Investing in Czech Property - A "How To" Guide
Investing in Czech property is a far sinmpler proposition for investors than it was a few years ago.
Whereas you used to have to set up a Czech SRO (company) in order to buy property as a foreigner, any EU citizen can now obtain an EU Card and be able to invest in property.
SO WHAT'S THE DIFFERENCE?
Buying a Limited Company (SRO)
This was the original buying method for foreign investors and still is for non-EU citizens. It is still used for a number of reasons.
There may be tax implications for individuals buying as a limited company. This depends on individual circumstances and a professional, qualified accountant would be able to explain this in more detail.
It is essential to buy a limited liability company, which is a newly-formed company known as an SRO. This is a brand new company, off-the-shelf, so there is no chance that you may be inheriting a bad credit history.
The cost is usually around CZK39,000 + VAT, but there are additional expenses to consider. These include the production of annual accounts for which you need to budget around CZK12,000 for accountancy fees.
If you wish to sell the property, then it can be sold as part of the limited company or you can keep the company and sell the property as an asset.
EU Card
EU Cards are seen as the most popular choice as they are relatively straightforward in comparison to buying a company. Obviously, this route is only available to EU citizens.
EU cards are free to EU citizens and are basically a simple plastic ID Card, which is valid indefinitely. If you are buying a property in joint names, or in a group, then it is essential that every party named on the mortgage has an EU Card.
A government organisation - the Foreign Police - oversees all immigration paperwork and is responsible for issuing EU Cards.
It is necessary to attend its office in Prague in person to obtain your EU Card.
The turnaround for applications can vary from one day to 60 days. Currently, as of January 2008, the turnaround time is 30 days.
If you cannot hand in your application and receive your card in one day then you will have to make a return journey to collect your EU Card. It is possible to appoint a power of attorney to submit your application but you must attend in person to collect the EU Card.
There have been reports that some companies are offering, for an additional fee, to arrange the collection of an EU card without the applicant attending the Foreign Police's office in person. This is illegal and carries a sentence of up to five years and/or a fine.
Along with a completed application card you will need the following:
- Original passport
- Three passport pictures
- Original European health insurance card (formerly the E111 card)
- A purchase contract or future purchase contract signed by the seller and the buyer
- Proof of accommodation
THEN WHAT?
Once you have your EU Card or your Czech SRO you are free to invest in Czech property for sale. There are, however, some buying costs you need to be aware of, including those of the EU Card or Czech SRO.
| Fees (Estimated) | |
|---|---|
| EU Card | CZK 19,000 + VAT |
| SRO Limited Company | CZK 39,000 + VAT |
| Mortgage Arrangement Fee | Between 0.7% to 1% of the mortgage amount |
| Property Valuation Fee | CZK 6,000 |
| Land Registry Fee | EUR 30 |
| Legal Fees | CZK 30,940 |