Comparative legal analysis of associations laws and regimes in the EU. Country Report: Czech Republic
In the Czech Republic the connotation of the term association asociácie is very broad. Depending of the nature of associations, they could exist in one of the two following forms: established on “personal basis” (associating persons) or on a “property basis” (accumulating assets). Several legal forms are called associations (asociácie): corporates/association spolky, institutes ustavy; foundations and endowment funds nadace a neinvestiční fondy, trade unions (odborove organizace), employer organizations (odbory zamestnavatelu) and international organizations (medzinárodní organizace ).
However, despite that the term is used for a variety of entities, corporates/association spolky is the legal form which overlaps most with the legal form of association in the rest of the EU Member States.
A primary source of law is the Constitution of the Czech Republic (article 20 of the Charter of Fundamental Rights and Freedoms). The Czech Civil code regulates in detail the legal status of all existing forms of associations : corporates/associations spolky § 243-247; foundations - §306-393; endowment Funds - §394-401.
According to the Civil code, the associations in the Czech Republic are legal entities that voluntarily associate persons with a common interest. The main bodies of the associations are: the supreme authority, the statutory body, the arbitration committee, the control commission.
According to The Court Fees Act1 n.549/1991, the following administrative fees apply2 : request for registering of an association: 700 CZK (EUR 28,51) 3; modification or completing of information: 1000 CZK (EUR 40,72)4. The members of the associations can carry out supplementary economic activities only if they are related to the subject of their main activity. Moreover, they must use the revenues gained from their activity for achieving the goals determined by the statute or the constituting act5.
The Income Tax Act exempts associations from taxation which concerns their non-business activities6 , different forms of reduction of the tax base of the associations exists as well.7 The associations are exempted from all tax obligations related to contributions received in the areas defined by their statute as their main purpose. Furthermore, the exemption is also applicable to grants received on the basis of international treaties.
In 2021, according to the Regional Volunteering Centre of Liberec8 , the number of corporates/associations spolky was 9666. 9 The estimated number of members of the corporates/ associations spolky was at least 30,000 people (2021)10. According to the statistics published by the Czech National Institute of Statistics, the main activities covered within the non-profit sector in 2020, part of which are also the corporates/associations11 are: culture, advertisement, recreation (41 281 entities); education (36 321 entities); health and social services (29 112 entities).
According to the Regional Volunteering Center of Liberec12 ,, the total economic value of non-profit organization's activities was 365,761,124 EUR in 2018.13 . The economic weight according to the same source is 6 % of the total GDP.
In 2018, there were a total of 117 000 employees and 37 455 volunteers engaged in non-profit organizations . 14
1.Definition, types of associations and characteristics
2.Sources of law founding associations
3.Formation requirements and constitutive acts and elements
8.Definitions of public interest
10.Economic activities permitted
11.Governance, operating rules and bodies
14. Resources and assets management
6.Share between voluntary and paid work
In the Czech Republic the connotation of the term association asociácie is very broad. According to the nature of associations, they could exist in one of the two following forms: established on a “personal basis” (associating persons) or on a “property basis” (accumulating assets). Several legal forms are called associations (asociácie): corporates/association spolky, Institutes ustavy; foundations and endowment funds nadace a neinvestiční fondy, trade unions (odborove organizace), employer organizations(odbory zamestnavatelu) and international organizations (medzinárodní organizace ).
Associations are legal entities that voluntarily associate persons (personal basis) with a common interest (group of individuals who come together for certain purposes). Possible examples are sports clubs, hunting associations or other organizations with various public benefit goals, such as education. The minimum number of persons required to establish an association is three. Members can be natural or legal persons. The associations can not conduct business in the area of its main activity, just in a secondary area.
In order to highlight the differences in the characteristics of other important forms also called with the generic term associations asociácie, we include a brief description of foundations and endowment funds nadace a neinvestiční fondy. These legal entities are created by accumulation of assets for a specific purpose (property basis). The foundation may conduct business only as a secondary activity, unless the founder has excluded this in the foundation charter.
A primary source of law is the Constitution. According to the article 20 of the Charter of Fundamental Rights and Freedoms of the Constitution of the Czech Republic:
„(1) The right of association is guaranteed. Everybody has the right to associate together with others in clubs, societies, and other associations.
(2) Citizens also have the right to form political parties and political movements and to associate therein.
(3) The exercise of these rights may be limited only in cases specified by law, if it involves measures that are necessary in a democratic society for the security of the state, the protection of public security and public order, the prevention of crime, or the protection of the rights and freedoms of others.
