Trade Inspection and Penalties (Sections 60a-62 of the Trade Licensing Act)

The Trade Licensing Office does not only check whether you have the "paperwork" to do business. It also examines how you fulfil your obligations during the operation of a trade. This article gives you a clear summary of who carries out the inspection, what offences the law recognises, and how high the fines threaten under Sections 60a to 62 of Act No. 455/1991 Coll. (the Trade Licensing Act).

What the law says

Trade inspection (Section 60a). The inspection is carried out, within the scope of their competence, by the Trade Licensing Offices. They monitor "whether and how the obligations are fulfilled" as laid down by the Trade Licensing Act, by special regulations relating to trade licensing, by the conditions imposed in the decision on a concession, and the obligations in the provision of services under Section 69a. The inspection proceeds in accordance with the Inspection Code - Act No. 255/2012 Coll. If the office discovers a breach of obligations regarding the marking of spirits or tobacco products, it informs the excise duty administrator.

Cooperation between offices (Section 60b). The law allows an inspection to be carried out by a Trade Licensing Office other than the locally competent one. This is practical for entrepreneurs who have business premises in several municipalities - the office at the location of the business premises may carry out the inspection.

Offences of natural persons (Section 61). These target persons who are not (duly) entrepreneurs. In addition to partial offences (e.g. a false statutory declaration of a clean criminal record - a fine of up to CZK 100,000), the key one is unauthorised business activity. Anyone who carries on an activity that constitutes a trade without a licence commits an offence for which the office will impose a fine of:

• up to CZK 500,000 for an unqualified (free) trade,
• up to CZK 750,000 for a craft or regulated trade,
• up to CZK 1,000,000 for a licensed (concession) trade.

Offences of legal persons and natural persons doing business (Section 62). These concern those who already are entrepreneurs but breach their obligations - for example, they fail to appoint a responsible representative, fail to mark the business premises, fail to prove the legal grounds for using the business premises, fail to keep the prescribed records, or breach the conditions of a concession. The fines are graduated according to seriousness: up to CZK 10,000, 20,000, 50,000, 100,000, 500,000, and up to 1,000,000. The strictest rates (up to CZK 1,000,000) apply to the most serious breaches (e.g. failure to prove the manner of acquisition of goods or non-compliance with the conditions for marking); the most lenient rate (up to CZK 10,000) targets failure to notify the continuation of the operation of a trade after its interruption.

Interpretation and explanation

It is important to distinguish between the two sections. Section 61 applies to "non-entrepreneurs" - typically to a person who actually does business but has no licence for it. Section 62 applies to duly registered entrepreneurs who "merely" breached some obligation. That is why, in the case of unauthorised business activity, the penalty is tied to the type of trade: the more demanding the field (concession), the higher the cap on the fine.

The amounts given are upper limits. When setting the amount of the fine, the office takes into account in particular the extent, seriousness, manner, duration, and consequences of the unlawful conduct. A minor and promptly remedied lapse therefore does not usually lead to the maximum fine.

As for the course of the inspection: the inspector identifies themselves with an authorisation and has powers under the Inspection Code - for example, to enter business premises, inspect documents, and request explanations. As the inspected person, you have the obligation to provide cooperation; failure to provide it is separately punishable under the Inspection Code. A report is drawn up from the inspection, against the findings of which objections may be raised.

What to watch out for: an administrative penalty does not preclude criminal liability. On a larger scale, unauthorised business activity may fulfil the elements of a criminal offence. A fine from the Trade Licensing Office therefore need not be the only consequence.

Practical implications and examples

Example 1 - business "on the quiet". Mr Novak starts renovating flats for a fee but keeps putting off notifying the trade. Trade and construction activities constitute a craft or regulated trade - he faces a fine of up to CZK 750,000 under Section 61, even retroactively for the period without a licence.

Example 2 - unmarked business premises. A company has a brick-and-mortar shop, but the entrance lacks the mandatory marking (name, company ID number, opening hours for consumers). This is an offence under Section 62 with a fine of up to CZK 100,000, often addressed first by a call to remedy the situation.

Example 3 - responsible representative. A company operates a regulated trade, but after the departure of its professionally qualified representative it fails to fill the role in time. Failure to ensure that the activity is carried out by a professionally qualified person is among the offences under Section 62, with a fine of up to CZK 100,000.

Example 4 - inspection without notice. An inspector arrives at the business premises and presents an authorisation. The entrepreneur is obliged to allow the inspection and present documents. Refusing cooperation only makes the situation worse - it will not spare you the inspection and will add a further penalty.

Related context

Before you can even be inspected as an entrepreneur, you need a trade licence. You will find the practical procedure in the guide How to start a trade. To find out which category (unqualified/free, craft, regulated, licensed/concession) your field falls into - and thus which penalty rate would apply to unauthorised business activity - use the trade catalogue.

Thematically related are above all the entrepreneur's obligations (responsible representative, marking of business premises, keeping records), the breach of which is penalised precisely by Section 62, as well as the relationship between administrative and criminal sanctions for unauthorised business activity. Verify the precise and always up-to-date wording of Sections 60a to 62 in the full text of Act No. 455/1991 Coll.