Annual Report on Exchange Arrangements and Exchange Restrictions, 2007
Chapter

CZECH REPUBLIC

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
October 2007
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(Position as of April 30, 2007)

Status under IMF Articles of Agreement
Article VIIIDate of acceptance: October 1, 1995.
Exchange Measures
Restrictions and/or multiple currency practicesNo restrictions as reported in the latest staff report as of December 31, 2006.
International security restrictions
In accordance with IMF Executive Board Decision No. 144-(52/51)On December 20, 2006, the Czech Republic notified the IMF that it maintained restrictions in accordance with EU Council regulations. These include the freezing of funds and economic resources of Belarus, Bosnia and Herzegovina, Côte d’Ivoire, and Croatia; of certain individuals and entities of the Democratic Republic of the Congo, Iraq, the Democratic People’s Republic of Korea, Lebanon, Liberia, Myanmar, Sudan, Uzbekistan, the former Federal Republic of Yugoslavia, and Zimbabwe; of persons and entities associated with Osama bin Laden, Al-Qaida, and the Taliban; and of certain other persons, groups, and entities, with a view to combating terrorism.
Other security restrictionsIn accordance with relevant EU council regulations, effective April 20, 2007, restrictions are imposed including the freezing of funds and economic resources of certain individuals and entities of the Islamic Republic of Iran.
References to legal instruments and hyperlinksCouncil Regulation (EC) No. 765/2006 (OJ L 134, dated May 5, 2006); Council Regulation (EC) No. 1763/2004 (OJ L 315, dated October 14, 2004) as amended; Council Regulation (EC) No. 1183/2005 (OJ L 193, dated July 23, 2005) as amended; Council Regulation (EC) No. 560/2005 (OJ L 95, dated April 14, 2005) as amended; Council Regulation (EC) No. 1210/2003 (OJ L 169, dated July 8, 2003) as amended; Council Regulation (EC) No. 305/2006 (OJ L 51, dated February 22, 2006) as amended; Council Regulation (EC) No. 872/2004 (OJ L 162, dated April 30, 2004) as amended; Council Regulation (EC) No. 817/2006 (OJ L 148, dated June 2, 2006) as amended; Council Regulation (EC) No. 1184/2005 (OJ L 193, dated July 23, 2005) as amended; Council Regulation (EC) No. 881/2002 (OJ L 139, dated May 29, 2002) as amended; Council Regulation (EC) No. 2580/2001 (OJ L 344, dated December 28, 2001) as amended; Council Regulation (EC) No. 2488/2000 (OJ L 287, dated November 14, 2000) as amended; Council Regulation (EC) No. 314/2004 (OJ L 55, dated February 22, 2004) as amended; Council Common Position 2006/787/CFSP, dated November 13, 2006; Council Common Position 2006/795/CFSP, dated November 20, 2006; Council Regulation (EC) No. 423/2007; Council Regulation (EC) No. 441/2007.
Exchange Arrangement
CurrencyThe currency of the Czech Republic is the Czech koruna.
Exchange rate structureUnitary.
Classification
Managed floating with no predetermined path for the exchange rateThe external value of the koruna is determined by supply and demand in the foreign exchange market. The Czech National Bank (CNB) may intervene in the foreign exchange market in order to smooth large intraday volatility swings of the euro-koruna rate. The CNB publishes daily rates of 29 selected currencies against the koruna for customs and accounting purposes. Commercial banks set their own exchange rate with no limitation.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketYes.
References to legal instruments and hyperlinksn.a.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Payments arrangements
Regional arrangementsThe Czech Republic is a member of the EU.
Administration of controlThe MOF and the CNB are responsible for the administration of exchange controls and regulations, in accordance with the Foreign Exchange Act. In general, the MOF exercises authority over ministries and other administrative authorities, municipal authorities, budgetary organizations, state funds, and all types of credits extended to or accepted by the Czech Republic. The CNB exercises authority over the activities of all other agents.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)No.
Controls on exports and imports of banknotesReporting requirements apply to exports and imports of amounts exceeding the equivalent of €15,000 out of and into the EU customs territory.
On exportsYes.
On importsYes.
References to legal instruments and hyperlinksAct No. 61/1996 Coll. on selected measures against legitimization of the proceeds of crime and on the amendment of related legislation; www.mfcr.cz/fau.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Held abroadControls apply to the deposit of funds with nonresident institutions by a private pension fund or by an insurance company if these assets are to form part of the cover of its technical reserves.
Accounts in domestic currency held abroadControls apply to the deposit of funds with nonresident institutions by a private pension fund or by an insurance company if these assets are to form part of the cover of its technical reserves.
