Entrepreneur´s Guideto Tourism

Introduction

As is the case in the other member states of the EU, there are a number of legal provisions which it is necessary to take into consideration when setting up a business in the CzechRepublic. It is wise to gather as much information as possible before you start considering a move into independent business activity. It is for this reason that this guidebook has been put together.

The “Entrepreneurs Guide” handbook came into being as one of the many products of the project of the Corporate City of Ústí nad Labem “ Tourism in the Ústí nad Labem Region support project”, cofinanced by the European Union and the Ústí n.L. Region.The purposeof this handbookis to help entrepreneursoperating tourism businessesas well asthosewho areconsideringestablishingtheir business in tourism, to developand improvetheirprovided services.

The handbook provides an explanationand proceduresrelatedtoentrepreneurial activities in general, basiclegal regulationsonentrepreneurial activitiesas well as speciallegal regulationsrelatedto tourism. The handbook also comprisescontact linkstorelevantauthoritiesand institutions,andanotherpart of thehandbookis devotedtohow tocertifytourist services. Each type of certificationspecifies theterms andproceduresneeded toobtainthe certificate.

1. Legalregulations ondoing business in tourism

1.1 Setting up a business and doing business

Enterprise in the CzechRepublic is regulated by a number of laws. According to the Commercial Code, engaging in business is a systematic activity undertaken independently by the businessman on his own behalf and at his own liability for the purpose of achieving profit. According to this law, a businessman is classed as follows:

  • a party entered in the Commercial Register;
  • a party who engages in business on the basis of trade authorisation;
  • a party who engages in business on a basis other than trade authorisation in accordance with special regulations;
  • a natural person who operates agricultural production and is entered in records according to special regulations.

1.1.1 Trade

Operating a business on the basis of a trade licence (trading) is regulated by the Trades Act and represents a specific area of business activity in the spheres of production, trade, and the provision of services. It is only possible to operate business activity in the CzechRepublic on the basis of trade authorisation (i.e. a trade licence, trade permit certificate, or certification).

The establishment of the right to operate a trade differs according to the type of business and precisely who is the subject of business activity – the businessman.

For notifiable trades, trade authorisation is established by law on the date of notification or on a later date as stated in notification as the date on which trade authorisation shall take effect. The majority of trades are notifiable trades and can be further divided as follows:

a)vocational notifiable trades

-the fundamental condition here is expert qualification as acquired through training in the field in question or other specialised education or indeed the required practice.

b)professional notifiable trades

-the condition of operation here comprises specialised qualification and documentation to evidence that practice has been undertaken.

c)unqualified notifiable trades

-only the General Terms and Conditions set forth in the Trades Act must be met in order to operate such a trade, i.e. no specialised or other qualification is needed.

Notifiable trades related to tourism:

a) Vocational notifiable trades

  • Catering and inn keeping

This comprisesactivitieswhich involve thepreparation andsale ofmealsand drinksto beimmediatelyconsumedin the facility in which they are sold,exceptforserving breakfaststo guestsaccommodatedin differentcategories of structuressubject to a special legal regulation (blocks of flats,self-contained houses, structures for individualrecreation)with a capacityof up to 10 beds (including extra beds). These activities caneither be performed separately, or togetherwithproviding accommodationinaccommodationfacilitiesdetermined in aspecial legal regulation,which providecatering services (e.g. a hotel, motel, boarding house). Within this trade, accommodation can be providedin otheraccommodation facilities (particularly guesthouses, camps, groups of bungalows) and othercategories of structures (blocks of flats, residential houses, structures for individual recreation). Accommodationfacilities in differentcategories of structures witha capacity of up to 10 beds can serve breakfaststo staying guests. Salesviavending machines (drinks, refreshments), additional sales (tobaccoproducts, souvenirs, basichygieneneeds), sales of take-away food and drinks,lending of newspapers and magazines, hire oftable games (e.g. cards, chess), operating games (e.g.billiards), providedthe characterof the trade character remainsunchanged.

