Get free access to
Our legislation updates make it easy for you to keep on top of the latest changes affecting your business. Receive our articles, opinions, tips, industry news, country profiles, regional overviews and studies, latest events and even more, directly into your mailbox.
Check out our Newsroom to see what is included!
We will send you only relevant information we consider may be of your interest and treat your personal data in compliance with our Privacy policy and GDPR statement.
Unable to subscribe? Try this page.
We would like to inform you about the corporate obligations related to the end of the financial period. These include the following:
The annual financial statements must be discussed and approved by the general meeting of the company no later than six months from the end of the financial period. If the financial period ended on 31 December 2024, the financial statements must be approved by 30 June 2025.
Alongside the financial statements, a proposal for profit distribution or loss settlement must also be presented to the general meeting. The actual decision on the distribution of profit or other own resources lies with the statutory body. Before adopting such a decision, the so-called balance sheet and insolvency tests must be conducted to determine whether the distribution of profit is permissible. The relevant documents, incl. the financial statements and, where applicable, the annual report, must be filed in the Collection of Deeds no later than 12 months after the balance sheet date.
For medium and large accounting units, the proposal for profit distribution or loss settlement is a mandatory part of the financial statements notes. If this information is included in the notes, it is not necessary to prepare a separate resolution on profit distribution or loss settlement.
If a company fails to file its annual or extraordinary financial statements in the Collection of Deeds for at least two consecutive financial periods, and at the same time the Registry Court is unable reach the company, the company may face a procedural fine (which can be imposed repeatedly) or eventually dissolution without liquidation.
In this context, we also recommend checking whether the company’s beneficial owner is duly registered in the Register of Beneficial Owners and whether the entry reflects the current situation. Otherwise, according to the Act on the Registration of Beneficial Owners, voting rights at the general meeting may be suspended, or the distribution of profit may be prohibited.
We would be happy to assist you with these obligations and the preparation of the necessary documentation. Please don’t hesitate to contact us.
We would like to remind you the annual legal obligation to prepare a Report on Relations in the Czech Republic under the Business Corporations Act. The obligation to prepare the report is set by law for all companies (controlled entities) that are controlled by another entity or form a part of a group of companies.
The Report on Relations (inter alia):
The Report on Relations shall be prepared by the statutory body of the controlled entity no later than three months after the end of the financial period and shall be reviewed by the company’s supervisory body (if appointed). The statutory body shall file the Report on Relations with the Collection of Deeds kept by the applicable Registry Court within the period for filing the Financial Statements compiled for the financial period covered by the Report on Relations. If the Financial Statements of the business corporation are audited, the Report on Relations shall be part of the Annual Report.
As a reminder, if your company’s financial year ended on 31 December 2024, the Report on Relations shall be prepared by 31 March 2025 and filed with the Collection of Deeds by 31 December 2025.
If the obligation to prepare and file the Report on Relations is breached, the company may face a disciplinary fine of up to CZK 100,000.
If you are interested in our advisory services in the Czech Republic, we will gladly prepare the Report on Relations for you so that it complies with all requirements set out by law, and file it with the Collection of Deeds of the applicable Registry Court.
The data boxes in the Czech Republic represent a secure and state-guaranteed electronic communication portal, which can be used to communicate with authorities, courts or other entities, including private entities. For now, all public authorities, legal entities registered in the Commercial Register, and representatives of the so-called liberal professions such as attorneys, insolvency administrators, auditors or tax advisors are obliged to have the data box. However, there will be a change from 1 January 2023. Newly, the data boxes in the Czech Republic will also be automatically set up for all entrepreneurs and the rest of legal entities that have not yet been obliged to have the data box established.
Most of the new holders of data boxes will be the entrepreneurs, i. e. freelancers or self-employed persons, even if they have their business activity suspended. If these persons already have the data box based on their position as the natural persons, according to the new obligation they must have one more data box established based on their position as the entrepreneurs.
