Written by: René Jakl
Photo by: Věroslav Sixt
Can a Czech buy a villa in the Alps without legal obstacles? Yes. What about the opposite – can a foreigner without a Czech passport buy an apartment in Prague or a cottage in Krkonoše? Yes and no. How is this possible?
Officially, a foreigner cannot own real estate in the Czech Republic. “This is based on the existing foreign-exchange law,” says Tomáš Bettelheim, a member of Lovells, an attorneys’ association. Although Czechs can buy real estate – in the European Union, for example – the opposite is impossible. This is one of the exceptions that Czech negotiators pushed through under the agreements covering accession to the EU. According to Bettelheim, this limitation should expire no later than three years following EU accession. On this point the Czech government gave in to political pressure exerted by some frightened Czech voters, especially those living in border areas. They asked that the government prevent a clearance sale of the land.
Nevertheless, foreigners do buy real estate in the Czech Republic anyway, and it doesn’t matter to anyone. Only a Czech entity, albeit an individual or a legal entity, can own real estate in the Czech Republic. And this is the way: “a foreigner must establish a company in the Czech Republic, such as a limited liability company, which buys the real estate and then rents it to him. When founding the company, the foreigner must respect all domestic regulations and procedures, of course,” Bettelheim explains. According to him, in practice this means that the foreigner spends two to three months establishing the company and spends CZK 20 to 30 thousand on attorney fees. If he wants to accelerate the establishment of the company and thus the real estate purchase, some law offices offer already established companies. But in such cases, fees can exceed CZK 100,000, which makes the purchase of a small apartment significantly more expensive.
Fortunately for Czech citizens purchasing real estate in the EU, such restrictions ceased to be valid several years ago.
This article was prepared in cooperation with Lovells, an attorneys’ association.