General Conditions for Operating a Trade (Section 5 and Section 6)

What the Act says

Before you even set out for the Trade Licensing Office, you have to meet the basic entry conditions. The Trade Licensing Act (No. 455/1991 Coll.) addresses them right at the beginning, in sections that stand above the distinction between unqualified (free), craft, regulated and licensed (concession) trades.

Who may do business (Section 5). The Act puts it briefly: "A trade may be operated by a natural or legal person who meets the conditions laid down by this Act." The range of subjects is therefore broad, but not unconditional. For natural persons (typically the self-employed) you must meet the general conditions under Section 6, and for certain trades the special conditions as well (professional qualification). Section 5 also places foreign persons on an equal footing: as a rule they may operate a trade within the territory of the Czech Republic under the same conditions and to the same extent as Czech persons, unless this Act or a special act provides otherwise.

General conditions (Section 6). Here is the core of the whole article. The Act lays down two general conditions for the operation of a trade by natural persons:

• a) full legal capacity, which may be substituted by the court's approval of the consent of the legal representative of a minor to the independent operation of business activity (a reference to Section 33 of the Civil Code),
• b) a clean criminal record.

The Act defines a clean criminal record "negatively", that is, through who does not have one. Under Section 6(2), a person is not considered to have a clean criminal record if they have been convicted by a final judgment of an intentional criminal offence, where that offence was committed in connection with business or with the subject of business that they are applying for or notifying, unless they are regarded as not having been convicted.

How a clean criminal record is proved (Section 6(3)). For citizens of the Czech Republic, a clean criminal record is proved by an extract from the Criminal Records Register. Citizens of another European Union member state and other persons prove a clean criminal record with comparable documents from their country of origin (or, where applicable, with further documents) under Section 6(3) in conjunction with Section 46 of the Act.

Interpretation and explanation

Let us go through the two conditions the way you will need them in practice.

Full legal capacity = as a rule, having reached the age of majority. You acquire full legal capacity upon reaching the age of 18. That is why 18 is informally regarded as the "age for a trade". The Act, however, also takes younger persons into account: if a minor wants to do business, the missing legal capacity may be substituted by the court's approval of the consent of the legal representative. In practice this means that the legal representative grants consent to the independent operation of business activity and the court approves that consent. It cannot be done without the court's approval; the signature of the legal representative alone is not enough.

A clean criminal record is narrower than people think. A common misconception: "I have an entry in the Criminal Records Register, so I can't do business." That is not true. The Act requires several elements to be met at the same time, and only when they all occur together is the clean criminal record condition broken:

1. it is a final conviction,
2. for a criminal offence committed intentionally (negligent offences do not count here),
3. the offence was committed in connection with business or with the subject of business you are applying for,
4. and you are still regarded as a convicted person (the period after which you are regarded as not having been convicted has not yet elapsed).

The key phrase is connection with business. If the criminal offence has no connection whatsoever with business, you do not lose your clean criminal record for the purposes of the Trade Licensing Act. There is also case law of the Supreme Administrative Court on the interpretation of this connection: what matters is not whether the offence is an "economic" criminal offence according to its definition, but whether it has a specific link to the business activity of the given person.

Caution: As soon as the conviction is expunged or another statutory situation arises in which you are regarded as not having been convicted, you meet the clean criminal record condition again. An entry that is "no longer visible" does not bar you from doing business.

Proving it is convenient nowadays. A citizen of the Czech Republic does not have to bring an extract from the Criminal Records Register to the office. The Trade Licensing Office requests it itself in electronic form. This saves both time and the fee. Foreigners have it harder and prove a clean criminal record under Section 6(3) and Section 46 with documents from their home state.

Practical effects and examples

Example 1: A student, 17 years old, wants an e-shop. Honza is a minor and wants to notify an unqualified (free) trade. By himself he does not have full legal capacity. The solution is the consent of the legal representative to the independent operation of business activity, approved by the court. Only with this approval of the court can he notify the trade. His clean criminal record is proved in the standard way.

Example 2: A minor traffic offence. Mrs Nováková received a suspended sentence in the past for a negligent criminal offence in traffic. She wants to set up an unqualified (free) trade (consultancy). Because it was a negligent offence and, moreover, without any connection with business, she meets the clean criminal record condition. The Trade Licensing Office will issue her the trade licence.

Example 3: Conviction for fraud in business. Mr Dvořák was convicted by a final judgment of the intentional criminal offence of fraud committed during his earlier business activity, and he is still regarded as a convicted person. He wants to notify a trade in a similar field. Here lies the problem: all the elements of Section 6(2) are met (intent, final conviction, connection with business). He does not meet the clean criminal record condition until the conviction is expunged.

Example 4: A limited liability company. A clean criminal record is not an issue only for the self-employed. If a responsible representative is appointed for a legal person, the general conditions are assessed for them; for foreign persons, a clean criminal record is also assessed for members of management. Here too it holds that the decisive factors are intent and the connection of any conviction with business.

Common to all cases: the general conditions apply across all types of trades. Whether you are notifying an unqualified (free) trade or applying for a concession (licence), you must always have full legal capacity and a clean criminal record. For an unqualified (free) trade they are in fact the only conditions you have to prove; more on this in the article on types of trades.

Related topics

The general conditions are only the first step. What to move on to next:

• Special conditions (professional qualification). For craft, regulated and licensed (concession) trades, proof of expertise is added to the general conditions (Section 7 et seq.). You will find an overview in the article on types of trades.
• How to do it in practice. The specific procedure for notification, the forms and the fees are described in our guide on how to set up a trade.
• The responsible representative. If you do not meet the qualification requirement yourself, a responsible representative resolves this, but they too must meet the general conditions, including a clean criminal record (Section 11).
• Catalogue of trades. Want to know exactly what you will have to prove for your field? Look it up in the catalogue of trades.

In summary: Section 5 determines who may operate a trade, and Section 6 lays down two entry conditions for natural persons, full legal capacity and a clean criminal record. A clean criminal record is, moreover, tied to an intentional criminal offence committed in connection with business, and for citizens of the Czech Republic the office verifies it itself by means of an extract from the Criminal Records Register.