Finance
TAXATION SYSTEM
The current tax system in the Czech Republic was established in 1993. Taxes are divided into 3 basic groups – direct taxes, indirect taxes and other taxes. The Czech Republic also has a broad network of double taxation treaties with both EU and non-EU countries. These double taxation treaties are based mainly on the OECD Model Tax Convention. more
LEASE OF BUSINESS PREMISES
The Czech Civil Code regulates the lease of premises for business purposes, even in relation to lease agreements entered into prior to this date. Compared to general types of property leases, a lease of business premises has several specific features. Landlords, property developers and their tenants who are leasing business premises in the Czech Republic should certainly be aware of these.
REQUIREMENTS OF A LEASE CONTRACT
The essential requirement of a Lease Contract is an agreement concerning the object of the lease and the amount of rent. The purpose of the lease does not need to be specified in the Contract. If, however, the object of the lease will not be used at least predominantly for the operation of business, then no specific conditions applicable for the lease of business premises shall apply. Neither is it required to have the object of lease approved by the occupancy permit for the Contract to be valid. The regulation of leases in the Czech Civil Code is not mandatory. Parties therefore have the opportunity to manage their mutual rights and obligations, according to their own specific requirements and needs. The Lease Contract does not need to be renegotiated and rewritten due to the adoption of the new legislation, although in practice the parties prefer this option, to exclude the application of provisions of the Czech Civil Code
TERMINATING A LEASE OF BUSINESS PREMISES
Unless the contracting parties agree otherwise, the notice period for a lease with an indefinite term is six months, and three months for a fixed term lease. The Notice on a fixed term Contract must state the reason for terminating the lease, otherwise the Notice shall not be valid. Unless the parties set out other reasons, tenants are entitled to give notice on a fixed term lease before the lease expires, inter alia if (i) they have lost the capacity to carry out the activity for which the business premises were intended, (ii) the leased premises have ceased, for objective reasons, to be eligible for carrying out the activity for which they were intended, and the landlord does not provide the tenant with equivalent alternative premises, (iii) the landlord has grossly breached his obligations in respect of the tenant. The landlord is entitled to give Notice on a fixed term Lease Contract, inter alia if: (i) the real estate in which the business premises are located is to be demolished or rebuilt in such a way that prevents the leased premises from being used any further, provided that the landlord did not and could not have predicted such situation when entering into the Contract, or (ii) the tenant has grossly breached his obligations in respect of the landlord (e.g. the tenant is more than 1 month in arrears with the payment of rent or services connected with the use of the business premises). The Lease Agreement passes over to the new owner in the case of the sale of the premises. If the new owner had no reasonable cause to doubt that he was buying the premises free of any lease, he shall be entitled to terminate the lease within three months after he became or must have become aware that the premises are leased and who the tenant is. Objections can be raised by the terminated party against a Termination Notice. Objections must be made in writing and notified within one month of the relevant party having received the Notice. If the Notice is not withdrawn by the terminating party within one month from the delivery of the objections, the party who raised the objections may ask the court to examine the legitimacy of the Notice within the period of another two months. If, however, the tenant vacates the business premises in accordance with the Notice, then such Notice shall be regarded valid and as having been accepted by him without objections. In particular cases, termination without a notice period is possible; by the landlord in cases of particularly serious breaches of the Lease Agreement by the tenant, by the tenant if the landlord fails to provide the tenant with sufficient protection against claims of a third party, who asserts the right of ownership or another right to anything, or who claims that the premises be surrendered or vacated. Nevertheless, the breach has to be specified in the Notice, and the possibility has to be available to remedy the breach before the Notice is given |
SIGNAGE REGULATION
The tenant is entitled to furnish, to an appropriate extent, the real estate in which the object of the lease is located with various types of signage, provided the landlord has given his consent. The landlord may only withhold his consent for serious reasons. If the tenant requests the landlord in writing to be given such consent and the landlord does not respond within 1 month, it shall be taken that consent has been given. On the other hand, failure to obtain the consent constitutes a gross breach of the Lease Agreement by the tenant.
COMPENSATION FOR TAKING OVER A CUSTOMER BASE
The tenant shall be entitled to
compensation for the takeover of a customer base i.e. a group of customers who
were regular clients of the tenant, provided that such base has been created by
the tenant himself/herself, in cases where the lease is terminated by Notice of
the landlord and at the same time the customer base is taken over by the
landlord or a new tenant. However, the tenant shall not be entitled to
compensation for the takeover of a customer base if the landlord has given Notice
to the tenant for the reason of the tenant’s gross breach of obligations.