A brief insight into three significant legal acts, which will become effective in the Czech Republic as of 1st December 2016:
1. The Act No. 183/2016 Coll., which amends the Act No. 418/2011 Coll., on Criminal Liability of Legal Entities and their Prosecution;
2. The Act No. 257/2016 Coll., on Consumer Credit;
3. The Act No. 112/2016 Coll., on Electronic Registration of Sales.
Ad 1. The novelization of the Act on Criminal Liability of Legal Entities
The main changes brought by this novelization are:
- New concept of the Criminal Liability of Legal Entities. The list of criminal offences for which a legal entity may be held liable is extended to nearly all of the criminal acts that are listed in the Czech Criminal Code, except for criminal offences expressly excluded (e.g. murder, drunkenness or evasion of alimony payments), i.e. the exclusion relates mostly to criminal acts that can‘t be committed by a legal entity due to their nature.
- New rules for exculpation of legal entities. Any legal entity may be exempted from its criminal liability for acts committed not only by its regular employees, but newly also by its statutory bodies (members of the statutory body), provided all reasonable efforts were made in order to prevent the commission of the criminal offence by such individual. In order to fulfil this requirement, the legal entities should implement a system of internal measures and procedures (so-called Criminal Compliance Program) and insist on its application in practice.
Ad. 2 New Consumer Credit Act
The new legislation in the area of granting and intermediating consumer loans brings especially:
- New and much stricter regulation of conditions under which a non-banking provider of the consumer loans will be allowed to conduct its business activities. Pursuant to the new law, all non-banking providers of consumer loans will be entitled to conduct their business only on the basis of a special license granted by the Czech National Bank (Česká národní banka), whereas under the existing legislation the majority of the non-banking providers performed their activities on the basis of a trade license. The transitional period to acquire the license is maximum 18 months as of 1st December 2016. However, the application for the license itself has to be submitted in the 3-month period as of the effective day of the new Act, i.e. by 28.2.2017.
- Higher level of the consumer protection. The consumer is newly entitled to repay his loan partly or as a whole at any time during the loan term. However, the creditor is entitled to apply for a compensation of reasonably incurred costs in connection with the premature repayment of the loan. The maximum amount of compensation is capped by the law. In case of consumer´s default with payment, it is possible to apply only certain types of sanctions (i.e. provider’s right to compensate reasonable incurred costs in connection with the consumer’s default; default interest, which must not be higher than statutory interest; or a contractual fine). The maximum amount of the contractual fine is also limited by the new law.
Ad. 3 New Act on the Electronic Registration of Sales
By the new act, the electronic registration of sales (EET) is established in the Czech Republic.
The main aim of the new legislation is to duly register all payments made in cash for the sale of goods or providing of services and such registration shall be on the basis of the communication between the traders and financial authorities in the Czech Republic.
According to the new act, the registration will relate to all payments which:
- are made in cash, via cheque, bill of exchange or another forms of transactions
- and at the same time constitute a business income of the income tax payer.
Introduction of the electronic registration system into practice is divided into number of phases according to the performed business activity.
1st phase starts as of 1st December 2016 and relates to accommodation and catering services (e.g. hotels, restaurants);
2nd phase shall be introduced as of 1st March 2017 and will relate to retail sale and wholesale;
3rd phase shall be introduces as of 1st March 2018 and will relate to further business activities such as doctors, lawyers, butchers or confectioners;
4th phase (final phase) shall start as of 1st June 2018 and will relate to certain trades and manufacturing professions (e.g. production of clothes, production of furniture, hairdressers or masseurs).