CZECH REPUBLIC Law and Practice Contributed by: Matěj Manderla, Jan Wagner, Ivo Hartmann and Aleš Malach, Tenacta, advokátní kancelář, s.r.o.
may be established either in favour of another prop - erty or a specific individual. 6.2 Types of Commercial Leases Commercial leases are not divided into specific statu - tory type. By contrast, a lease of residential premises is specifically regulated and subject to a more strin - gent legal framework. 6.3 Regulation of Rents or Lease Terms The regulation of lease terms differs fundamentally between residential and commercial leases. Commercial leases are governed by the principle of freedom of contract. The parties are generally free to negotiate their rights and obligations without signifi - cant statutory limitations, and legal provisions apply only subsidiarily where the agreement is silent. By contrast, residential leases are subject to a higher degree of regulation. The Civil Code contains a num - ber of mandatory provisions designed to protect the tenant as the weaker party, which limit the parties’ ability to deviate from the statutory framework, par - Commercial leases are almost always concluded for a fixed term. Office and standard retail leases typi - cally last three to five years, while larger industrial or logistics leases often run for ten years or more. It is also common to include an option for the tenant to extend the lease. Maintenance and Repair Commercial leases typically transfer most day-to- day responsibilities to the tenant. The tenant is usu - ally responsible for routine maintenance, all internal repairs, servicing of installations and equipment and ensuring that all required statutory inspections are carried out within the leased premises. The landlord remains responsible for the structural parts of the building and common areas, while the related costs are typically allocated to tenants on a pro rata basis through service charges. ticularly to the tenant’s detriment. 6.4 Typical Terms of a Lease Length of Lease Term
Rent and service charges are usually paid monthly or quarterly in advance. 6.5 Rent Variation In practice, especially in the commercial sector, rent rarely stays the same throughout the lease term. It is standard to include indexation clauses, which increase the rent annually in line with inflation, either accord - ing to the European Harmonised Index of Consumer Prices (HICP) (for euro leases) or the Czech inflation index (for Czech koruna leases). At the beginning of a lease, landlords often offer incen - tives such as rent-free periods or gradually increasing rent to help tenants with initial fit-out costs. In the retail sector, particularly in shopping centres, leases often include a turnover rent mechanism, where the rent consists of a fixed base amount and a variable part based on the tenant’s revenues. In residential leases, if no inflation clause is agreed, the landlord may still increase the rent, but only within statutory limits. 6.6 Determination of New Rent The mechanism for determining and adjusting rent is governed primarily by the provisions agreed between the parties in the lease agreement. In commercial leases, rent is usually determined by a pre-agreed formula, such as inflation indexation or a percentage of turnover. In residential leases, the par - ties can also agree on how the rent will increase. If the contract does not address this, the law provides a fallback mechanism. The landlord may propose a rent increase up to the usual market level in the area, but the total increase over three years must not exceed 20%. If the tenant does not agree within two months, the landlord may ask a court to decide. The court will then determine the new rent based on market conditions. 6.7 Payment of VAT Under the Czech Value Added Tax Act, the lease of real estate is generally treated as VAT-exempt without entitlement to deduct input VAT.
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