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Can a foreigner buy directly real
estate property in Prague? The answer is no. But there are
several legal vehicles that can inexpensively and quickly accomplish
this. One of the most popular one is that foreigner first sets up a
Czech limited liability company called S.R.O and be the 100% shareholder,
and that S.R.O can buy the property. It's safe and very simple with the
assistance of a lawyer. Other legal vehicle is that the foreign company
can establish a branch office in the Czech Republic. We have experience
in these matters and can refer you to a specialist in this field.
Mortgages are also available to foreigners.
There are several multi-national
banks that created vehicles for financing the purchase of real estate in
Czech Republic by foreigners.
Real Estate Acquisition in
the Czech Republic
Complete survey of relevant legal
provisions.
- The acquisition of real estate in the
Czech Republic by foreign persons is now treated by three legal
regulations. The basic one naturally is the general regulation
contained in Act No. 219/1995 Coll., the Foreign Exchange Act, as
amended. This law distinguishes between two groups of parties to
foreign exchange relations - residents and non-residents. The
criterion is the place of permanent residence of natural persons, and
the headquarters of legal entities. It must be emphasized that the
citizenship of a natural person is not decisive. According to § 1
letters b) and c) of the Foreign Exchange Act, persons permanently
resident or legal entities based in the Czech Republic have the status
of residents, the others are non-residents. Under Czech legal
regulations this means that foreign citizens and legal entities owned
by them can have the status of residents and non-residents, and this
is determined in individual cases on the basis of specific data. For
example: a French citizen permanently resident in Brno is under
foreign exchange regulations a resident, and, on the contrary, a Czech
citizen permanently resident in Paris is a nonresident.
Note: The terms under which a foreign citizen or a
person without citizenship can acquire a permanent residence permit
are stipulated in Act No. 326/1999 Coll., on the residence of foreign
persons in the territory of the Czech Republic, as amended. We call
attention to the fact that a temporary residence permit, even a long-term
visa, has no influence on the status of non-resident. But a foreign
person granted asylum acquires a permanent residence permit in keeping
with § 76 of Act No. 325/1999 Coll., on asylum, and on this basis has
the status of resident.
The Status of Resident or
Non-resident is of Fundamentals Importance in View of the Possibility
of Acquiring Domestic Real Estate in Krepiny with the Foreign Exchange
Law
The foreign exchange law contains
no restrictions applying to residents. In contrast, non-residents can
acquire real estate in the Czech Republic only in cases stipulated in
§ 17. Emphasis must be laid on the fact that no foreign exchange body
is authorized by law to grant any exception above the framework of
this provision. But the law includes a special provision applying to
Czech citizens - they are free to acquire real estate in this country
even if they are permanently resident abroad and thus have the status
of non-resident. Until the end of 2001, non-residents could acquire
real estate in this country only in cases included in § 17 paragraph
1, i.e:
- by inheritance,
- for the diplomatic representation of another
state on condition of reciprocity,
Real Estate Asquisition in
the Czech Republic
- the property is acquired into unapportioned
co-ownership of a married couple only one of which is a non-resident,
or when a non-resident acquires the property from a spouse, parents
or grandparents,
- through the exchange of domestic real estate
which he owns for other domestic real estate, when the usual price
of the latter does not exceed the usual price of the former,
- if he has a pre-emptive right by reason of
apportioned co-ownership of real estate,
- if it is a construction built by a non-resident
on his own land,
- where expressly provided by a special act
(e.g. Act No. 403/1990 Coll., on
Mitigating Consequences of Certain Property Injustices, as amended;
Act No. 427/1990 Coll., on Transfers of State Ownership of Certain
Things to Other Legal or Natural Persons, as amended; and Act No.
92/1991 Coll., on the Terms and Conditions for Transferring State
Property to Other Persons, as amended). Amendment No. 482/2001 Coll.
expanded § 17 with paragraph 2, which allows, from 1 January 2002, the
purchase of real estate (except for farmland and woodland) by foreign
legal entities which place their enterprise or its branch in the Czech
Republic and ester it in the Czech Commercial Register. Under § 21 of
the Commercial Code, this entry is a legal prerequisite for their
business in the Czech Republic, but they still are a part of the legal
entity based abroad - non-residents, who also are entered in the land
register as owners of the real estate.
It need be added that foreign
entrepreneurs can set up subsidiaries in the Czech Republic, or enter
existent legal entities, and participace in their establishment. Since
all the mentioned cases apply to legal entities based in the Czech
Republic, i.e. residents as described in the foreign exchange law,
they could acquire domestic real estate (with the exception of state-owned
farmland and woodland) before the amendment took effect, and so it
brought no change for them.
- Limiting provisions, applying only to
state-owned farmland and woodland, are contained in two special laws:
- It is primarily Act No. 95/1999 Coll,
on the basis of which state owned farmland and woodland is
privatized. Its § 4 stipulates that farmland can be acquired only
by:
- Czech citizens
- municipalities
- legal entities, which are owners or co-owners
of buildings and structures belonging to an original farm, or
serving agricultural production, or water management connected
with it (but this applies only to sites under these buildings or
structures and sites immediately adjacent to them if they are
essential for their operation (§ 1 letter a) points 2. and 3., § 5
para 4)
- and public universities and woodland can be
acquired only by municipalities and public universities.
- Certain unimportant limitations are
contained in Act No. 229/1991 Coll., Land Act as amended. Its § 3
stipulates that "land cannot be transferred to the ownership of
exchange foreigners". But this law is primarily a regulation
governing restitutions, and the limitation lost its original meaning
on the basis of later amendments. And so this limitation of foreign
persons does not apply in general, but only to land transferred
under the land act, i.e. land free of restitution claims, and
managed by the Land Fund of the Czech Republic.
What Development Can Be
Expected in This Area?
In accordance with the European
Agreement § 45 point 7 third sentence, the Czech Republic should grant
citizens of the European Union, who do business in our territory as
individual entrepreneurs, the right to acquire, use, rent, and sell
real estate property, and the right to lease natural resources,
farmland and woodland, when they need it to secure their economic
activities, until 31 January 2005 at the latest. All foreign
entrepreneurs already have these rights except the right to acquire
real estate. The chapters already closed in talks on the accession of
the Czech Republic to the European Union include the chapter "Free
Movement of Capital and Payments", which grants the Czech Republic the
two following transition periods to be valid after its accession to
the EU:
- 7 years for the acquisition of farmland and
woodland
- 5 years for adjoining dwelling.
For further legal details contact:
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JUDr. Irena Helmová
Attorney at Law
Address: náměstí Kinských 7, 150 00 Praha 5
Tel/fax: +420 257 311 249 , 257 311 250 , 257 311 251
E-mail :
helmova@irenahelmova.cz |
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Price list:
1) Legal Consulting Services
Eur 150 per Hour
2) Company Establishing in the Czech Republic
Eur 1500
3) Property Purchase Contract
1% from Selling Price
4) Purchase Contract including "Due Dilligence"
1,5% from Selling Price
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Vit Klima
Czech Republic |
604 568 553 |
