Financial advisory services

Within our legal practice, we also provide financial advisory services in budget, fee, monetary and foreign exchange law. We also provide legal services in the field of taxation of individuals and legal entities, consulting in franchising, factoring, forfaiting and financial leasing. We are also ready to help you with various types of contracts with banks, mortgage contracts, insurance policies (sometimes called “insurance contracts”) or multi-currency transactions.

Budget law

Budget law can be defined as a set of legal rules that regulate the system and content of public budgets, including fund management, the budgetary procedure and the relations arising in the creation, distribution and use of the monetary mass in these public budgets. It is part of financial law in a broader sense. The basic sources of budget law in the Czech Republic include:

1. Act No. 218/2000 Sb., on budgetary rules and amendments to certain related acts, as amended
2. Act No 250/2000 Sb., on the budgetary rules of territorial budgets, as amended

Fee law

Fee law can be characterised as a set of financial and legal rules regulating public financial activities related to the revenues of public funds under fee law. Fee law, like budget law, falls under financial law. As part of our practice, our law firm focuses on financial advice in the field of state, local and water fees. The basic sources of fee law include:

1. Act No 634/2004 Sb., on administrative fees, as amended
2. Act No 549/1991 Sb., on court fees, as amended
3. Act No 565/1990 Sb., on local fees, as amended

Monetary law

Monetary law is a set of legal rules governing currency (monetary unit, currency issue, system of tenders and their protection), treasury operations, money circulation and payment transactions. Within the Czech legal system, monetary law is regulated by legal rules of different legal force, with the key position being occupied by Act No.6/1993 Sb., on the Czech National Bank, as amended. Monetary law, like the two above-mentioned branches of law, can be classified under financial law.

Foreign exchange law

As in the previous cases, this is a subsystem of financial law. The legal rules of foreign exchange law regulate the disposition of values that can be used to settle liabilities abroad and certain other values related to payment and credit transactions with foreign countries. In simple terms, foreign exchange law regulates relations arising, realising or terminating in connection with the handling of foreign exchange assets. In accordance with Section 1(d) of the repealed Act No. 219/1995 Sb., the Foreign Exchange Act, foreign exchange assets mean foreign currencies, foreign securities and also rights appreciable in money and obligations derived therefrom.

The basic sources of foreign exchange law currently include Act No. 277/2013 Sb., on currency exchange, as amended, and Act No. 240/2000 Sb., the Crisis Act, as amended. 

The subjects of foreign exchange law:

1. Individuals and legal entities who are
   1. foreign exchange residents
   2. foreign exchange non-residents
2. Foreign exchange authorities (e.g. the Ministry of Finance of the Czech Republic of the Czech National Bank)

Another category of subjects falling under the foreign exchange law sector is foreign exchange entities. These are entities carrying out transactions with foreign exchange assets. Foreign exchange entities include:

1. Banks, savings banks and credit cooperatives
2. Entities with a foreign exchange licence
3. Entities registered with the CNB that are permitted to perform foreign exchange activities or entities authorised to make cross-border payments on the basis of the single licence principle or to trade in foreign exchange assets

Another important concept in this area is the foreign exchange licence, which means the authorisation of the Czech National Bank granted to entities who do not have a banking or single licence but provide monetary services on a commercial basis and conduct transactions with foreign exchange assets. This licence is granted upon request, is non-transferable and there is no legal right to obtain it.

Taxation of individuals and legal entity entities

Our law firm provides specialised legal services in the field of taxation of individuals and legal entities under Czech tax law and their representation before the tax authorities in tax proceedings.

One of the taxes applicable to both individuals and legal entities, which we will discuss in more detail, is income tax and can be found in Act No. 586/1992 Sb., on income tax, as amended (hereinafter the “ITA”). Together with VAT and excise duties, this tax is the most profitable tax for the state budget.

Pursuant to the ITA, the following are subject to personal income tax:

1. Income from employment
2. Income from independent activities
3. Income from capital assets
4. Rental income
5. Other income

For legal entities, the following is subject to tax:

1. Income from all activities
2. Income from the management of all assets

The income tax rate is currently 15% for individuals and 19% for legal entities.

Please note that every entity subject to income tax must register for the tax. For employees, the registration is carried out by their employer, while business entities (self-employed persons, companies) must fulfil the registration obligation themselves within 30 days of registration in the public register at the locally competent tax authority (according to the registered office of the legal entity, according to the permanent residence of the individual).

Taxes are generally determined and assessed through tax proceedings, including ensuring their payment. Tax proceedings have three levels, namely:

1. The level of determination at which the tax is assessed or assessed additionally
2. The level of payment at which the tax is collected or enforced
3. The level of extraordinary and supervisory remedial measures against individual decisions issued in the course of tax proceedings

The parties to the tax proceedings are:

1. Tax administrator
2. Taxable entity (taxable person[1]/taxpayer[2])
3. Third parties, such as witnesses, experts or persons who have documents and other things needed in the proceedings.

Consulting in franchising, factoring, forfaiting and financial leasing

Franchising simply means doing business under someone else’s leased brand, the basis of which is the relationship between the franchisee and the franchisor, usually established by a written franchise agreement. The franchisor grants the franchisee the right to use the franchisor’s brand for a fee. This form of business is especially suitable for people who want to start a business but do not have their own product with potential.

