Creation and Scope of a Trade Licence (Sections 10, 13, 28)

When exactly does your right to do business arise? What happens to a trade when the entrepreneur dies? And how do you tell what you are actually allowed to do within your trade? The answers are provided by Sections 10, 13 and 28 of the Trade Licensing Act (Act No. 455/1991 Coll.). In this article we explain them clearly and with practical examples.

What the Act says

Creation of the licence (Section 10). The Act distinguishes two moments of creation according to the type of trade. Under Section 10(1), the licence to operate a trade arises "for notifiable trades, on the day of notification" (letter a) and "for licensed (concession) trades, on the day the decision granting the concession becomes final" (letter b). If a later date for the creation of the licence is stated in the notification, it arises only on that day. For listed legal entities, an exception applies: the licence arises at the earliest on the day of their registration in the Commercial Register (Section 10(5)). You prove your licence by means of an extract from the Trade Register. The rule in Section 10(7) is also important – a trade licence cannot be transferred to another person.

Continuation upon death (Section 13). Note: the former Section 12 was repealed; the regulation is now contained in Section 13. Under Section 13(1): "If the entrepreneur dies, the following may continue to operate the trade" under the stipulated conditions until the conclusion of the probate proceedings – namely the administrator of the estate (or, where applicable, the executor of the will), the heirs at law as well as the heirs under the will, the surviving spouse or partner (if they are a co-owner of the property used for operating the trade), the insolvency administrator or liquidation administrator, and the trust administrator. Whoever wishes to continue "is obliged to notify this fact to the Trade Licensing Office within a period of 3 months from the date of the entrepreneur's death" (Section 13(2)). The administrator of the estate appointed by the court, as well as a trust administrator, insolvency administrator or liquidation administrator, has a period of 1 month for the notification (Section 13(4)).

Scope of the licence (Section 28). Under Section 28(1), "the scope of a trade licence is assessed according to the subject of business stated in the extract". For an unqualified (free) trade, the licence entitles you to the activities listed in Annex No. 4 to the Act – but only to those fields that you have notified. If, for trades under Annexes No. 2 and 3 (craft and regulated trades, or licensed (concession) trades respectively), operation is conditional on a document issued by a special authority, the scope is defined by that document (Section 28(2)). "In case of doubt about the scope of the licence, the Trade Licensing Office shall decide upon the entrepreneur's request" (Section 28(3)).

Interpretation and explanation

The key practical difference lies in the moment the licence arises. For notifiable trades (unqualified (free), craft, regulated), you can, as a rule, do business immediately on the day of notification. You do not wait for any decision of the office or for the issuance of an extract – the extract is merely proof, not a condition of creation. By contrast, for licensed (concession) trades, you must wait until the decision granting the concession becomes final. For these the state reserves prior consent, because they are higher-risk activities (e.g. transport, weapons, funeral services).

The rule on non-transferability (Section 10(7)) means that you cannot "sell" or give away a trade as a thing. When you take over a business from someone else, you must arrange your own licence.

The regulation on continuation after death (Section 13) addresses the situation in which an otherwise valuable and functioning business would otherwise "go dark" overnight. The Act therefore allows temporary continuation, so that contracts, employees and assets do not fall into a vacuum until the estate is settled. Be careful with the deadlines, however: the notification within 3 months from the date of death is essential. If you miss it, the right to continue ceases and the deceased's licence ends. After the conclusion of the probate proceedings, the person who acquired the property right to the trade may continue even further, again subject to compliance with the notification deadline.

The scope of the licence (Section 28) is the answer to a frequent misunderstanding: a trade is not a "blank cheque" for anything. What you may actually do is determined by the subject of business in the extract. For an unqualified (free) trade, this does not automatically mean all fields from Annex No. 4 – only those you have notified apply.

Practical implications and examples

• You are in a hurry to start. As a self-employed person, you want to start an unqualified (free) trade "Manufacturing, trade and services not listed in Annexes 1 to 3" and issue your first invoice next week. Because it is a notifiable trade, you have the licence as of the day of notification (Section 10(1)) – you can invoice immediately.
• Waiting for a concession. You are planning road freight transport. Here notification is not enough – you must wait for a final decision on the concession (Section 10(1)(b)). If you start earlier, you are doing business without authorisation.
• Death of the entrepreneur – a family business. A father who operated a carpentry workshop dies. The son, as heir, wants to continue in the workshop. He must notify the Trade Licensing Office within 3 months from the date of death (Section 13(2)); he may then run the operation until the conclusion of the probate proceedings. If he himself does not have the necessary professional qualification for the craft trade, he appoints a responsible representative.
• Expanding the activity. You have an unqualified (free) trade notified only for "Wholesale and retail" and you want to add "Accommodation services". That is a different field of Annex No. 4 – you must additionally notify it, otherwise the scope of your licence does not cover it (Section 28(1)).
• Uncertainty about the scope. You do not know whether a specific activity falls under your trade, or whether you already need a different one. You can ask the Trade Licensing Office for a decision in case of doubt (Section 28(3)) and have certainty.

Connections

The creation, duration and scope of the licence are closely related to which trade you choose and how you notify it. An overview of specific fields and their classification can be found in our trade catalogue. If you are just starting out, go through the guide on how to start a trade, where we describe the notification as well as the difference between notifiable and licensed (concession) trades step by step.

These sections are followed by further provisions of the Act – in particular the conditions for operating a trade, the role of the responsible representative, and the grounds for termination of a trade licence. For the complete and always up-to-date wording, we recommend consulting directly Act No. 455/1991 Coll..