EXECUTIVE SUMMARY – INVESTORS’ RESIDENCE SCHEMES IN THE CZECH

REPUBLIC

General background

In the Czech Republic, foreign investors can apply for the long-term residence permit for the
investment purpose, the conditions of which are set out in Act No 326/1999 on the Residence of
Foreign Nationals.1 This specific residence permit was introduced into the Act on the Residence of
Foreign Nationals by Act No 222/20172 which is further implemented by Government Regulation No
223/20173 and Decree No 223/2017.4 These laws entered into force on 15 October 2017.

Before the entry into force of these acts introducing the long-term residence permit for the purpose of
investment, foreign investors had to apply for a visa for a stay exceeding 90 days for the purpose of
carrying out business activities 5 and after their arrival in the Czech Republic they had to apply for the
long-term residence permit for the purpose of carrying out business activities. 6 Foreign investors still
have this possibility as an alternative to the long-term residence permit. However, there are some
differences. When applying for the visa for a stay exceeding 90 days for the purpose of carrying out
business activities, the fact that the foreign national intends to make in the Czech Republic a
significant investment, the potential benefit of the investment for the Czech Republic, the number of
jobs created, or the amount of the invested financial means are not taken into account. In contrast,
applicants for long-term residence for the purpose of investment do not need to provide certain
documents, such as proof of accommodation or sufficient financial means for residence in the Czech
Republic. The rules for the reunification of the holder of the long-term residence permit for the
purpose of investment with his family members are also less strict, since family members may apply
for the residence permit as soon as the holders of the long-term residence permit for the investment
purpose obtains their permit. Finally, the time-limit for issuing the decision on the long-term
residence permit for the investment purpose is shorter (30 days or a maximum of 60 days in
particularly complex cases in contrast with 90 days for the visa for the purpose of carrying out
business activities). The rationale behind the new residence permit was to introduce more favourable
conditions for foreign investors intending to invest and carry out business activities in the Czech
Republic, and at the same time to reinforce the principle according to which business activities of
foreigners should be beneficial for the Czech Republic or for its territorial units.

The competent authority for migration issues and the long-term residence permit for the investment
purpose is the Department of Asylum and Migration of the Ministry of the Interior (MoI). The
Ministry of Industry and Trade (MIT) also plays a role in the procedure by providing the MoI with
an opinion on whether: the investment to be made is a significant investment; the intent to make a
significant investment is credible and feasible and will be beneficial for the Czech Republic or one of
its regions or districts; the benefit of other invested property is comparable with the investment of the
part of the financial means which it substitutes; the activity of the foreign national in the Czech
Republic will have significant influence on the business activities of the commercial corporation; the

1
Act No 326/1999 of 30 November 1999 on the Residence of Foreign Nationals on the Territory of the Czech Republic, and
amending other selected acts, Chapter 106/1999, available at https://www.zakonyprolidi.cz/cs/1999-326#f1991472.
Section 1(A) of Government Regulation No 223/2017.
2
Act No 222/2017 Amending Act No 326/1999 on the Residence of Foreign Nationals on the Territory of the Czech
Republic, as Amended, and Other Related Acts, Collection of Laws of the Czech Republic, Chapter 81/2017, available at
http://aplikace.mvcr.cz/sbirka-zakonu/SearchResult.aspx?q=222/2017&typeLaw=zakon&what=Cislo_zakona_smlouvy .
3
Government Regulation No 223/2017 of 10 July 2017 on Some Conditions for Issuing and Prolongation of the Validity of
the Long Term Residence Permit for the Purpose of Investment, Collection of Laws of the Czech Republic, Chapter
81/2017, available at http://aplikace.mvcr.cz/sbirka-zakonu/SearchResult.aspx?
q=222/2017&typeLaw=zakon&what=Cislo_zakona_smlouvy.
4
Decree No 224/2017, of 14 July 2017, amending Decree No 368/1999, laying down Elements and Number of Photographs
Necessary Under the Act on the Residence of Foreign Nationals, Chapter 81/2017, available at
http://aplikace.mvcr.cz/sbirka-zakonu/SearchResult.aspx?q=224/2017&typeLaw=zakon&what=Cislo_zakona_smlouvy.
5
Section 31 of Act No 326/1999.
6
Section 42 and Section 46(7) of Act No 326/1999.

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share of the foreign national in the commercial corporation is at least 30 %. 7 There are no non-public
bodies involved in the application process.

