Legal news of 2018

Pre-emption right

For many years we were all used to the fact that in the event of a transfer of a share in a common asset, the co-owners had a right of pre-emption. First, the share had to be offered to them.

The current Civil Code, in force since 1 January 2014, has not adopted this regulation and has thus simply abolished the existence of a statutory pre-emption right of co-owners, with the exception of the case where the co-ownership was established in a manner beyond the control of the co-owners (e.g. by inheritance).

The amendment to the Civil Code, which will enter into force on 1 January 2018, brings the statutory pre-emption right back into play. The right of pre-emption will thus apply to both pecuniary and gratuitous transfers. An exception will be the transfer of a share to a close person, i.e. children or siblings or persons sharing a household for a long time.

What the impact of this change will be is up in the air, as it can be expected that the rights of co-owners will often be circumvented, but it will certainly prolong the transfer of real estate. However, the co-owners may also waive their pre-emption right themselves. This will be reflected in the land register.

GDPR

The new EU data protection regulation (known as GDPR – General Data Protection Regulation) will enter into force on 25 May 2018. It brings a number of innovations, such as a greater emphasis on the security of personal data, the right to portability of automatically stored data or the right to be forgotten (i.e. not to appear in search results, etc.).

In particular, businesses will have to urgently adapt their terms and conditions and other legal documents to properly use personal data in their databases. They also need to better secure them and take note of the new and higher sanctions.

In response to the ever-growing jungle of personal data in the online world, the European Union is preparing an ePrivacy Regulation in addition to the GDPR. This is intended to be a complement to the GDPR. The GDPR only protects personal data. The ePrivacy Regulation, by comparison, guarantees the confidentiality of all electronic information, regardless of whether it contains personal data.

The essence of ePrivacy is that everyone should be able to freely consent to electronic communications providers collecting data about them. The new rules will be binding not only on telephone operators but also on service providers such as WhatsApp, Facebook Messenger, Skype, Gmail, iMessage or Viber. The problem is that this will probably affect web analytics etc. Privacy will be guaranteed not only for content but also for metadata derived from electronic communications.

Initially, ePrivacy was supposed to come into force at the same time as the GDPR, but this will probably not happen in time, and there is more talk of it not coming into force for another year. Even so, there will certainly be a lot of work to do in 2018 to adapt to the new regulations.

EET

There is probably no need to elaborate on EET at length. It is supposed to affect basically all sole traders and other entrepreneurs who sell or provide something to end customers. A part of the public then controls it through the lottery of Účtenkovka.

It is known that from 1 December 2016 the obligations from EET started to apply to accommodation, catering and hospitality services. From 1 March 2017, the EET obligation came into force for retail and wholesale. It was only from 1 March 2018 that other business sectors such as doctors, lawyers and plumbers were to be included, with the exception of certain craft and manufacturing activities, for which EET was to come into force even later.

However, this has changed with the Constitutional Court’s decision. According to the court, the next stages were not sufficiently thought out. The Constitutional Court explicitly stated that it respects the fact that the legislator cannot see everywhere and foresee everything, but when introducing any blanket regulation, it must consider its effects in advance in terms of the persons to be regulated, the timing and the manner (who, when and how). The saying that splinters fly when cutting down a forest has no place for regulatory measures in the rule of law, the court said. So it is now unclear when the next phase of the EET will be launched and under what conditions.

At the same time, at the end of February 2018, the judges also abolished the mandatory registration of card payments, which, given the traceability of these flows, does not make sense and is therefore not a justifiable restriction. Then, at the end of 2018, based on the Constitutional Court’s decision, the government will lose the ability to decide on exceptions to the registration independently (it has exempted, for example, Christmas sales of carp). The Court considers this to be unsystematic and the law itself must decide on exemptions.

However, the essence of the EET goes further, and the judges rejected the minority view of their colleagues that the impugned statutory regulation in the case of small traders strikes at the very heart of the right to run a business and to provide for one’s livelihood through work.

Amendment to the Building Act

From the new year we will also see a simplification of the construction procedure, which has been criticised by some environmental associations. The main change in the law is to speed up construction, where instead of going through three permit procedures, it will be possible to apply for one joint decision, which will include an environmental impact assessment, a zoning decision and a building permit.

At the same time, it will be easier to modify or add some less prominent structures, such as greenhouses or swimming pools. After all, the Czech Republic is known as a world of private swimming pools.

Tax and social security law

One of the biggest changes that will affect most sole traders from 2018 is a reduction in the limit for claiming so-called expense allowances. These are used in the calculation of the tax base. Thanks to them, sole traders do not have to record actual costs. They simply deduct a predetermined percentage of their income from the income they earn.

The lump sums vary between 30 and 80 per cent, depending on the different categories of trades. However, the maximum deduction limit is halved. Along with the limitation on deductible expenses, however, businesses will once again be able to take advantage of tax deductions for children and spouses.

In a boom and election year, it is perhaps not surprising that child benefits are increasing from 1 January 2018. However, this is not a completely across-the-board increase. Parental allowance amounts will increase by CZK 300 per month only where at least one parent is working or has earned income of at least the minimum subsistence level or from self-employment.

At the same time, there will be another increase in the minimum wage. From the current CZK 11 000, the wage will rise to CZK 12 200. The minimum hourly wage will thus rise from CZK 66 to CZK 73.2. From the beginning of the year, the state will also pay higher sick pay to entrepreneurs and employees who are long-term sick.

A ban on the distribution of plastic bags

From the new year, the Czech Republic will join the countries that charge for and restrict the use of plastic bags. An amendment to the Packaging Act, going beyond European directives, imposes a ban on the free provision of any plastic carrier bags, except for very lightweight plastic carrier bags (micro-bags).

While this has been common practice in large grocery chains for several years, the provision of free plastic bags is still widespread in, for example, convenience stores, as well as fashion, shoe and electronics stores.

The fact that plastic carrier bags are not provided free of charge should be apparent from the tax receipt for the goods purchased (separate item on the receipt, etc.). The price of the plastic carrier bags must be at least the cost of production, so there is no way around this with an imaginary zero price.

Charging is a response to the pollution of the environment by plastic bags. If plastic carrier bags are provided free of charge, traders are guilty of an administrative offence for which they can be fined up to CZK 500,000.

Hopefully, then, we are in for a fulfilment of our benevolent intentions overall, and not just an increase in regulation.

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