Czech president signs new investor visa amendment into law

Earlier this year, Investment Migration Insider reported that an amendment to the Czech Republic’s immigration law, which included plans for an investor visa, was awaiting senatorial approval. President Milos Zeman has now signed the bill into law and will officially publish it this week, 15 days after which the law will come into effect, according to Rutland Ježek, a Prague-based legal advisory specializing in business law.

First, the essentials about this investor visa:

• Valid for two years, can be extended for as long as the investment is maintained.
• The investment must create and maintain jobs for at least 20 EU nationals.
• Passive investments are permissible
• Requires an investment of 75 million Czech Koruna (about EUR 2.9 million), but up to five applicants may enter into a joint investment, which is to say that each individual would need to invest only 15 million Koruna (EUR 575,000).
• Non-cash assets – such as real estate, equipment and (according to Rutland Ježek) even intangible assets such as know-how – may constitute up to 60% of the investment, which means the total cash investment could be as little as EUR 230,00.
• Immediate family members of the investor are eligible for long-term residence as well, through a reunification permit.
• The investor must propose, and receive approval for, a business plan.

The stated terms raise a number of questions:

Is there a physical residence requirement? Previous reports on the investor visa have made no mention of this. What sort of intangible assets may count toward the investment? Know-how, valuable as it may be, hardly lends itself to quantification. Does this track lead to permanent residence? As per Czech immigration law, a non-EU national is eligible for permanent residence status in the country following five years of continued residence. For investors who don’t plan on actually living in the Czech Republic, then, the answer is ‘no’.

Unlike the Spanish, Greek, Maltese, Cypriot and Portuguese options, the Czech investor visa does not appear to be a residence by investment program. It is not so much a proactive plan to attract large volumes of new FDI as it is a law providing a legal way for legitimate foreign investors already in the country to remain.

Several European countries have a gap in their immigration laws that discourage foreign investment: Entrepreneurs come to the country to set up a company, run it for several years until it becomes successful, all the while employing themselves as executives. During this time, they remain legally in the country by virtue of an employment visa. Trouble only arises the day the company is well-established and the executive investor decides to no longer play an active role in day-to-day operations, but rather hire others to manage the firm. No longer an employee of his/her own company, the investor has no legal basis for remaining in the country. By the looks of it, this is the problem CR’s new immigration law amendment seeks to mitigate.

If the Czech government’s intention were to attract non-EU investors en masse, on the other hand, they would have asked for much smaller investments, in line with similar programs elsewhere in Europe, and made the requirements and processes more streamlined and less subjective. The Czech investor visa poses no significant competitive threat to the continent’s golden visas; it is too expensive, too complicated, and requires physical residence of investors who wish to obtain permanent residence.

Image credit: Michał Józefaciuk