CZECH REPUBLIC Law and Practice Contributed by: Matěj Manderla, Jan Wagner, Ivo Hartmann and Aleš Malach, Tenacta, advokátní kancelář, s.r.o.
5.6 Annual Entity Maintenance and Accounting Compliance
the previous cap of EUR1.6 million (CZK40 million) on individual exemptions has been abolished if the time test is satisfied. 5.3 REITs The Czech Republic has no REIT regime. Real estate investments are usually done through regulated funds, especially real estate funds or funds for qualified investors, with limited use of trust-like structures. The key distinction is between public funds and those lim - ited to qualified investors, both generally accessible to foreign investors. There is no general REIT tax exemption, but some funds may qualify for a reduced 5% corporate income tax rate. 5.4 Minimum Capital Requirement An s.r.o. requires a minimum registered capital of less than EUR1, while a joint-stock company requires a minimum registered capital of approximately EUR80,000, and an SE requires a minimum registered capital of EUR120,000. 5.5 Applicable Governance Requirements Limited Liability Company The s.r.o. has the simplest governance model. Its core bodies are the general meeting and one or more executives as the statutory body, while a supervisory board is optional. Joint-Stock Company (a.s.) and SE Both the a.s. and the SE have more complex gov - ernance structures. An a.s. may choose between a dualistic model (general meeting, board of directors, supervisory board) and a monistic model (general meeting and administrative board). The SE follows a similar structure but is governed primarily by European law, supplemented by national rules. A key difference is that employee involvement must be addressed before the SE is registered, which typically makes its governance framework more com - plex than that of a standard Czech SPV.
The level of annual entity maintenance and account - ing compliance costs is not determined solely by the legal form of the vehicle, but rather by the nature and complexity of its activities. Although, as a general observation, a limited liability company will typically involve lower ongoing costs than a joint-stock company or an SE, it would be mis - leading to suggest that meaningful conclusions can be drawn on the basis of legal form alone. In practice, costs are driven by a range of factors, including the volume and complexity of transactions, the size and composition of the real estate portfolio, financing arrangements (in particular, the presence of external debt), any cross-border elements and appli - cable regulatory requirements, including audit obli - gations. As a result, annual maintenance costs may vary considerably even among entities of the same type, and no standardised benchmark can be reliably applied. 6. Commercial Leases 6.1 Types of Arrangements Allowing the Use of Real Estate for a Limited Period of Time The use of real estate for a limited period may be structured through a range of legal arrangements, both contractual and proprietary in nature. The most common is a lease, under which a tenant is granted the right to use the property for an agreed purpose and term in exchange for rent. In the context of agri - cultural land or business undertakings, a usufructuary lease further entitles the user not only to use the asset but also to derive profits from it. Beyond purely contractual arrangements, Czech law also recognises rights in rem recorded in the Cadas - tral Register. A prominent example is the superficies right, which allows a person to construct and own a building on land owned by another for a period of up to 99 years. Finally, the use of real estate may also arise from ease- ments, such as rights of way or usufruct rights, which
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