(4) Political parties and political movements, as well as other associations, are separate from the state.“15
Part of the legal base of associations is stipulated in §20 of Civil Code n.89/2012 (came into force on 01.01.2014). § 20 covers the liability of the associations.16 Moreover, the Czech Civil code regulates in detail the legal status of all existing forms of associations :
Corporates/associations § 243-247;
Foundations - §306-393;
Endowment Funds - §394-401.
Social corporations - Law on Commercial Companies n. 90/2012
Others (special) laws:
Law of Income Tax n. 586/1992
Volunteer Service Act n. 198/1992
The Lotteries Act n.202/1990
The Accountancy Act n.563/1991
Law on the Public Registry of Natural and Legal persons n.304/2013
Public Collections (Regulation) Act n. 117/2001
As stated in the Constitution, the Civil Associations Act and the Civil Code, Czech citizens enjoy the freedom of association. They can establish corporations, corporates societies, unions, institutes, movements or others different associations. Also, legal persons can join an association.
The first step in the establishment of an association is the registration. In order to form an association, the founders must submit a request for registration to the Registration Court (under the remit of the Ministry of Interior). The request must be accompanied by the statute of the association which must contain the following elements: association’s name, registration office, the goals and means for their achievement, the powers of the different bodies of the association, the rules regarding the organizational unities and the principles of their financial management. The founders must determine the statutory body of their association as well. The registration request must be submitted by at least three citizens. Once the association is registered, it starts to exist legally.
Associations must be registered in order to start to exist legally. The registration requirements are common to all legal entities and are laid down in the Civil Associations Act and the Civil Code. A registration request must be submitted by at least three natural persons. This request must be signed by a preparatory committee. The statute of the association17 must be attached to the application. The registration request must contain information about the main decision-making body of the association such as for example the General Assembly. The following elements must be included too: association’s name, registration office, goals and means for their achievement, powers of the different bodies of the association, the rules regarding the organizational units and the principles of their financial management. The registration request must be addressed to the relevant Court of Registration.
According to The Court Fees Act18 n.549/1991 the following administrative fees apply in the Czech Republic:19
Request for first registering of an association: 700 CZK (EUR 28,51) 20.
Modification of a document or additional information 1000 CZK (EUR 40,72)21.
As stipulated in § 20 of the Civil Code, a special law (for each legal association form) determines if the concrete association shall dispose of its rights and obligations (liability). 22In the same way, its members (natural persons) also possess these rights and obligations and are legally responsible for their actions.
According to the Civil Association Act, all rights and obligations of members of the Association are determined by the statutes. In general, the members of an association are liable together to respect and accomplish all the obligations that they have in relation to a third party (joint liability). All the properties that the members gain from their activities become subsequently part of the property of the association. No one can be forced to become a member of an association and all request for a resignation must be accepted. All members can perform another economic activity if it`s only secondary and is performed in line with the main objectives of the association.
Due to the fact that since the adoption of the new Civil Code in 2014 all civil associations became automatically corporates/associations spolky, many associations must modify their statutes and complete their profiles in the Public Register.23
According to the Civil Code, the associations in the Czech Republic are legal entities that voluntarily associate persons with a common interest. Legal personality is acquired upon registration.
According to the Civil Code, the public benefit association is a legal entity which contributes to the general welfare of the society by performing its activities.24
The Non-Profit Legal Entities Act lists the following categories of social services:
health services;
social aid and humanitarian care;
development and protection of cultural and spiritual values;
human rights protection;
education;
science;
environment;
employment;
housing25
In order to join an association, a new member must send a written request to the executive body of the legal entity. The membership in the association is voluntary, every member must have the right to participate in the management of the association, to be informed about its activity, as well as to enjoy equal access to its property. In addition, all members are required to make financial contributions.26
The reasons for termination of a membership are :
expressed unilateral will;
death;
exclusion;
dissolution of the organization;
liquidation of the organization;
non-payment of annual membership fee/contribution27.
The members of the associations can carry out supplementary economic activities only if they are related to the their main activity. Moreover, they must use the revenues gained from their activity for achieving the goals determined by the statue or the constituting act.28 However, profit distribution is prohibited by law. The members can initiate another economic activity, if it is secondary. In addition, it must be in line with the main objectives of the association.
According to the Civil Code the corporates/associations have the following governance structure:
Supreme Authority
The statute determines which organ of the corporate/association spolky is its supreme authority. Some of its competences include:
taking decisions about the amendments of the statutes;
determinig the main activities and purposes of the corporate;
evaluating the activity of the other organs of the corporate;
deciding about dissolution, liquidation or transformation of the corporate.
