The Trade Licensing Act (No. 455/1991 Coll.)

The law defines the operation of alicensed trade as an ongoing activity, performed independently, in one's own name, at one's own responsibility, for the purpose of achieving profit and under the conditions set forth by this law. This is adefinition that coincides, in its characteristics, with the definition of transacting business in accordance with the Commercial Code. The meaning of the given definition of atrade does not include one-off jobs, work not done for the achievement of profit and under the direct control or instructions of another individual. The effect, however, of the Trade Licensing Act is more specific in its resulting connection to the requirements it sets forth and does not include the transaction of business on the basis of authorization other than trade licensing.

Within the scope of the Trade Licensing Act then, an entrepreneur is understood to mean every physical individual and legal entity, domestic or foreign, that fulfils the requirements set forth by this law.

Atrade is essentially every activity, including activities operated by an employer as additional profit-seeking activities, as long as it fulfils the above-stated criteria and is not specifically excluded from business activities.

The Trade Licensing Act governs anumber of specific responsibilities of the entrepreneur in connection with his business and governs, in detail, even the official procedures of reporting atrade or, respectively, application for aconcession and the issue of trade authorisation. It also governs trade inspection, its operation and application of fines for violation of the law and resolves other specific issues, such as the maintenance of trade registers, cooperation of individual authorities of government administration in the area of trades and business along with other related issues.

The currently valid trade licensing law differentiates notifiable trades, for which the right to operate the trade arises, in most cases, by notifying the relevant trade authority, and for licensed trades for which the right to operate business arises at the time the concession is granted.Notifiable trades are categorised into:

  1. Non-regulated trades, for which only general trade operating conditions are established (Annex No.4).
  2. Craft trades, specified in annex no. 1 of the Trade Licensing Act, which are primarily considered from the classic standpoint of professional activity in aspecific field and require special professional capabilities attained generally through education in the field and acertain amount of experience.
  3. Regulated trades, specified in annex no. 2 of the Trade Licensing Act, the operation of which require special professional capability and authorisation, certification or asimilar document issued to the entrepreneur by the empowered authority in accordance with arelevant special regulation.

Licensed trades, whose fields are set forth in appendix no. 3 of the Trade Licensing Act, are primarily considered to be those activities whose operation, by aspecial legal regulation, is dependent upon permission from the materially relevant authority of the State administration. All in all, proof of certain professional capabilities is required. For selected trades other requirements for the entrepreneur exist, such as proof of aclean criminal record for all employees, or certain conditions for operating the trade.

From the standpoint of the subject of business, the law differentiates between the following types of trades:

-Manufacturing – authorisingthe manufacture as well as sale of products of the same type from other manufacturers

-Business - including the purchase of goods for re-sale and sales, authorising the mediation of sale as well as rental of goods

-Provision of services, by which it is understood to mean, providing maintenance and repair of items, transport of individuals and cargo and other work and satisfaction of needs, specifically consulting and mediating activities.

The general conditions for the operation of atrade are that the individual:

-be at least 18 years old

-be capable of performing legal tasks

-have aclean criminal record

Aclean criminal record is understood to mean that the individual has no record of convictions for offences that pose abarrier to operating abusiness. According to the relevant provision, aperson does not have aclean criminal record if that person has been legally convicted:

-Of acriminal act committed intentionally and sentencedto imprisonment for at least one year, for:

-Each punishable offence committed intentionally, whose factual basis is in connection with business, if the offence in question is not as stated above, or:

-Fore each punishable offence committed through negligence, whose factual basis is in connection with the subject of business.

Aclean criminal record is proven to the Trade Licensing Authority by relevant documents issued in the country where that individual is acitizen, as well as countries where that individual has resided for along term (more than three continuous months) over the past three years.

An entrepreneur that is aforeign individual and does not have aresidency permit for the Czech Republic is required to assign an authorised representative. An authorised representative is aperson assigned by the entrepreneur that is responsible for the proper operation of the trade and for the upholding of legal trade regulations and who has, (if the person in question is not the wife or husband of the entrepreneur), alegal labour relationship to the entrepreneur.The authorised representative must fulfil general and specific requirements for the operation of atrade, must have permanent residency established in the Czech Republic and must, if the person in question is not acitizen of the Czech Republic, prove before the Trade Licensing Authority, knowledge of the Czech or Slovak language.

The operation of some trades requires, in addition to general requirements, special trade requirements. These special requirements for operating atrade are professional or other capabilities required by the Trade Licensing Act or by special legal regulations.Professional capability is required when reporting professional trades; dependent trades and for most concession trades. If apotential entrepreneur does not fulfil the special conditions requisite for operating atrade, he may fulfil these conditions by appointing an authorised representative.

Proof of trade authorisation is aStatement from the Trade Licensing Register confirming the fulfilment of conditions set forth by this law.

On the basis of proof of trade authorisation, trade may be done at one or more premises, as long as the entrepreneur has usage or ownership rights to the premises.

Appendix

The operation of a non-regulated trade is restricted solely by the necessityof fulfilment of the general requirements; operating acraft trade or aregulated trade is further restricted by the necessary fulfilment of special requirements for operating atrade that is professional or requires other special capabilities.