b) Professionalnotifiable trades

  • Tour guide activities a) mountain, b) physical education and sports, c) related to tourism

Mountain tour guide activitiesare the activities of atour guidein the mountains, which involveorganisingandguiding individuals or groupsin themountains,with the exception ofglaciers, rocks, canyon walks andall other types of terrain where it is necessaryto use mountain climbingtechniques, climbing equipmentand material (particularlycrampons, ice axes, ropes, safetytools), whenin snowymountain terrainssuch activity is only possiblein undulatingterrains ofnortherntype, apart fromterrain faults. Itexcludes any activities such asskiing, ski-alpinismor similarwith the exception ofhiking usingsnowshoes. It also comprisesactivitiesofamountain guide,which comprisesorganisingandguidingindividualsor groupsinmountains andalpineenvironment, including glaciers,rock climbingandclimbingon securedroutes,artificial walls, ski-alpinismtours,guidingand organisingalpineexpeditions, includingsafety assurance. Within the trade it is also possibleto provide information,guidanceservices on theproduction of climbing,alpine, ski-alpine and similarequipment and gear, includinghireof suchequipment and gear. Physical educationand sportstour guideactivitiesinvolveperformingphysical educationand recreational programmes, programmes focused onbody weightreduction or extreme sporting activities (for example, rafting), includingthe necessaryinstructions in skillsfor therelevantsporting activity. Tourist guide activitiescompriseaccompanyinggroupsof people or individuals, during whichan explanationon theculturalandnatural legacyof thecountry is providedin a language of their choice. The explanation particularly comprisesinformation on the culture (history, arts, archaeology, folklore, ethnology, gastronomy, etc.), theenvironment (geology, nature, climate, etc.), individual locations (historic, industrial, municipal centres, etc), places (museums, churches, etc.) and regions (tourist regions, regions, etc.); it alsocomprisestheperformanceofnecessary activitiesrelated toaccompanyinggroups of peopleor individuals,leading andcheckingan itinerary,arranging a programme, providing basic informationduring the journey, including practicalinformationrelated tothe place of stay, and providing basic assistancetothe accompanied persons.

  • Operatinga travel agency

This comprisesoffering, sales andmediation ofsales ofindividualtourist servicesaswell as organising, offering, salesandmediationof salesof combinedtourist services, exceptsales oftrips and excursions. Under individualtourist servicesare understood particularly theprovisionof transport, accommodation, catering, tour guide services, flight ticket sales andreservations, sales andreservationsof railwayand busticketsincluding seat reservation tickets, sales andreservations of ship tickets including cabins,mediation of visas, offers and salesof spa serviceswith the purpose ofrelaxationand rehabilitation, offers andsalesof sporting activitieswith the purposeof relaxation and rehabilitation – for example,horse riding, rentalof bicyclesand othersportsequipment, stays in fitness centres,mediationandassuranceofparticipation insporting and socialevents and mediationof other servicesrelated torecreation,relaxation andbusinesstrips.Within this tradeit is possibleto sellarticlesrelated totourism, particularlyadmission tickets, maps, plans, time schedules,guidebooks and souvenirs.

  • Provision ofphysical education servicesand sports servicesin ...
  • Operation ofphysicaleducation and sports facilities and facilitiesfor regenerationand rehabilitation (e.g. athletics and ice-hockey/skating stadiums, gymnasiums, swimming pools, pools, fitness centres)
  • Waterrescueservices
  • Massage,rehabilitation and regenerationservices
  • Operation of solariums

c) Unqualifiednotifiabletrade

  • Provisionof servicesfor agricultureandhorticulture
  • Domesticand zoologicalanimal husbandryandprovisionof relatedservices
  • Production offood products
  • Production of drinks
  • Mediationofbusiness and services

Mediationof purchases and salesof corporeal chattels,includingany provisionof businesstransactionson behalfof other entitiesor in representation ofanother entity. Mediationof transport services(transportcontrol dispatching centre, etc.),trade industryservices (for example,quick locksmith services, plumbers, etc.), mediation ofbuilding societysavings, mediation ofloans, stays inforeigncountriesfor thepurpose of studying (au-pair) and mediation ofother services. This tradedoesnot comprise mediationof purchases andsales ofproperties,mediationof purchases and salesof culturalmonumentsandarticles ofcultural value, insurance mediation,employment mediation, activitiesof mediatorsandarbiters of collectivedisputes, mediationoftrip salesandother tourist services,mediation of freight transportation (forwarding agency), etc.

