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The Covid-19 pandemic has changed the way companies operate in many industries. The impact of the pandemic has affected the structure of almost all areas of business. Some entrepreneurs in the Czech Republic have realized that their activities can exist without offline, others have a difficult transition due to the specifics of business and others cannot provide online services at all. However, the trend is clear and a shift towards digitalisation of sales and the transition to online is inevitable.
If you are suddenly considering starting a business at this difficult time and want to open a business now, you will probably have to work online one way or another. There are some legal subtleties involved in starting a business in the world of the Internet. In this article, we will try to briefly go through the most important legal aspects of starting an online business in the Czech Republic.
VAT alias VAT – value added tax or an unloved word of all entrepreneurs in the world. But we are in a hurry, you cannot bother them at the very beginning of your business trip, because you are still in a state of non-payment. You can become a VAT payer voluntarily – if it is economically advantageous for you, your suppliers or business partners. However, from the moment your profit for a calendar year (any 12 consecutive months – exactly as stated in the law) “exceeds” one million crowns, you will have to pay VAT to the state treasury.
At the beginning of any business trip, you have to ask yourself many questions and even more decisions. And often such an important task as registering a store name is postponed for better times. It’s important to understand that your brand name is the alpha and omega of your entire business, so you need to be given enough time and creativity.
Before choosing a name or domain, you need to make sure that you are not violating someone else’s rights and that you cannot be accused of plagiarism. Because if the name you choose matches at least the already registered brand, you will have problems: you may be asked to change the name or even stop using it in that wording. And that’s not the nicest news when your child in the form of an online store has just gotten to his feet. Worldwide).
Main point: always try to choose an easy-to-remember original title. And for a 100% guarantee, it is best to register a trademark immediately, thus protecting your name from theft by competitors.
The site has something to sell, but how to pay for it?
This too must be considered in advance. Entrepreneurs who do not attach due importance to the issue of payment for goods often deal with it at the last minute, which then often delays the launch of the store itself. The strict working conditions of the payment gateway providers (in Czech, the payment gateway) will not allow them to set up a gateway for you in the event of any discrepancies on the site, and the legal aspect of the matter is related to this.
And in 2021 (see 2020), dinosaur e-shops are extremely rare, where you can’t pay by card immediately. Everyone else who goes with the times, or at least tries to do so, uses payment gateways. There are many options for such gateways and the choice is yours: compare the fees for each individual payment depending on the amount. Regardless of your choice, absolutely every provider will require you to prove that your store is fully ready to launch. The site must contain all mandatory data such as: your personal data, contact information, business conditions, complaint procedure and personal data processing policy, or other requirements that a particular provider may require.
If you decide to provide payment for goods by bank transfer, be sure to link your payment system with your bank so that all payments in the system are automatically matched.
In addition, if you plan to open a point of sale, or store in the traditional sense of the word, where you will receive cash payments, then in this case you will be required to electronically account for sales (EET for short). You must inform the tax administrator of each transaction online as soon as possible, in the event of technical problems – within 48 hours at the latest.
But what about all our cash on delivery payments. We are pleased to inform you that EET does not apply to you if you ship the goods and the carrier sends the payment amount to your bank account. On the other hand, you need to remember EET if the carrier transfers the amount of the payment to you in cash or by postal order.
Lunchmoney artist Lewis even dedicated a song to them in 2015, and what should we know about invoices?
Our first and foremost rule is that every customer must receive their check. Send it to the client by email, print it out and pack it in a package, send a carrier pigeon with a letter – it doesn’t matter, but the check should arrive.
Each online store has its own invoice generator. Whether you use a ready-made template or a tailor-made website, it should be easy for you to connect to any Czech invoicing system and it will cost you a maximum of a few hundred crowns a month.
It always depends on how you keep your accounts and whether you are a VAT payer.
If you keep tax records or declare expenses as a percentage of income, everything is quite simple. By law, it is sufficient to state your name and surname or company name, identification number, office address and the name of the registry in which you are listed on the invoice.
But according to the proven saying “armed in advance” we provide you with a complete list of information, which is also better to put on a check in case of a check from the tax office:
Mark the document as “invoice” (Czech – invoice) and state its unique number
Indicate that you are not a VAT payer (non-VAT payer)
Name and surname of the person you are invoicing
Brief description of invoiced goods or services
Invoiced amount broken down by number of items
Invoice date
In this case, in addition to your personal data, the following information must be provided:
A description of the goods or services you invoice
Invoiced amount broken down by number of goods
Invoice date
But again, although the law requires nothing more, we still recommend providing the same additional information as in the first case: just a few extra lines and much more confidence in the tax inspector and less time spent switching to another format in case of any changes.