Statutory body
If the statute does not contain provisions with regards to its supreme organ, its competences will pass over to the member’s meeting, which is convened by the statutory organ at least once a year.
Arbitration Committee
It arbitrates the potential conflicts between corporate’s members or between
the members and the corporate itself. This body also examines the reasons of the decision about removal of the corporate's members.
Control Commission
This organ has the right to control all corporate’s documents; it also controls if the members of the corporate are acting in accordance with the statute. It must have at least three members (if the statute does not determine explicitly the
total number of its members).
The organizational body system of associations may be different for each category. As an example:
Foundations: administration board, supervisory board, inspector;
Institutes: director, administration board.
Associations that pursue public benefits purposes are supervised by the state. All associations that operate in the Czech Republic must be registered. All registrations pass through the registration process by the register courts, which are established in every district.29 Once the association has been registered, this information will be administrated by the Ministry of Interior, which is the general register for all existing associations. This register helps the Government to keep a track of the information concerning the active associations.
The main body of state's supervision is the Counsel of Non-Profit Organizations. It has the following responsibilities:
supervises if associations work towards achieving their purposes and provide the non-profit services for which they have been created originally;
evaluates the content of the annual reports published by associations;
drafts annual report summarising the results of the activities of the associations;
closely cooperates with the Ministries and regularly evaluates the activities of all associations;
examines the results achieved and provides recommendations;
decides on financial fines or penalties;
can suspend or cancel the existence of an association;
evaluates the transparency of existing legal rules and that of the state’s legal system30
The Government of the Czech Republic directly or indirectly supports associations through tax, credit interest, customs and other financial and economic benefits. It works in close cooperation with the secondary legal bodies (the Counsel for the non-profit organizations and Registration Courts).
Once a year all registered associations are required to perform an audit and publish their annual report concerning their activities and their final accounts.31 These obligations are stipulated in the Civil Code and in the Accounting Law n.341/2005.
According to the Accounting Law, associations are obliged to submit their annual activity report and their financial statement to the registration court electronically until 30th of July of every year. The report must contain the activities undertaken during the year, their relevance with regards to the strategic priorities of the organization, the amount of donations received, information about the rest of the income obtained, the overall balance of the association, and others.32
The asset management is determined by the statute of the association. Each association can define in its statute a body that will be in charge of governing the assets of the association during the period of its existence.
In general, associations are financed by the following main types of resources:
income from main non-profit activity;
income from membership;
income from donations (from natural persons or legal entities);
income from heritage legacy;
income from economic activities (after taxation).
Associations can also receive income from the state budget. The revenues of associations are taxed (according to existing taxation laws) and they cannot be used to support political parties or movements.
The association ceases to exist on the day of its removal from the register. Before that, it must pass through a process of annulation (with or without liquidation).
Liquidation is not necessary if the association’s property is transferred to another existing association (after their fusion or unification). A liquidation balance should pass over to another non-profit organization.
The liquidator of an association is a natural person designated to perform the liquidation process. Liquidator has the right to be remunerated. The charges used for liquidation are covered with the property of the association. The liquidation process is regulated under the general rules of the Civil Law33 and the special rules concerning the different types of association (for example in §269 - Liquidation of the Corporates).34
Fundamental decisions related to the association’s functioning are taken by the body defined by its statutes. Among the key powers of the designated body are:
decides on amendments to the statute
nominating and removing members;
approving the association’s budget;
approving the annual report of the association;
decides on the dissolution, liquidation or transformation of the association;
nominates and removes the director and determines the amount of its salary;
nominates and removes the members of Administration Board;
The taxation regimes in the Czech Republic concerning the associations are governed by the following laws:
Law on Income Tax n. 586/1992 (amended in 2006);
Law on Immovable Property tax n.338/1992;
Law on Highway Tax n. 190/1998;
Law on Value Added Tax n.335/1999 amended in 2004);
Law on Inheritance, Donation and Immovable Property Tax n.357/1992.
The Income Tax Act exempts associations from taxation which concerns their non-business activities35 , reductions of the tax base of the associations are also possible on the basis of this legal act.36
Associations are exempt from all tax obligations related to contributions received in the areas defined by their statute as their main purpose. Furthermore, the exemption is also applicable to grants received on the basis of International Treaties.
In 2021, according to the database of the Regional Volunteering Centre of Liberec37 , the number of corporates/associations is 9666. 38
In 2021, the estimated number of members of the corporates/ associations is at least 30,000 people39.
According to the statistics published by Czech National Institute of Statistics, the main activities covered within non-profit sector in 2020, part of which are also the corporates/associations (the represent around 7 % of all the non-profit associations) are:40
culture, advertisement, recreation: 41 281 entities;
education - 36 321 entities;
health and social services - 29 112 entities.