Conditions and procedure

Conditions
Applicants for a long-term residence permit for investment purposes, must comply with the
qualifications and requirements set out in the Act on the Residence of Foreign Nationals, namely:
they must intend to stay in the Czech Republic for a period exceeding 90 days and must intend to
carry out in the Czech Republic a significant investment. The significant investment criterion is
satisfied where investments in the Czech Republic amounting to at least CZK 750 000 000 (EUR
3 000 000) are made and at the same time the investment must create at least 20 jobs in the
Czech Republic. Up to 60 % of this amount may be replaced by investment in material or immaterial
property (including technological and informational knowledge; buildings; land, etc). 8

The applicant must provide proof of an intention to make the significant investment (the business
plan), which must be credible and feasible and the significant investment must be beneficial for the
Czech Republic as a whole, or for one of its regions or districts. 9 In addition, the applicant must have
access in the Czech Republic to finances for the implementation of the significant investment,
and if s/he already resided in the Czech Republic, s/he must be debt-free.10

Apart from the investment requirement, the following fees apply: CZK 1500 (EUR 60) for lodging
the application for the residence permit and for its renewal, and CZK 1000 (EUR 40) for issuance or
renewal of the residence permit.

The investor’s physical presence in the Czech Republic is not required. Unlike family members,
investors are not required to have an address in the Czech Republic during the application process.

Procedure
Third country nationals who can apply for the long-term residence permit for the investment
purpose are:
1. A natural person, who is an entrepreneur, that means, who carries out gainful activity on one’s
own account and has responsibility in a trade or similar activity with the intention of doing so
consistently for the purpose of making a profit. The person must have full legal capacity to act and be
at least 18 years of age.11
2. A natural person, who is a governing body, a member of a governing body, a procurator or a
partner of a business corporation, on condition that the activity of such a person will have a
significant influence on the business activities of the business corporation. If the number of natural
persons in a corporation applying for the residence permit is five or less, their significant influence in
the commercial corporation is assumed. If there are more than five applicants from the same
corporation, their real influence in the corporation will have to be proved. Moreover, the share of such
an applicant in the commercial corporation must be at least 30 % in any case.12

Applications must be done in the form prescribed by the MoI 13 and submitted at the appropriate
consulate. Applicants already residing in the Czech Republic, may lodge their application directly
with the MoI office. If the applicant complies with all the necessary conditions, the MoI will issue the
long-term residence permit for the purpose of investment. The validity of the permit is for two
years, however it may be repeatedly extended.

7
Section 42n(4) of Act No 326/1999.
8
Section 42n(1)(b) of Act No 326/1999.
9
Section 42n(1)(c) of Act No 326¨1999.
10
Sections 42p and 42o of Act No 326/1999.
11
Section 42n(1)(a) of Act No 326/1999.
12
Section 42n(3) of Act No 326/1999.
13
Model application forms are found at http://www.mvcr.cz/docDetail.aspx?docid=21672757&doctype=ART. The model of
the application form for the long-term residence permit for the investment purpose has not been added yet.

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The residence permit may be renewed without limitation on the number of times the investor may
apply for renewal. For such purposes, the investor must continue to comply with the conditions that
justified issuing the residence permit the first time, including the creation of 20 jobs. In particular, the
investor must proceed in line with the intent to make the significant investment, which means that the
investor must continue to fulfil the business plan on the basis of which s/he was granted the residence
permit. For example, if according to the business plan CZK 75 000 000 (EUR 3 million) are to be
invested within five years, and after two years the applicant applies for the extension of the residence
permit, then on the basis of the mandatorily published annual reports it will be verified how the
carrying out of the business plan proceeds and whether a financial amount proportionally
corresponding to two years has already been invested. If the applicant requests the extension of the
residence permit as a governing body, member of a governing body as a procurator or partner of the
commercial corporation, his activity in the territory of the Czech Republic must continue to have
significant influence on the business activities of the commercial corporation. The share of the
applicant, who is a partner of the commercial corporation, must still correspond to the minimum share
stipulated in Section 1(d) of Government Regulation No 223/2017 (30 %).

In this regard, the MoI must assess whether the objectives of the intent to make the significant
investment are proportionate to the amount of the investment funds, and whether it is based on the
knowledge of local conditions, legal order and labour market. Finally, technological solutions should
not be materially flawed in the essential points. 14

Applications for a residence permit can be turned down for any of the following reasons: the foreign
national provided false information in the application or submitted false or forged documents or did
not have a valid travel document that the applicant circumvented the law in order to obtain the
residence permit, or it was discovered, that after the expiration of the long-term residence permit the
applicant intends to misuse the residence permit for a purpose other than investment, the applicant did
not come for the appointment with the MoI; the applicant was condemned by a final and conclusive
judgment for committing an intentional crime; s/he is listed in the Schengen Information System as a
person who is prohibited from entering the territory of the Member States; the stay of the foreign
national is not in the interest of the Czech Republic; the foreign national is on the list of non-desirable
persons (a person who cannot enter the Czech Republic because s/he might undermine public order,
or endanger public health or protection of rights and freedoms of others); there is a reasonable danger
that the foreign national could endanger the security of the Czech Republic or of another Member
State or undermine its public order; another EU Member State or conventional State expelled the
applicant due to her/his imprisonment for at least one year or due to a suspicion that s/he committed
or prepared a serious crime; the applicant did not meet the requirements of the Ministry of Health to
prevent introduction of an infectious disease; s/he did not fulfil in the Czech Republic the purpose for
which the residence permit was granted; the costs of the stay of the holder of the residence permit
would be borne by the Czech Republic; the foreign national did not submit a document on the travel
health insurance and a proof of payment of the premiums; the foreign national does not satisfy the
condition of criminal integrity; s/he did not pay a fine or costs of procedure pursuant to Act No
326/1999 on foreign nationals; or s/he did not in the last five years comply with an obligation under
Act No 326/1999. The permit can also be withdrawn for the same reasons. Foreign nationals may also
request the cancellation of the validity of their residence permit.

