PragueConnect.cz - Real Estate

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Who Legally Qualify to Purchase Czech Property?

Through the last 10 years there has probably been more confusion on this subject than any other. This confusion has included the Land Registry departments themselves and investment advisors. Evidence of this confusion can still be found by searching on the topic via the internet.

 

 

Non-Czech citizens were recently permitted to buy agricultural and forestry land as a physical person.

 

Residential, Commercial and Recreational Property

Originally it was only possible for non-Czech citizens to purchase residential, commercial and recreational property via a Czech limited liability company called an s.r.o. (in Czech: “společnosti s ručením omezeným”).

After joining the EU in 2004 it changed in that EU citizens could purchase directly if they had a residence permit in the country. However, this change was poorly executed by the Land Registries, the correct information was difficult to find and as a result, many EU citizens continued to purchase via an s.r.o. into 2006 and 2007.

This change also applied to countries in so-called ‘favored nation’ agreements with Czech Republic and included Norway, Switzerland, Lichtenstein and the United States. Again, much confusion was possible regarding citizens of these countries and often legal teams had to ‚train‘ the Land Registry regarding these ‚favored nation‘ agreements.

The legal requirements regarding foreigners changed substantially in May of 2009.

From this date forward it was legally possible for citizens of all foreign countries to purchase residential or recreational property directly in Czech Republic without a residence permit or citizenship. This change recognizes the EU directive (Article 56 of the EU articles of establishment) which stipulates that all EU member countries must have similar laws on the purchase of property. In fact, this EU directive states that there should be no restrictions on the purchase of property.  Czech Republic had had a five year exemption from this article but this time had passed by May of 2009.

This has also proved true for foreign companies although this interpretation of the law could be debatable, according to our legal team. In the past foreign companies needed to establish a local branch or stand-alone s.r.o. in order to purchase. We personally have the experience that this is no longer required and have had clients purchase property directly with a foreign company.

Again, in many cases outside of Prague the Land Registries may not have had experience with the purchase of property by a foreign individual or entity so it can be necessary for your legal team to give them guidance in the current laws. You can refer to internal Land Registry correspondence nbr: CUZK 1796 2009-15 which clarifies the laws regarding foreigners to all Land Registry offices in the different districts.


Agricultural and Forestry Property

A further two year exemption on article 56 of the EU articles of establishment applied on the purchase of land zoned agricultural and forestry meaning foreigners could purchase these types of land only through establishing a Czech company (SRO) or holding the appropriate licenses as a physical person. 

However, this exemption expired on May 2011 under international treaties but was only adopted in Czech law recently.

So it is now possible for non-Czech citizens to purchase property with these zonings without restriction.

So in conclusion, an individual from any nationality can now buy any type of property in Czech Republic without restriction as a physical person. 

by Nathan Brown - nathan@czechpoint101.com - owner and managing director of Czech Point 101  - "You’re in good hands whether buying, selling or managing property in the Czech Republic." 
 

 
 
 
 
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