The Most Important Changes introduced in 2009:

VAT Act

Effective 1 January 2009 an Amendment to the Value-added Tax Act has come to force. According to the provisions of the Amendment, a taxable supply of the transfer of real estate is newly deemed realised as of its handover to an acquirer, but not later than as at the day of delivery of a document (e.g. purchase agreement), which states a date of the legal effect of the registration in the property register, or as of a day of the registration of a change to the title right.

As for the changes in the area of financial “leasing”, the VAT Act began to distinguish between a “leasing” which includes a duty of a tenant to purchase the subject of the “leasing” and “leasing” where the tenant has only a right (not a duty) to purchase the subject of the “leasing”. For “leasing” of real estate with the agreed duty of the tenant to acquire the real estate a day of the taxable supply became the day on which the right to use the real estate by the tenant arises. The “leasing” provider then in such a case issues within 15 days a tax document for a statutory rate of VAT from the total price of the financial “leasing”.

Cadastral Act

On 1 March 2009, the Amendment to the Cadastral Act has come to force introducing several changes. Anonymous access to information from the property register was limited. It is no longer possible to inspect documents filed in the collection in which documents are collected documenting a title right to an owner of a real estate (property) (e.g. purchase agreement) or to a summary of such rights, i.e. a list of all property in the ownership of a specific person. Such records may be inspected from 1 March 2009 only after proving the identity and providing the purpose of such  inspection.

As of 1 March 2009 it is possible to send applications for recoding of changes in the property register and documents for filing into the collection in a form of data message with certified electronic signature or electronic mark (i.e. via e-mail and from 1 November 2009 also via data boxes). The possibility of electronic submission of documents unfortunately still does not apply to petitions for registration of changes (e.g. purchase agreement), which may still be filed only in “paper” form.

Changes planned in the Legal regulation on Real Estate for the Year 2010:

Building Code

The Chamber of Deputies of the Parliament of the Czech Republic has received a draft of so-called “Great Amendment” to the Building Code (effective as of 1 July 2006) the date of approval of which is scheduled for 2010. The Amendment is quite extensive; therefore, we only mention changes being the most important as to the routine practice:

Firstly, the list of structures for the realisation of which no building permit is needed and where only a notification to the building authority is sufficient, or which may even be realised without such notification, shall be extended.

Also a group of structures for which it is not necessary to apply for the issue of so-called “zoning permit” shall be extended, and the zoning consent shall be sufficient enough, i.e. a simpler form with less formal requirements as to the issue. Such change shall affect all structures for realisation of which the building permit is not necessary according to the Amendment.

Newly there should be implemented in the Building Code an overall and comprehensible regulation of the so-called “combined zoning permit and building permit proceedings”.

Change in a Flat Lease Regulation

In 2010, it is presumed that the Amendment to the Civil Code will be approved which should introduce a greater contractual freedom into the regulation on a flat lease (at preserving the necessary protection of a tenant) and avoid or regulate certain institutes limiting the entitlement to handle on the part of a landlord.

Newly, for example it will be possible to agree on the handover of a flat even in a condition unfit for use. The landlord shall take a partial control over persons co-using the flat with the tenant. The Amendment will also affect the future regulation of the rent; the landlord and the tenant, unless reaching the agreement,  will have a right to seek the amount of usual rent be determined by court. A change will occur also in transfer of the lease– except for narrowing a list of persons to whom the lease of the flat may be transferred, also a time limit to the transfer of the lease will occur.

Foreign Exchange Act

Finally, a change of Foreign Exchange Act is expected in 2010, after which it will be possible for citizens of both the EU countries and the countries out of EU (e.g. Ukraine, Russia, etc.) to acquire any kind of the real property in the Czech Republic except for the forest and agricultural land.

It is necessary to add that cadastral offices already since 1 May 2009 (whereas on 1 May 2009 expired the period for exception from prohibition of all limitations of a movement of capital among the EU countries as well as the EU countries and third countries which the Czech Republic has negotiated) observe the methodological instructions of the Czech Cadastral Office, and that as at the fore-going date the motions to registration of the title right cannot be rejected by reference to the provision of the Foreign Exchange Act being the subject of respective Amendment.