In the case of refusal to grant the long-term residence permit, the unsuccessful applicant can file an
appeal against the decision to the Commission for decision-making in matters of residence of
foreigners, which is a body of the appellate administrative authority within the MoI.

Security and ex-post checks

Before the granting of the long-term residence permit for the investment purpose, the applicant is
subject to a number of security checks. The MoI obtains an extract from the Penal Register of the
Czech Republic, or the applicant submits a similar document obtained in another country. ; During the
security checks the MoI consults international databases (the Schengen Information System). If the
14
Information provided by CzechInvest – Investment and Business Development Agency, a contributory organisation of the
MIT, competent authority on investment issues, 15 March 2018.

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foreign national is listed in the Schengen Information System as a person who is prohibited from
entering the territory of the Member States, it is one of the reasons for turning down the application or
for cancelling the residence permit.

As regards the checks on the source of funds, applicants must submit the following documents with
the application: financial statements or similar documents containing the net profits of the applicant,
commercial corporation and its controlling entity for the two calendar or accounting years preceding
the date of the application; upon request, proof of origin of the finances for implementation of the
significant investment (tax return or, in the case of a natural person who is an employee, a document
confirming income certified by the employer); documents proving ownership and origin of other
assets to be invested (e.g. purchase contract) and an expert valuation of such assets. 15

Ex-post checks are carried out as a part of the procedure for renewal of the residence permit, where
the foreign national must continue to comply with the same requirements.

No additional information could be found with regard to other criteria or databases checked as a part
of due diligence or with regard to cases of misuse associated with corruption or fraud.

Family members
As soon as applicants are granted the long-term residence permit for the purpose, their family
members may apply for a long-term residence permit for the purpose of family reunification. The
family members concerned are the spouse, the minor child or adult dependent child, the minor child
or adult dependent child of his/her spouse, the adopted minor child or the minor child in foster care of
the holder of the residence permit or of his/her spouse, or the minor child whose guardian is the holder
of the residence permit or his/her spouse, or solitary foreign nationals over 65 years of age or,
regardless of age, foreign nationals who are objectively unable to provide for their own needs on
account of their state of health, where their parent or child holds a residence permit. 16 The long-term
residence permit for the purpose of family reunification is also granted for two years and the family
members can apply for it as soon as the investor is granted the long-term residence permit for the
investment purpose. There is no requirement of a minimum length of stay of the investor before the
family members can apply for family reunification. It may also be repeatedly extended.

Monitoring of the proceedings and the authorities involved

There is no cap or limit on the number of applications under investors’ residence schemes. The law
does not establish a system of scrutiny by Parliament or other bodies. However, the Department and
Immigration Policy of the MoI keeps statistics on the applications and decisions concerning all kinds
of residence permits.

Rights
Holders of the residence permit for the investment purpose and their family members have the right
to work in the Czech Republic. They are entitled to equal treatment with other employees with
regard to working conditions and remuneration for work and may also become members of a trade
union. They have access to social security and health insurance schemes. They can also access self-
employment under the same conditions as Czech nationals.

Other matters

Link with citizenship

Holders of the long-term residence permit for the investment purpose do not have direct access to
the naturalisation procedure. In order to apply for Czech citizenship, the applicant must be a holder
of a permanent residence status in the Czech Republic, which is obtained after five years of
continuous residence in the Czech Republic. In order to obtain citizenship, applicants must have
resided in the Czech Republic for at least ten years, prove knowledge of the Czech language and of

15
Section 42o(1) of Act No 326/1999.
16
Section 42a of Act No 326/1999.

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the Czech constitutional system and cultural, geographical, and historical facts pertaining to the Czech
Republic, and prove their source of income in the last three years. 17

Statistics and economic impact

Czech legislation does not establish any mechanism to monitor the economic impact and
financial revenues of investors who have been granted the long-term residence permit for the
investment purpose. Act No 222/2017 introducing the long-term residence permit for the investment
purpose came into force only on 15 August 2017 and so far, no application for the long-term
residence permit for the investment purpose has been submitted. Thus, there are no statistics yet
which would enable an assessment of the economic and financial efficiency of this residence permit.

17
Section 14(3) of Act no 186/2013 from 11 June 2013, on Citizenship of the Czech Republic and on the amendment of
selected other laws (the Czech Citizenship Act), Chapter 77/2013: http://aplikace.mvcr.cz/sbirka-zakonu/SearchResult.aspx?
q=186/2013&typeLaw=zakon&what=Cislo_zakona_smlouvy.

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