The data boxes will also be newly set up to all non-profit organisations, i.e. in particular foundations, charitable associations, communities of unit owners, trust funds, associations or various societies.The original version of the amendment to the act also provided for the automatic establishment of data boxes for natural persons who use the citizen’s electronic identity (a resource in the NIA national point system). However, this rule was abandoned as it was perceived as too strict. Thus, in general, for the individuals who are not entrepreneurs, the data box will only be set up upon their request.
The data boxes in the Czech Republic will be set up between January and March 2023.
The entities will obtain their access details by a registered letter once the data boxes are automatically set up. However, they need to beware that the data boxes will be activated even if the letter with the access data is not picked up and the entity never logs in to the data box.
If you already have the data box as an individual, the access details for the new data box will be sent here instead of receiving the letter. In this case, unfortunately, the data boxes cannot be merged into one, as you will act as a different type of entity with each of them, as a natural person and as an entrepreneur.
As far as the activation of the data box itself is concerned, the data box will be activated either by logging in itself or automatically after 15 days from the date of its establishment, if such a login does not occur
Received data messages are stored for 90 days after logging in. After that, they are deleted. If the person does not log in to the data box, the data message will be stored for a maximum of 3 years
However, what is essential and what needs to be paid attention to in order to avoid adverse consequences, is the change in delivery and the deemed delivery associated with it. The data message, both in the context of private communications and communications with public authorities, is considered to have been delivered at the moment when it is logged into the data box. However, if no such log in occurs, the data message is considered to have been deemed delivered on the 10th day after its delivery.
Please note a recent development following the decision of the Supreme Administrative Court relating to this matter: If 10th day falls on a weekend or public holiday, it will not be deemed delivered automatically, but the deemed delivery will take place on the next working day. This rule is valid as of 1 January 2023.
We therefore recommend setting up a notification system for newly incoming data messages in order to avoid the risk of delay.
Over time, data boxes in the Czech Republic should become a completely common and trusted communication portal between individual entrepreneurs and organisations/authorities. With their lower financial cost and greater convenience, they could even completely replace registered letters.
If you are interested, we can offer you the service of managing data boxes in the Czech Republic with our own access data. We will always inform you about the received data messages in a timely manner and we will also ensure their secure archiving.
On 1 October 2022, the amendment to the Act on the Register of the Beneficial Owners came into force. This amendment brings new rules for the beneficial owners in the Czech Republic and responds to the requirements of the European Commission, according to which the current local regulations on the beneficial owners are not in compliance with the European law. The amendment will further reduce the administrative burden on the registrants’ end and ensure greater transparency of organisations.
The main change brought by the amendment is a simplification of the definition of the beneficial owner. The amendment departs from the distinction between the ultimate beneficiary and the person with ultimate effective control, and it establishes a uniform material definition of the beneficial owner.Newly, only the direct or indirect ownership or control in a legal person or legal arrangement will establish a basis for identifying the beneficial owner. The ownership will be based on the factual situation and the ownership of 25% share (of participation in the capital, voting rights or profit) will be the determining criteria. At the same time, it will not be necessary to meet the material condition of possessing the ultimate control. This may result in the identification of multiple beneficial owners – significant ‘players’ in the company who may not have actual decisive influence.
The obligation to register the beneficial owner will now apply to some legal entities and legal arrangements that did not have this obligation before. The registration of the beneficial owner will be required for:
The new amendment also extends the period during which the voting rights of an unregistered beneficial owner are not suspended, and that is from 15 to 30 days. If the position of the beneficial owner is established in the period of 30 days prior to the date of the general meeting, the prohibition on exercising voting rights will not be applied.
In order to comply with the terminology of the new amendment, most of the data already entered in the register of beneficial owners will be adjusted automatically, without the need to submit a new registration form for changes of the beneficial owners’ data.
For most of the entities which will have a new obligation to register their beneficial owner, the automatic data exchange mechanism will also be used.