Professional capability for professional trades is proven by:

  • Certificate of education in the relevant, 3-year trade study or other document confirming completion of the relevant three-year study in the field and adocument confirming three years of experience in the field.
  • Diploma confirming the completion of studies in the relevant field at atrade school, whose length is less than 4 years and adocument confirming three-years of experience in the field.
  • Diploma confirming completion of graduation exam in the relevant field of study at aprofessional trade school or apprentice training centre or high school with professional preparatory subjects and adocument confirming two years of experience in the field.
  • Diploma or other document confirming the completion of baccalaureate or master's study program at the relevant college and document confirming one year of experience in the field.

These documents may be substituted by:

  • A certificate of apprenticeshipin arelated three-year apprenticeship program or other document confirming the proper completion of study in arelated field and adocument confirming the completion of four years of practice in the trade field.
  • Diploma confirming the completion of studies in arelated field of study at atrade school, whose length is less than four years and adocument confirming the completion of four years of experience in the field.
  • Diploma confirming the completion of agraduation exam in arelated field of study at aprofessional trade school or apprentice training centre and adocument confirming three years of practice in the field.
  • Diploma or other document confirming the completion of college in arelated field and adocument confirming two years of practice in the field.
  • Certification of re-qualification or other document regarding professional capability issued by an institution accredited by the Ministry of Education, Youth and Physical Education or arelevant Ministry branch governing the field in which the trade is operated and adocument confirming four years of experience in the field.
  • A document regarding the completion of aqualification examination before acommission composed of representatives of the relevant Trade Licensing Authority, the relevant trade school or apprentice training centre, or even the relevant trade association if it exists, and adocument confirming four years of experience in the field, or possibly,
  • A document confirming six years of experience in the field.

Professional capability for aconcession trade is governed by special regulations listed in appendix no. 3 of the Trade Licensing Act or established by this appendix. If appendix no. 3 of the Trade Licensing Act lists or requires professional capability consisting of training in afield or high-school level education completed by graduation exam, the fulfilment of educational requirements is proven by the same document of re-qualification and adocument confirming four years of practice in the field. For concession trades, the Trade Licensing Authority will assign or change requirements for the operating of atrade by the entrepreneur on the basis of the Trade Licensing Law or on the basis of special regulations.

Documents submitted for notifiable trades, (non-regulated, craft or regulated), and licensed trades are the same. They are:

  • For notifiable trades the "Notification of Trade" form is submitted, and for licensed trades, an "Application for Concession", (filled out in advance, though it is possible to fill them out at authority offices as well).
  • Statement of criminal record for the entrepreneur, or his authorised representative, if assigned, and documents by which aforeign individual proves aclean criminal record, (documents issued by the country where the foreign individual is acitizen, as well as countries where he has resided for more than three months in the course of the past three years). The statement of criminal record, as well as the other mentioned documents, may not be older than three months.
  • Declaration of the authorised representative, if assigned, that he agrees with the function, with taking on responsibilities in accordance with the Trade Licensing Act and with listing of the entrepreneurs for which he holds the function of authorised representative. If the authorised representative does not sign this affidavit in person at the Trade Licensing Authority, the signature on affidavit must be witnessed by anotary.
  • Previously issued trade authorisations for the entrepreneur, (if such exist).
  • Statement from Commercial Register not older that 3 months, if the individual is listed therein.
  • Document confirming the fact that the individual has no outstanding tax debts towards state authorities, (document issued at the appropriate financial authority).
  • Document regarding ownership or other rights to premises where the trade will be performed if this differs from residence.
  • Document regarding payment of administrative fees for each reportable or concession trade.
  • In the event that the entrepreneur intends operating an industrial trade, documents proving facts related to operating atrade in an industrial manner.

Administrative and other fees and how they can be paid:

  • Administrative fee of 1000,- Kč for the issue of Trade Authorisation,
  • Administrative fee of 500,- Kč for the issue of the other trade,
  • Fee of 50,- Kč for astatement from the Criminal Records Register.

Fees are collected by the relevant authorities, (Trade Licensing Authority, Criminal Records Register).

Official deadlines:

The Trade Licensing Authority is required to issue aStatement within 15 days of the notification of trade, if all requirements have been met.

Sanctions that may be applied in the event of not upholding the required responsibilities:

For notifiable trades, if the entrepreneur does not correct insufficiencies or does not fulfil the conditions established by the Trade Licensing Law, the Trade Licensing Authority will commence aprocess and decide that trade authorisation did not occur with notification. (Respectively, it will decide that the entrepreneur did not fulfil the requisite conditions for trade authorisation to arise).

For licensed trades, if the Trade Licensing Authority, before the decision on concession issue is made, must verify whether or not the general and special conditions for operating atrade have been fulfilled and whether or not there is apreventative circumstance for the operation of atrade. If any of the conditions are not fulfilled or if arelevant state administrative authority, as per appendix no. 3 of the Trade Licensing Act, is not in agreement with the issue of aconcession, the Trade Licensing Authority will deny issue of the concession.