According to the Regional Volunteering Center of Liberec41 , the total economic value of the non-profit organization's services was 365,761,124 EUR in 2018.42 .
In 2018, the economic weight of the associations was 6 % of the total GDP.
According to the Regional Volunteering Center of Liberec“ , there were a total of 117 000 employees and 37 455 volunteers engaged in non-profit organizations in 2018. Compared to the previous years, the total number of volunteers has decreased. In 2015, there were 57 426 volunteers aged between 15 and 26 years, who contributed to Czech non - profit organisations.“43
No data available.
Charte of Fundamental Rights and Freedoms. available at: https://www.usoud.cz/fileadmin/user_upload/ustavni_soud_www/Pravni_uprava/AJ/Listina_English_version.pdf
Civil Code, available at: https://www.zakonyprolidi.cz/cs/2012-89
Civil Associations Act. available at https://www.zakonypreludi.sk/zz/1990-83
Law on the Public Registry of natural and legal persons n.304/2013, available at : https://www.zakonyprolidi.cz/cs/2013-304
Law on Non-Profit Organizations providing the general public benefits services, available at : https://www.zakonypreludi.sk/zz/1997-213
Accounting Law n.341/2005, available at: https://www.zakonyprolidi.cz/cs/1991-563
Law on income tax n. 586/1992, available at: https://www.zakonyprolidi.cz/cs/1992-586
Czech Supreme Court’s decision 27 Cdo 3603/2018 from 30.06.2020, available at: https://profipravo.cz/index.php?page=article&id_category=67&id_article=262492&csum=6a593747
UniversityThesis - I.KOSTELOVÁ, Srovnání podmínek pro vývoj…….po rozpadu ČSFR, p.31. Available at: https://dspace.cuni.cz/bitstream/handle/20.500.11956/5637/120004246.pdf?sequence=1
University thesis - V.DOLEJŠALOVÁ, - Příspevkové organizace , 2018. Avalaible at: https://theses.cz/id/6z8zkt/
https://bezvavejska.cz/dnesni-pravni-formy-neziskovych-organizaci-no/
https://www.isamosprava.sk/pravo/samospravne-organy-a-organizacie/pravnicke-osoby-obce/
https://www.vlada.cz/cz/pracovni-a-poradni-organy-vlady/rnno/zakladni-informace-767/
https://www.vlada.cz/cz/pracovni-a-poradni-organy-vlady/nno/zakladni-informace-767/
https://www.vlada.cz/assets/ppov/rnno/dokumenty/studie_bachmann_pro_web.pdf
https://www.22hlav.cz/povinnost-auditu-zverejnovani-u-nestatnich-neziskovych-organizaci-od-112016
https://neziskovky.kr-zlinsky.cz/clanky/zverejneni-ucetni-zaverky
https://vdb.czso.cz/vdbvo2/facesindex.jsfpage=vystupobjekt&f=TABULKA&z=T&skupId=3769&katalog=30831&pvo=ORG01&pvo=ORG01&str=v386&v=v7__KODAKT__571__1
State Policy with Respect to Non-Governmental Organizations for the Years 2015 – 2020, https://www.vlada.cz/assets/ppov/rnno/dokumenty/statni_politika_EN.pdf.
Annex to The Court fees Act, available at: https://www.mesec.cz/zakony/zakon-o-soudnich-poplatcich/uplne/#p1
https://www.businessinfo.cz/navody/zapis-do-obchodniho-rejstriku-ppbi/5/
Supplement n.39-1b) of the Annex to The Court fees Act, available at: https://www.mesec.cz/zakony/zakon-o-soudnich-poplatcich/uplne/#p1
Supplement n.39-1c) of the Annex to The Court fees Act, available at: https://www.mesec.cz/zakony/zakon-o-soudnich-poplatcich/uplne/#p1
The constituting act is an agreement adopted by the founders of the association. The statue is a legal document, which defines the internal organization of the association (e.g. economics activities, bodies etc.)