  • Wholesale

Purchases and salesof articlesforthe purposeof theirfurther sale forfurtherentrepreneurialactivities. Thetrade does notinvolvepurchases or sales of fuels andlubricants exceeding 50 kgper one pieceof packaging, liquefiedhydrocarbongases inpressurisedcontainers, culturalmonuments or articles of cultural value, farm animalssoldby their breeder, animals specifiedforhobbybreeding, firearms and ammunition, explosives, toxic and highly toxicsubstances and preparations, medicaments or distributionofaudio recordings andaudio-video recordings.

  • Specialised retailandgeneral merchandise retail
  • Retail of motor vehiclesandtheir accessories
  • Accommodation services

Provision of accommodationin other accommodationfacilities specified by a special legalregulation, which do notprovidecatering services (particularly inguesthouses, camps, groups of bungalows). Provisionof accommodationin differentcategories of structures (blocks of flats, self-contained houses, structuresfor individualrecreation, etc.), provided otherthanbasic servicesarealsoprovidedsimultaneously withthe accommodation, andprovision ofbreakfastsin such structures with acapacity ofmaximum 10 beds (including extra beds). The trade does not compriseany activitiessuch aspreparation and sales of meals and drinksto be immediately consumedin the facilityin whichtheseare sold, except forserving breakfaststo guestsstayingin different categoriesof structures (blocks of flats, self-contained housesand structures for individual recreation) with a capacity of maximum10 beds, as well as theprovisionof accommodationinaccommodation facilities providingcatering services. The tradedoesnotinvolveanyrental ofproperties, flats ornon-residentialpremises.

  • Land transportexceptrailwayandroad transport

(e.g.personal transportationin carriages, ski lifts)

  • Leaseand borrowing ofpersonal chattels

Personal chattelsleasewithsubsequent purchaseofthe leasedassets (financial leasing, etc.). Movable assetslease,particularlytransport means (personal vehicles andautomotive trucks, bicycles, etc.), agricultural plant and machinery, buildingtechnology ( without an operator), consumergoods, clothes, sports equipment, household technicalequipment. Hire ofhorses (for labour, sportsor similar purposes) andother, particularlyfarminganimals without an operator.

  • Translatingandinterpretingactivities

Translationsfroma languageinto a different languagefortourist purposes,international relations,businessnegotiations and other businesspurposes. Interpreting fromone languageinto a different languageandinterpreting into and from sign language for tourist purposes, businessnegotiations, etc.

For permitted trades (trades executed upon the issuance of a permit), trade authorisation is established on the date on which the ruling on the issue of a permit comes into legal force (in the event that a later date is not specified).

Certifiedtradesrelatedto tourism:

  • Operation ofa travel agency

Offersand salesof trips. Offers, sales and mediationof sales ofindividualtourist servicesandorganising, offering, sales and mediationof sales by combiningindividual tourist services. Individualtourist servicesareunderstoodparticularlyas the provision of transportation, accommodation, catering, tour guide services, sales andreservationsofflight tickets, salesand reservationsof railwayand busticketsincludingseat reservation tickets, sales and reservationsofship ticketsincludingcabins, mediation of visas, offers andsales of spaservices withthe purpose ofrelaxation and rehabilitation, offers and sales ofsports activitieswith the purpose of relaxationand rehabilitation – for example,horse-riding, bicyclerentaland rentalof other sportsequipment, stays in fitness centres, mediationandassurance ofparticipationin sportsand socialevents and mediationof sales of otherservicesrelated to recreation, relaxation andbusinessnegotiations. Within this tradeit is possibleto sell articles related totourism, particularly admission tickets, maps, plans,time schedules, printedguidebooks as well as souvenirs.

