EU citizens in Czechia after 1st May : Office House

expats.cz - March 2004

(visa requirements, property purchase limitations)

At the very same date when the Czech Republic joins the European Union, visa requirements and property purchase restrictions will change considerably with respect to all EU citizens. However, as only part of the relevant legislation has been enacted so far, certain questions concerning this matter still remain unanswered.

This article may help as a summary of important changes which have already been approved and can be taken into consideration.

Buying property

Notwithstanding the purpose or length of stay in the CR, EU citizens will need NO visa nor approval for the stay in the Czech Republic after 1^st May. Visa requirements further to which EU foreigners had to ask for a long-term visa if they wished to stay in Czechia for more than 90 days, will be abolished.
If an EU citizen intends to stay in the CR for more than 3 months (e.g. for an indefinite period), he will be entitled to apply for a special permit for a long-term or permanent stay. It is not obligatory to apply for such a permit in order to stay or work in the Czech Republic.
Long-term residency permits will be issued for a period up to 5 years, permanent residency permits will be issued for a period of 10 years. Validity of both types of permits can be renewed after their expiry.
In case that an EU citizen decides to buy a flat or a house, he will need to have one of the above mentioned permits. Such an obligation results from the amendment of the Foreign Exchange Act approved by the House of Representatives in the beginning of March of this year.
Application for the permit (either for the long-term stay or the permanent stay) can be filed either at the Foreigner Police Department (processing should take up to 60 days) or at any embassy or consultate of the Czech Republic (processing should not exceed 180 days).
Notwithstanding whether the long-term residency or permanent residency permit is in question, the application must be accompanied by the following documents:
a.passport,
b.photographs,
c.document proving the purpose of stay.
Following purposes of stay will be are acceptable for the long-term or permanent stay in the Czech Republic: employment, performance of independent business with a trade license or directorship in a Czech company. In case that the purpose of stay is employment, the application for a permanent stay can be filed only in case the applicant is already employed in the CR and has been staying here 3 years without interruption.
If the EU citizen does not fulfil the above stated employment condition, the easiest and fastest way how to obtain the permit for permanent stay will be to become a director in a new or an already existing Czech firm. In case of a new firm, the appointment of a director is effective by the company registraton (in practice 1-2 months). In case of the appointment into an existing entity (e.g. a ready-made company), the appointment is effective immediately.

Obligation of EU citizens to apply for the permit before then can buy property in the Czech Republic is a result of the exception from the EU acquis granted for the Czech Republic for the period of 5 years. By this limitation, the Czech Republic tries to ensure that real estate is acquired only by individuals wishing to stay and work or do business here. However, as seen from the above, even EU citizens who do not meet these requirements may acquire houses or flats directly if they form or buy a Czech company and get the long-term or permanent residency permit. Therefore, the situation will not change significantly as forming single-purpose companies has been a common practice in this regard.

EU citizen as a Czech company director

At the time being, only a Czech resident or a foreigner with a long-term visa can become a director in a Czech company. As a result, there is a huge amount of Czech companies owned by foreigners but managed by Czech nationals appointed as directors (jednatel) instead of them. This situation will also change quite dramatically in May: as long-term visas will be abolished and the procedure of applying for the new type of residency permit will be quite easy, it can be expected that many EU citizens will now wish to become directors in their companies.

It is however still unclear at this moment whether the new residency permits will be necessary for their appointment. The relevant provisions of the Commercial Code relating to the residency requirements of company directors will remain in force and only the practice will show whether the Commercial Registry will need to see a copy of the residency permit or not. Depending on this, of the following scenarios will apply:

for the purpose of the registration of the appointment of director, the residency permit will not be required: in such case, the EU citizen will be appointed as a director by the resolution of shareholders/partners and this appointment will be registered into the Commercial Registry. If afterwards the EU citizen will need to get the residency permit for some reason, he can apply for the permit on the basis of his directorship in the Czech company. Such a permit will be issued for a 10-year period.
for the purpose of the registration of the appointment of director, the residency permit will be required: in such case, the EU citizen will be appointed as a director by the resolution of shareholders/partners. A copy of this resolution (as a document proving the purpose of stay) will be presented to the Foreigner Police together with the residency permit application. After this permit is issued, a copy thereof will be filed to the Commercial Registry which then will complete the registration of the new director´s appointment.

Tomas Chrobak
Spolecnosti Online s.r.o.