§18-19 of Law on income tax n. 586/1992, available at: https://www.zakonyprolidi.cz/cs/1992-586
§20 of Law on income tax n. 586/1992, available at: https://www.zakonyprolidi.cz/cs/1992-586
https://lk.regionalnidobrovolnickecentrum.cz/subdom/lk/jak-jsou-v-cesku-zmapovany-neziskovky-a-jak-mezi-nimi-najit-dobrovolnickou-organizaci/
https://vdb.czso.cz/vdbvo2/faces/index.jsf?page=vystup-objekt&f=TABULKA&z=T&skupId=3769&katalog=30831&pvo=ORG01&pvo=ORG01&str=v386&v=v7__KODAKT__571__1
Estimated on the basis of the number of members and the minimum number of entities.
they represent around 7 % of all the non-profit associations
https://lk.regionalnidobrovolnickecentrum.cz/subdom/lk/jak-jsou-v-cesku-zmapovany-neziskovky-a-jak-mezi-nimi-najit-dobrovolnickou-organizaci/
https://lk.regionalnidobrovolnickecentrum.cz/subdom/lk/jak-jsou-v-cesku-zmapovany-neziskovky-a-jak-mezi-nimi-najit-dobrovolnickou-organizaci/
https://national-policies.eacea.ec.europa.eu/youthwiki/chapters/czech-republic/24-youth-volunteering-at-national-level
Article 20 of Charte of Fundamental Rights and Freedoms. available at: https://www.usoud.cz/fileadmin/user_upload/ustavni_soud_www/Pravni_uprava/AJ/Listina_English_version.pdf
§20-1 of Civil Code, available at: http://zakony.centrum.cz/obcansky-zakonik-novy/cast-1
The term “statute” can be used. (However, in Czech language it exists in plural- Štatúty).
Annex to The Court fees Act, available at: https://www.mesec.cz/zakony/zakon-o-soudnich-poplatcich/uplne/#p1
https://www.businessinfo.cz/navody/zapis-do-obchodniho-rejstriku-ppbi/5/
Supplement n.39-1b) of the Annex to The Court fees Act, available at: https://www.mesec.cz/zakony/zakon-o-soudnich-poplatcich/uplne/#p1
Supplement n.39-1c) of the Annex to The Court fees Act, available at: https://www.mesec.cz/zakony/zakon-o-soudnich-poplatcich/uplne/#p1
§20-1 of Civil Code, available at: http://zakony.centrum.cz/obcansky-zakonik-novy/cast-1
https://www.epravo.cz/top/clanky/obcanske-sdruzeni-versus-spolek-dle-noveho-obcanskeho-zakoniku-100418.html
§146 of Civil Code, available at: http://zakony.centrum.cz/obcansky-zakonik-novy/cast-1
The constituting act is an agreement adopted by the founders of the association. The statue is a legal document, which defines the internal organization of the association (e.g. economics activities, bodies etc.)
There are several register courts. Every district possesses its own register court (e.g. Registration Court of Brno).
https://www.vlada.cz/cz/pracovni-a-poradni-organy-vlady/nno/zakladni-informace-767/
https://www.22hlav.cz/povinnost-auditu-zverejnovani-u-nestatnich-neziskovych-organizaci-od-112016
https://neziskovky.kr-zlinsky.cz/clanky/zverejneni-ucetni-zaverky
§187-209 of Civil Law, available at : http://zakony.centrum.cz/obcansky-zakonik-novy/cast-1
§269 of Civil Law, available at: http://zakony.centrum.cz/obcansky-zakonik-novy/cast-1
§18-19 of Law on income tax n. 586/1992, available at: https://www.zakonyprolidi.cz/cs/1992-586
§20 of Law on income tax n. 586/1992, available at: https://www.zakonyprolidi.cz/cs/1992-586
https://lk.regionalnidobrovolnickecentrum.cz/subdom/lk/jak-jsou-v-cesku-zmapovany-neziskovky-a-jak-mezi-nimi-najit-dobrovolnickou-organizaci/
https://vdb.czso.cz/vdbvo2/faces/index.jsf?page=vystup-objekt&f=TABULKA&z=T&skupId=3769&katalog=30831&pvo=ORG01&pvo=ORG01&str=v386&v=v7__KODAKT__571__1
Estimated on the basis of the number of members and the minimum number of entities.
https://vdb.czso.cz/vdbvo2/faces/index.jsf?page=vystup-objekt&f=TABULKA&z=T&skupId=3771&katalog=30831&pvo=ORG03&pvo=ORG03&str=v386&v=v7__KODAKT__571__1
https://lk.regionalnidobrovolnickecentrum.cz/subdom/lk/jak-jsou-v-cesku-zmapovany-neziskovky-a-jak-mezi-nimi-najit-dobrovolnickou-organizaci/
https://lk.regionalnidobrovolnickecentrum.cz/subdom/lk/jak-jsou-v-cesku-zmapovany-neziskovky-a-jak-mezi-nimi-najit-dobrovolnickou-organizaci/
https://national-policies.eacea.ec.europa.eu/youthwiki/chapters/czech-republic/24-youth-volunteering-at-national-level