Central & Eastern European Property & Finance Report

Czechs Complicate Foreign Residency

Effective January 1, 2000 a new law adopted in the Czech Republic could complicate matters for foreign investors operating and investing in the Czech Republic.

General Overview

In the past, the Czech Republic issued long-term residency permits (the so-called "green card") to foreigners who wished to reside in the Czech Republic or be directors of Czech companies. The new law replaces the long-term residency permit with a long-term visa and adds some new application requirements. As the law is new, there is confusion in Czech government embassies and agencies about the new documentation requirements; therefore some delays could occur if one authority disagrees with another about the acceptability of the application documents.

Types of Residence Permits

The new law recognizes two kinds of residency for foreigners - permanent and temporary. Permanent residency designates residency for extraordinary purposes, e.g., for family reasons. Temporary residency is the type of residency suitable for foreigners residing in the Czech Republic for business purposes or for purposes of employment. Temporary residency is divided into short-term visas (up to 90 days) and long-term visas (between 90 and 365 days). For either, an application must be submitted to a Czech embassy or consulate located outside of the territory of the Czech Republic. Short-term visas are granted by any Czech embassy or consulate and are processed quickly. Long-term visas are processed by the Ministry of Interior - Foreign Police inside the Czech Republic and can legally take up for 180 days to issuance!

Impact on Business

Most importantly, a long-term visa is required for any non-Czech person to act as director/manager (jednatel) of a Czech company. Of course, the person's status has different tax implications that should be considered. The Act imposes that the applicant show that he or she has available at least USD 3,000 for expenses; this requirement has been increased from approximately USD 1,000.

Once a long-term visa has been issued, so long as the purpose for residency has not changed, it is possible to apply for an extension with the Czech Foreigners' Police in the territory of the Czech Republic rather than from a Czech embassy or consulate located outside of the Czech Republic. The extension application must be accompanied by a certification issued by the Tax Office of the Czech Republic evidencing that the applicant has fully paid all income taxes for the preceding tax period and by a certification issued by the Czech Administration of Social Security evidencing that the applicant has fully paid the social security premium for the preceding period.

After 10 continuous years of holding a long-term visa which has never expired a foreigner may apply for a permanent residency permit, even if he or she does not fulfill the conditions for extraordinary purposes.

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