Accounts in domestic currency convertible into foreign currencyYes.
References to legal instruments and hyperlinksn.a.
Nonresident Accounts
Foreign exchange accounts permittedYes.
Domestic currency accountsYes.
Convertible into foreign currencyYes.
Blocked accountsThere are blocked accounts in connection with embargoes against the Islamic Republic of Afghanistan and individuals associated with the previous governments of Iraq and the former Federal Republic of Yugoslavia.
References to legal instruments and hyperlinksn.a.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other nontariff measuresEU regulations on common trade and agricultural policies apply.
Negative listRelevant EU import regulations based on the common commercial policy apply.
Open general licensesEU regulations based on the common commercial policy, including surveillance of certain steel products, and on the CAP apply.
Licenses with quotasIn accordance with EU import regulations, import quotas apply to certain textile and clothing products originating in China, Belarus, the Democratic People’s Republic of Korea, Kosovo, the Republic of Montenegro, and the Republic Serbia. Import quotas apply for certain steel products originating in Kazakhstan, the Russian Federation, and Ukraine, and for agricultural products in accordance with the CAP.
Import taxes and/or tariffsThe EU Common Customs Tariff applies.
State import monopolyNo.
References to legal instruments and hyperlinksn.a.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licenses
Without quotasEU regulations based on the CAP apply. For some armaments, a security license is required.
With quotasEU regulations based on the CAP apply.
Export taxes
Other export taxesExport refunds are based on the CAP related to commitments in the WTO.
References to legal instruments and hyperlinksn.a.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersNo.
References to legal instruments and hyperlinksn.a.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Restrictions on use of fundsNo.
References to legal instruments and hyperlinksn.a.
Capital Transactions
Controls on capital transactionsYes.
Repatriation requirementsNo.
Controls on capital and money market instruments
On capital market securities
Shares or other securities of a participating nature
Purchase locally by nonresidentsNonresidents’ foreign participation in the air transport sector may not exceed 49% of total participation. Also, controls apply on investment by nonresidents in lotteries and similar games.
Sale or issue locally by nonresidentsControls apply to mortgage securities.
Purchase abroad by residentsControls apply to the purchase by (1) a private pension fund of securities other than those issued by governments and central banks of OECD member countries on a foreign market; (2) an insurance company of securities other than those issued by governments and central banks of OECD countries if these assets are to form 75% or less of the cover of its technical reserves and by the EIB, EBRD, and IBRD if these assets are to form 50% or less of the cover of its technical reserves; and (3) an insurance company of securities not traded on a regulated OECD market if these assets are to form 10% or less of the cover of its technical reserves.
Bonds or other debt securities
Sale or issue locally by nonresidentsControls apply to mortgage securities.
Purchase abroad by residentsControls apply to the purchase by (1) a private pension fund of securities other than those issued by governments and central banks of OECD member countries on a foreign market; (2) an insurance company of securities other than those issued by governments and central banks of OECD countries if these assets are to form 75% or less of the cover of its technical reserves and by the EIB, EBRD, and IBRD if these assets are to form 50% or less of the cover of its technical reserves; and (3) an insurance company of securities not traded on a regulated OECD market if these assets are to form 10% or less of the cover of its technical reserves.
On money market instruments
Sale or issue locally by nonresidentsControls apply to mortgage securities.
Purchase abroad by residentsControls apply to the purchase by (1) a private pension fund of securities other than those issued by governments and central banks of OECD member countries on a foreign market; (2) an insurance company of securities other than those issued by governments and central banks of OECD countries if these assets are to form 75% or less of the cover of its technical reserves and by the EIB, EBRD, and IBRD if these assets are to form 50% or less of the cover of its technical reserves; and (3) an insurance company of securities not traded on a regulated OECD market if these assets are to form 10% or less of the cover of its technical reserves.
On collective investment securities
Purchase abroad by residentsControls apply to the purchase by a private pension fund of securities issued on a foreign market and to the purchase by an insurance company of securities not traded on a regulated OECD market if these assets are to form part of the cover of its technical reserves.
Controls on derivatives and other instruments
Purchase abroad by residentsControls apply to the purchase of or swap operations by a private pension fund in instruments and claims on a foreign financial market other than those issued by or contracted with governments and central banks of OECD member countries, and the purchase of or swap operations by an insurance company in instruments and claims on a foreign financial market other than derivatives publicly traded on an OECD market if these assets are to form 5% or less of the cover of its technical reserves.