  • Currency exchange activities

Currency exchange – purchase offoreign currency, i.e.banknotes, coins or cheques in a foreigncurrency, for banknotes, coinsor cheques in the Czech currency.

  • Roadpassenger transport
  • Taxi service
  • Inland watertransportation

A completelist ofscopeof individualnotifiableand certified tradescan be foundon

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For foreign persons (both legal entities and natural persons), trade authorisation for all trades is established on the date the business in entered in the Commercial Register.

In this case, the date on which trade authorisation is established is the date on which the entry is made in the Commercial Register. This date ought to be stated on the trade licence or trade permit certificate. Only on this date shall the trade licence or trade permit certificate in question become evidence of trade authorisation.

Evidence of trade authorisation (the trade licence or trade permit certificate) may be provisionally issued to a foreign legal entity in the event that this concerns the foundation of a subdivision in the CzechRepublic. Evidence of trade authorisation (the trade licence or trade permit certificate) may be provisionally issued to a foreign natural person in the event that this natural person is to set up a new company in the CzechRepublic or also a subdivision of this company.

Foreign parties (natural persons and legal entities alike) who must be entered in the Commercial Register are obliged to file a motion for entry in the Czech Commercial Register within a term of 90 days of the delivery of their trade licence or trade permit certificate. It is not possible to miss this deadline, the ineffective expiry of which results in the validity of the trade authorisation issued being dissolved. Under these circumstances the documents in question must be returned to the Trade Licence Office which issued authorisation without delay.

It is a similar situation for Czech legal entities which have not yet been entered in the Commercial Register when applying for trade authorisation or notifying a trade.

1.1.2Notifying a trade

A trade can be notified by submitting notification to the relevant Trade Licence Office in person or by post.The Trade Licence Office is obliged to issue a trade licence within 15 days of the delivery of notification in the case that all particulars have been met.

It is also necessary to submit notification at the Trade Licence Office in the following cases:

  • when terminating or suspending a trade;
  • when relocating a business;
  • when opening premises;
  • upon the dissolution of the business;
  • when closing premises.

Other formalities:

  • Opening a current business account at a bank;
  • Registration with the locally competent tax administrator (Inland Revenue Authority) within 30 days of receiving trade authorisation;
  • Registration of yourself and your employees with the locally competent Department of Social Security (within 30 days);
  • Registration of yourself and your employees with a selected health insurance company (within 8 days);
  • The submission of registration for compulsory accident insurance for employees (a minimum of 1 employee).

______

Trade Licence Department of the Municipal

Authority of the City of Ústí nad Labem

Regional Trade Licence Department

of the Region of Ústí nad Labem

The Inland Revenue Authority in Ústí nad Labem

District Department of Social Security

in Ústí nad Labem

General Health Insurance Company

of the Czech Republic

Military Health Insurance Company

of the Czech Republic

Health Insurance Company of the Ministry

of the Interior of the Czech Republic

1.2Legalregulations onselectedtourist business activities

  • Accommodation services

Trade Act No 455/1991 Coll. adds obligations to accommodation facility operators:
A place of business designed for goods sale or provision of services to customers mustbealwaysvisiblymarkedfromtheoutsidewith

a)the first name and surname of the person responsible for the operation at the place ofbusiness
b)shopping hours or opening hours for customers if this place is not a stand or a similarfacility
c)the category and class of the accommodation facility* providing temporary lodging.
* Decree No 137/1998 Coll. on general technical construction requirements.
The Ministry for Regional Development stipulates in its decree No 137/1998 Coll. on general technical construction requirements as of 9 December 1998 and

