certificate
is a certificate of a trade licence showing that the conditions determined by this act for operating a declared trade with the details according to the Trades Register have been met; a licence deed is a certificate for operating licensed trades with the details according to the Trades Register. An existing certificate of a trade licence can be substituted by a certificate issued for an entrepreneur at their request by the Trades Licensing Office.
Creation of trade licenses for foreign physical entities
In the case of foreign physical entities – citizens of the European Union or the European Economic Area the trade licence becomes valid on the declaration of a trade or if a later date is specified in the declaration on the specified date. A trade licence for licensed trades becomes valid on the date a decision on granting a licence comes into legal effect. The identical principle for the origination of a trade licence applies to those cases where the relevant person wishes to establish an organisation unit in the Czech Republic. Art. 21, Para. 5 of the Commercial Code allows this person and the organisational unit to be excluded from a record in the Commercial Register; however, according to the provision of Art. 13, Para. 3 of the Commercial Code the head of this unregistered organisational unit will not have the right to act independently in matters of the organisation unit, unless they have a power of attorney granted by the entrepreneur.
In the case of foreign physical entities with a permanent address in states other than the European Union or the European Economic Area member states and no record in the Commercial Register a trade licence originates on the day it is recorded in the Commercial Register. When a trade is declared or an application for a licence is submitted following a record in the Commercial Register, a trade licence becomes valid on the declaration of a trade or if a later date is specified in the declaration on the specified date, or on the date a decision on granting a licence comes into legal effect.
This shows that the Small Business Act has its own legal regulation for the origination of a trade licence for foreign physical entities and the general regulation according to the Art. 21, Para. 4 of the Commercial Code is not applied.A trade licence cannot be transferred to a different person. A different person can execute a trade licence if stipulated by the law.A trade licence can be executed throughout the Czech Republic.
- Act No. 455/1991 Coll., on commercial activities (Small Business Act), as amended..
The Small Business Act is closely connected with other acts and legal regulations:
- Commercial Code, Act No. 513/1991 Coll., as amended
- Civil Code, Act No. 40/1964 Coll., as amended
- State Supervision Act, Act No. 552/1991 Coll., as amended
- Penal Law, Act No. 140/1961 Coll., as amended
- Misdemeanours Act, Act No. 200/1990 Coll., as amended
- Administrative Procedure Code, Act No. 71/1967 Coll., as amended
- Administrative Fees Act, Act No. 634/2004 Coll., as amended,
- Administration of Fees and Taxes Act, Act No. 337/1992 Coll., as amended,
- Social Security and Contributions to the State’s Employment Policy Act, Act No. 589/1992 Coll., as amended
- Income Tax Act, Act No. 586/1992 Coll., as amended
- Consumer Protection Act, Act No. 634/1992 Coll., as amended
- Advertising Regulation Act, Act No. 40/1995 Coll., as amended
- Foreigners Stays in the Czech Republic Act, Act No. 326/1999 Coll., as amended
- Asylum Act, Act No. 325/1999 Coll., as amended
- Recognising Qualification Act, Act No. 18/2004 Coll.
- A range of other legal regulations