The automatic data exchange will take place during the month following the entry into force of the amendment, i.e. during October. If the automatic data exchange does not occur, the registration will have to be amended within 6 months, i.e. by the end of March 2023.
Likewise, legal entities that have fulfilled the registration obligation under the previous legislation but will not have the automatic data exchange applied, will have 6 months from the entry into force of the amendment to proceed with the registration updates in order to comply with the new requirements.
We will be happy to assist you with the registration of the beneficial owners in the Register. Please do not hesitate to contact us.The new Act on the Registration of Beneficial Owners will come into force on 1 June 2021 and it will completely replace the current concept of the ultimate beneficial owner existing under the Act on Public Registers. The new rules for the beneficial owners in the Czech Republic will bring numerous changes and, above all, introduce significant sanctions for a breach of the obligation to register the ultimate beneficial owner.
Until now, the ultimate beneficial owner was defined as a natural person who is able to exercise decisive influence in a legal entity – either directly or indirectly. The legal title under which the ultimate beneficial owner exercised his/her decisive influence was not essential since it was sufficient for him/her to have a factual power to exercise such control.
Although the new concept of the ultimate beneficial owner is still tied to the factual situation, it shall be noted that the new definition of ultimate beneficial owner recognizes not only a person who has the ultimate control, but also a person who is the ultimate beneficiary (of a share in the benefit).It is to be emphasized that the ultimate beneficial owner is any natural person who meets the above criteria. Thus, more than one ultimate beneficial owner may exist in relation to the legal entity according to the new rules for the beneficial owners in the Czech Republic.
A person exercising the ultimate control is a natural person who can, directly or indirectly, exercise decisive influence in the legal entity without passing it on to another person.
An ultimate beneficiary is a natural person who may acquire, directly or indirectly through another entity, a substantial part of a share in the benefit generated by the activity or liquidation of the legal entity or generated by the administration or dissolution of a legal arrangement (hereinafter the “benefit”), and does not pass on this benefit.
If the ultimate beneficial owner cannot be identified, any person in the top management of the entity on top of the ownership structure is to be registered. However, if such person in the top management is to be registered as the ultimate beneficial owner, it is necessary to record all steps taken while identifying the ultimate beneficial owner. Until now, the members of the statutory body of a Czech entity have been registered as the ultimate beneficial owners in such situations.
In the Register of Ultimate Beneficial Owners, the following information relating to the ultimate beneficial owner (who is always a natural person) will be registered:
A part of the registered information relating to the ultimate beneficial owners will be now accessible to public. The Ministry of Justice will allow anyone to obtain partial excerpts from its website.
If the Registrant (the Czech company) does not register the ultimate beneficial owners in the Register of Ultimate Beneficial Owners or it enters information that does not conform to the real situation, the following sanctions may be imposed:
When a discrepancy is found, the Reporting person within the meaning of the AML Act (eg. notaries, banks, lawyers) shall invite the Registrant to explain or eliminate the discrepancies. If the Registrant does not explain or eliminate the discrepancy, the Reporting person may not carry out the transaction in question and must report the discrepancy to the applicable court.
In practice, the discrepancy or absence of the registration in the Register of Ultimate Beneficial Owners may result in the following situations:
The new rules for the beneficial owners in the Czech Republic will come into force on 1 June 2021:
About Accace
Accace is a proactive consultancy and outsourcing partner who bridges the gap between needs and solutions. Combining smart and streamlined technology with a holistic approach, we provide an all-round care to clients and consider their matters as our own. With over 800 experts and approximately 2,000 customers, we have vast experience with facilitating the smooth operation and growth of small to large-scale, global businesses.
About Accace Circle
Accace operates internationally as Accace Circle, a co-created business community of like-minded BPO providers and advisors who deliver outstanding services with elevated customer experience and erase the borders of service delivery. Covering over 60 jurisdictions with more than 7,000 professionals, we support over 80,000 customers, mostly mid-size and international Fortune 500 companies from various sectors, and process at least 800,000 pay slips globally.