§ 3

This decree uses the following definitions

paragraph g) an accommodation facility construction is a structure or its part where the temporary accommodation and related services are offered the public; it is neither a flat house, neither a house, nor a leisure time structure for individuals; the accommodation facilities rank according to their types, areas and equipment in categoriesmarkedbystars,1.a hotel is an accommodation facility with at least 10 guest rooms, equipped for offering a temporary accommodation and related services (especially boarding); hotels rank in five categories; garni hotels can offer only a limited boarding service (breakfast at least) and rank in four categories,
2.a motel is an accommodation facility with at least 10 guest rooms, offering a temporary accommodation and related services for motorists and ranks in four categories,
3.a bed&breakfast is an accommodation facility with at least 5 rooms, with a limited offer of related services, nevertheless with an accommodation service at the level of hotels,andranksinfourcategories,
4.other accommodation facilities are tourist dormitories, camp sites, groups of bungalows, or cultural or listed objects used for offering a temporary accommodation service

paragraph h) an accommodation unit is a single room or a set of rooms, which satisfies the requirements of a temporary accommodation by its constructional disposition and equipment, and which is designated for this purpose

paragraph n) a staying room is a room or space, which suits by its position, size and constructional disposition for stay of persons (e.g. offices, workshops, consulting rooms, classrooms, staying rooms in hospitals, hotels and dormitories, halls of different purposes, cinema halls, theaters and culture facilities halls, rooms in the leisure time structures for individuals etc.)

§ 53 Construction ofan accommodationfacility

This sectiondeals withthe requirementsforan accommodationfacilitysuch asroom dimensions, firesafety precautions, evacuation, etc.

DecreeNo. 369/2001 Coll. of the Ministryfor Regional developmentonproviding generaltechnicalconstruction requirements forstructure usagebypersons withrestrictedability to moveandorientation

The decreeappliesto newly built, approved andre-approved accommodationfacilitiesafter15th December 2001, and it stipulatesrequirementsforaccommodation facilitiesrelated tohandicappedpersons such as,for example,barrier-freeaccess to abuilding, restrictedparkingspaces,alterations tohygienefacilities, etc.

  • Catering services

Decree of the Ministry of HealthNo. 137/2004 Coll. onhygiene requirementsfor cateringservicesand onprinciplesof personal and facilityhygiene inactivitiesseriousin terms of epidemiology

  • Tourguideactivities

DecreeNo. 295/12001 Coll.onthe scope ofthe specialistqualificationexaminationto perform as a tour guide of the Ministry for Regional Development

It specifiesthescope of the examinationof specialisedqualifications,applicationfor the testandthe role of the examination committee in detail.

  • Travel agents

Act No. 159/1999 Coll. on sometermsofdoing business in tourism

Theactspecifies termssuch as tour, travel office operator and travel agency operator. The act also specifiesthe obligationof travel agentstoprovide guaranteeinsurancein case oftravel agentbankruptcy.

1.3 Labour-law relations

Note: Labour-lawrelations are regulatedby Labour CodeAct No. 065/1965 Coll., from 1.1.2007 by amendedLabour Code No. 262/2006 Coll. !

In the event that you plan to establish new employment positions, we recommend that you study in great detail the law in which labour-law relations between employees and employers are governed in the Czech Republic. The law in question is the Labour Code.

The locally competent Employment Bureau ensures that labour-law regulations and wage regulations are observed.

Employment Bureau in Ústí nad Labem

1.3.1 Employment relations, the particulars of an employment contract

Employment relations are established on the basis of an employment contract, by election, or by appointment.

An employment contract is a two-way legal act which must primarily be rendered in writing. The employer is obligated to agree on the following points with the employee in the employment contract:

  • the type of work;
  • the place in which work is to be performed;
  • the date of the commencement of work (employment relations commence on this day).

Furthermore, the employer is obliged to familiarise the employee with the rights and obligations to ensue for him/her from the employment contract and with the terms and conditions of work and wages under which the employee is to perform the work.