Factoring is a transaction in which a factoring organisation (usually a bank) continuously purchases short-term receivables on a pre-agreed contractual basis. These receivables arising from invoice sales are transferred to the factoring organisation/factor by the supplier of the goods or services and the factor subsequently becomes their creditor, thereby assuming the risk from the supplier of the goods or services that the buyer will be unable or unwilling to meet its obligations. In simple terms, it is a flexible method of operational financing of a business company based on the assignment of receivables. Relationships arising from factoring are governed by a factoring agreement.

Forfaiting means a transaction in which the forfaiting organisation (usually a bank) purchases medium- and long-term export receivables on a pre-agreed contractual basis. Receivables purchased by a forfaiting company (forfaiter) usually:

1. Have a maturity of more than 180 days
2. Involve a foreign entity
3. Are denominated in a freely convertible currency
4. Exceed the value of USD 200,000 (when converted)
5. Are secured (by a bill or a bank guarantee)

Relationships arising from forfaiting are governed by a forfaiting agreement. In principle, this is a financing method similar to factoring (see above), but the difference lies in the requirement to secure receivables and in the fact that individual receivables are usually transferred through forfaiting, not a group of receivables as in the case of factoring.

Financial leasing is the most common form of lease financing; it is a contractual relationship between the lessee and the lessor (leasing company). On the basis of an initiative from the lessee, the leasing company arranges for the acquisition of the leased item into its possession and subsequently hands it over to the lessee in a condition suitable for use for the contractually specified period of time. In return, the leasing company receives “rental”, usually in the form of monthly payments. The leased item remains in the ownership of the leasing company for the entire lease term and only on the date of termination of the lease does the lessee purchase the leased item. Legal relations arising from financial leasing are governed by a leasing agreement, which is most often concluded in an adhesion (form) manner.

Contracts with banks

Contracts commonly concluded with banks include, inter alia:

1. Current account contracts
2. Deposit account contracts
3. Contracts for the provision of payment services
4. Credit agreements (including, but not limited to, mortgage contracts, consumer credits)
5. Commission contracts for various banking services

One of the contracts we will describe in more detail is the mortgage contract. This contract is usually concluded by any person who has been approved for a mortgage loan (called a mortgage) and is the most commonly used institute, for example, when financing the purchase price of a new property. A mortgage contract should always contain:

1. Precise definition of both parties
2. Amount and maturity of the mortgage loan
3. Mortgage fixation (the period for which the amount of monthly payments and the interest on the mortgage loan are fixed)
4. Interest rate
5. Detailed identification of the collateral (e.g. the property being purchased or other property owned by the debtor/person approved for the mortgage loan)
6. All terms and conditions and methods of drawing the loan

If you are interested in evaluating the potential risks for you arising from banking contracts, we are at your disposal.

Insurance policy

An insurance policy (often also called “insurance contract”) is a contract in which the insurer undertakes to the policyholder to provide the policyholder or a third party with the agreed amount of benefits in the event of an incident, and the policyholder undertakes to pay the insurer a premium.

With the exception of short-term insurance, the insurance policy must be executed in writing. It is also always important to remember that even if the insurance policy is concluded orally, the insurer is obliged to issue the policyholder with a certificate of insurance, which confirms the conclusion of the insurance policy. In the case of insurance policies concluded in written form, the policy should contain at least:

1. Identification of the parties
2. Insurance policy number
3. Insured events and insured risks
4. Term of insurance
5. Identification of the person who is entitled to the insurance benefit as a result of the insured event or the manner in which the person will be determined

The insurance policy usually includes insurance terms and conditions issued by the insurer, which define, in particular, the conditions for the creation, duration and termination of insurance, define the insured event, establish exclusions from insurance, the method of determining the scope of insurance benefits and their maturity. The insurance generally commences on the first day after the conclusion of the insurance policy.

The insurance or the insurance policy is terminated upon expiry of the insurance term, non-payment of the premium, agreement of the parties, termination or withdrawal by one of the parties and refusal of the insurer to perform.

If necessary, we are ready to draw up, legally assess or modify your insurance policy or insurance terms and conditions for you. We are also happy to provide you with legal advice on legal relations arising from insurance policies, including representation in court or out-of-court proceedings.

What situations do we typically handle for our clients regarding financial advice?

• Legal services in the field of personal and corporate taxation
• Assistance in setting up your own franchise
• Purchase of short-term receivables (factoring)
• Purchase of medium- and long-term export receivables (forfaiting)
• Preparation of corporate tax returns
• Legal advice on multiple-currency transactions
• Advice on optimising tax returns
• Representation of clients before financial administration authorities
• Legal consultation of company budgets
• Consultation on the preparation of public budgets
• Representation of clients in tax proceedings
• VAT registration
• Actions against decisions of tax authorities
• Double taxation
• Unlawful tax assessment and penalties
• Legal support for subsidy beneficiaries
• Revision of court fees
• Advice on the administration of state and local fees
• Electronic sales registration (EET) – implementation and administration
• Representation in disputes with card companies (Visa, MasterCard)
• Payment of a liability abroad
• Appealing against tax arrears
• Tax advice for international corporations
• Advice to company owners
• Legal consultation in company audits
• Dealing with accounting firms
• Tax due diligence
• Negotiations with banks on loan terms
• Mortgage contracts
• Disputes with banks
• Loan insurance and claims
• Legal assistance in loan consolidation
• Inability to repay the loan
• Application of insurance policies
• The insurance company refuses to meet its obligations
• Contesting deductibles on insurance claims