CZECH REPUBLIC Trends and Developments Contributed by: Filip Čabart, Štěpán Černý, Filip Šperl and Lukáš Janečka, HAVEL & PARTNERS
EU law requirements In contrast to favourable financing, the applicants must comply with a wide range of obligations arising under EU and national legislation. These include: • following the principle of “do no significant harm” in line with environmental standards; • complying with periodic reporting requirements; • meeting publicity obligations regarding EU financ- ing; and • avoiding any overlapping public support for the same eligible expenses. To ensure compliance, beneficiaries must allow access to their project sites and headquarters for inspections by the national authorities, the European Commission Applicants benefiting from the subsidised loan must also fulfil a number of obligations that directly affect the properties developed under the programme, including: • ensuring tenant eligibility criteria (eg, tenants must not already own apartments and must fall within a prescribed income category); • concluding lease agreements for fixed terms of one to two years; • setting rent at a maximum of 90% of the market value for comparable apartments in the area; • limiting rent increases to the annual rate of infla- tion; and and other authorised bodies. Property-related obligations • retaining ownership of properties developed under the programme, in which the rental apartments are located. In order to achieve project objectives, beneficiaries must adhere to these obligations for at least 20 years from the start of the apartment lease. These obliga- tions are therefore to some extent independent of the repayment of the loan. While this long-term commit- ment secures affordability, investors may adjust their exit strategy starting on the third anniversary of the lease of the last apartment, subject to approval by the Czech National Development Bank for any proposed transfer.
Conclusion The programme has the potential to improve hous- ing affordability in the Czech Republic. For develop- ers and investors, it offers access to long-term, low- interest financing under favourable conditions. Last but not least, its major advantage is that any legal entity established in the European Union that meets the programme’s criteria may apply. However, the applicants must carefully assess the compliance and long-term operational obligations before committing, as the rent caps, tenant eligibil- ity rules and the 20-year affordability requirements directly impact project returns and asset management strategies. Sanctions for Failing to Register the Beneficial Owner (UBO) Suspended Following Decision by Czech Supreme Court On 25 August 2025, the Supreme Court of the Czech Republic ruled that the failure to register UBOs in the Czech Beneficial Ownership Register, or to keep the data up to date, cannot be penalised with fines imposed by administrative authorities. This is because the Czech Act on the Registration of Beneficial Own- ers (the “Czech UBO Act”) does not correctly imple- ment the EU Anti-Money Laundering Directive (the “AML Directive”). The circumstances leading to this decsion This follows a 2022 decision by the Court of Justice of the European Union, which ruled that a provision of the AML Directive granting the general public unre- stricted access to beneficial ownership register data interfered with UBOs’ rights to private life and data protection (under Articles 7 and 8 of the Charter of Fundamental Rights of the European Union, respec- tively). The Court argued that, while a company’s fail- ure to comply with the registration obligation does interfere with the legitimate interests of state authori- ties engaged in combating money laundering, these interests alone cannot justify the impermissible inter- ference with the constitutionally protected rights of the company’s beneficial owners. The relevant provision of the AML Directive, which granted unrestricted access to data from the ben- eficial ownership register to the general public, has
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