If you pay VAT, your invoice is no longer just an invoice, but their amount of tax documents or tax documents in Russian. Everything is already strict here and in accordance with the Value Added Tax Act, this type of invoice must contain:
Your identification number, but already with the VAT number, better known to us all as the VAT number (in the event that the buyer also proves to be a VAT payer, you must also state his VAT number)
Invoice date
Date of taxable supply, if different from the date of issue of the invoice (usually the date of delivery of the goods or direct receipt of payment)
Quantity and type of goods or services
The tax base or tax base
Tax rate separately for each type of goods or services, if subject to different VAT rates
The amount of tax itself is always in Czech crowns
A useful corner of the consumer, or what should be stated in the terms and conditions of your online store:
Usually in traditional shops, the “default” terms of the contract between the seller and the buyer hang in the “consumer corner” and no one with common sense and sober mind would ever think to read them, so maybe a tax inspector is unlikely. But we as lawyers will pretend we didn’t say it, because well-written terms and conditions are really very important and will play a key role in a dispute.
So what you have to say, don’t forget:
Your ID, ie. name and surname of a self-employed person or company name, identification number – IČ (or DIČ for VAT payers), registered office address and registration number in the Commercial Register or Commercial Register. Don’t forget to include your contact numbers and email.
Labeling of goods and services. Don’t worry, you don’t have to compile memories describing individual products, you just need to state the segment, the market area you are targeting, and briefly state what exactly you offer.
Description of the conditions for concluding the contract. And here it is worth describing in more detail how the ordering process works and at what specific moment the contract will legitimately be considered concluded, “signed”, even though in fact neither party signs anything – just click on the right button.
Information on the prices of goods or services: where exactly the price is stated, in what currency, whether individual prices include tax and whether additional fees are added to the price.
Payment and delivery conditions. You should specify how your customers will be able to pay for their purchases and what delivery methods you offer. In cases where it is possible to pay in cash, do not forget to state the mandatory line about EET (remember, the same online sales records that we talked about a little earlier).
Complaints and the function of returning goods or services. Clients should know the algorithm of their actions if they are not satisfied with the service and want to report it. Describe in detail the return and handling procedure so that you cannot in any case be accused of misinforming consumers and also of infringing their rights.
Terms of termination of the contract. 14 is a magic number, because everyone knows that every consumer in the Czech Republic can return the purchased product within 14 days without giving a reason. In such cases, as a seller, you must unconditionally return the money along with the postage. This rule does not only apply to certain types of goods, such as already unpacked cosmetics, newspapers (suddenly someone did not like the news he read, wanted to return them, but such a mess), perishable products or services that you already have if. However, there is one extremely important point: you must specify these “special” types of goods, otherwise the consumer will still be able to exercise his right to a refund in these cases. In addition, if you do not inform the consumer at all about the possibility of withdrawing from the contract, about the periods in which he can do so, his right to return the goods will be extended by a whole year, so the buyer will have 1 year and 14 days to decide that the product does not suit him. Agree, an extremely undesirable situation for you.
Contract termination form. In addition to information on the possibility of withdrawing from the contract, a special form or questionnaire must be provided, which the consumer must complete in order to withdraw from the purchase. You can specify the text of such a questionnaire directly in the terms and conditions or provide a link to a PDF file, the main thing is that the buyer is always easy to find.
Information on out-of-court dispute resolution and complaint procedures. You are obliged to inform the consumer that in the event of a dispute that cannot be settled amicably, the online resolution of the dispute (to what extent technology has occurred) may be initiated by the Trade Inspection of the Czech Republic (cold name CTIA). By the way, gentlemen with the CTIA are not lazy to fine online stores that forgot to list this item in the terms and conditions.
Lastly, don’t forget the privacy policy, or how it’s fashionable in this globalized world now: the Privacy Policy. Sometimes all you have to do is inform the person whose data you are processing and tell them, for example, what their rights are, where they can turn in the event of an error or change, and of course who uses their data, why and for what purpose. This should be done with the information necessary for the service of delivery of the goods: name, address, etc.
However, there are situations where simply stating the fact is not enough and you need to apply for permission to process the data. For example, when you subscribe to a newsletter (that is, when you receive an advertisement in the mail), when you create a user account, or when you target advertising.
So, to sum up all of the above, we bring to your attention the Ten Commandments for online stores, which would be approved by Jeff Beezos himself:
Well, everything, now it’s time to print, hang over the bed and read before going to bed like a mantra.
Good luck and fully!
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