Controls on credit operations
Financial credits
By residents to nonresidentsControls apply to credits and loans granted to nonresident borrowers (1) other than governments and central banks of OECD member countries by a private pension fund; and (2) by an insurance company if these assets are to form part of the cover of its technical reserves.
Controls on direct investment
Inward direct investmentControls apply to (1) the purchase of real estate that forms part of the agricultural land fund and forests by branches of nonresident enterprises; (2) the operation of a branch as a “mortgage bank” to the extent that a mortgage bank is defined under Czech law as an institution authorized to issue mortgage securities on domestic markets, which is limited to financial institutions incorporated under domestic law; (3) air transport, where the undertakings are owned and continue to be owned directly or through majority ownership by EU member states and/or nationals of EU member states, and are controlled by such member states; and (4) operation of lotteries and similar games, with the exception of (a) betting games in casinos for which an authorization may be granted to legal persons established in the Czech Republic and (b) consumer lotteries in which the prize may be only in-kind fulfillment, services or goods, products, etc., provided the total value of the in-kind prizes for one calendar year does not exceed CZK 200,000 and the value of one prize does not exceed CZK 20,000.
Controls on liquidation of direct investmentNo.
Controls on real estate transactions
Purchase abroad by residentsControls apply to the acquisition of real estate abroad by (1) private pension funds; and (2) insurance companies, if these assets are to form part of the cover of their technical reserves.
Purchase locally by nonresidentsIn accordance with Foreign Exchange Act 219/1995 Coll., real estate other than agricultural land may be acquired by (1) nonresidents who are citizens of the Czech Republic; (2) nonresidents with a certificate of permission to reside in the Czech Republic as citizens of a member state of the EU; (3) nonresident legal entities that have an enterprise or branch and are authorized to conduct business in the Czech Republic; and (4) other nonresidents who acquire real estate (a) through inheritance; (b) for diplomatic representation of another state on condition of reciprocity; (c) through an unapportioned co-ownership of a married couple, only one of whom is a citizen or a resident of the Czech Republic; (d) from a grandparent, parent, sibling, or spouse; (e) through the exchange of certain other land in the domestic territory whose price does not exceed the price of the original real estate; (f) through a preemptive right by reason of apportioned co-ownership; (g) by constructing a building on their own plot that forms one functional unit with an immovable construction in their ownership; or (h) where expressly provided for by a special act.



The following may own agricultural land (defined as land that forms part of, or belongs to, the agricultural land fund and land set aside as woodland): (1) nonresidents who are citizens of the Czech Republic; (2) nonresidents who are citizens of a member state of the EU who have resided in the Czech Republic for at least three years and are registered as self-employed farmers; and (3) other nonresidents who acquire land (a) by inheritance; (b) for diplomatic representation of another state on condition of reciprocity; (c) through an unapportioned co-ownership of a married couple, only one of whom is a citizen or a resident of the Czech Republic; (d) from a parent, grandparent, sibling, or spouse; (e) through the exchange of other agricultural land in the domestic territory whose price does not exceed the price of the original agricultural land; (f) through a preemptive right by reason of apportioned co-ownership that forms one functional unit with an immovable construction in their ownership; or (g) where expressly provided for by a special act.
Controls on personal capital transactions
Transfer of gambling and prize earningsThe operation of out-of-country or domestic lotteries and similar games where bets are paid abroad is prohibited, unless an exception is granted.
References to legal instruments and hyperlinksn.a.
Provisions Specific to the Financial Sector
Provisions specific to commercial banks and other credit institutions
Open foreign exchange position limitsThe following limits apply: (1) the absolute value of the net foreign exchange position in each foreign currency may not exceed 15% of the bank’s capital; (2) the absolute value of the net foreign exchange position in koruny may not exceed 15% of the bank’s capital; and (3) the overall foreign exchange position may not exceed 20% of the bank’s capital.
Provisions specific to institutional investorsCredit unions, insurance companies, and pension funds may place their assets abroad, subject to specific prudential regulations.
Insurance companies
Limits (max.) on securities issued by nonresidentsControls apply to the purchase by an insurance company of securities (1) other than those issued by governments and central banks of OECD member countries if these assets are to form 75% or less of the cover of its technical reserves, and by the EIB, EBRD, and IBRD if these assets are to form 50% or less of the cover of its technical reserves; (2) not traded on a regulated OECD market if these assets are to form 10% or less of the cover of its technical reserves; and (3) not traded on a regulated OECD market if these assets are to form part of the cover of its technical reserves.
Limits (max.) on investment portfolio held abroadControls apply to (1) the purchase of or swap operations by an insurance company in instruments and claims on a foreign financial market other than derivatives publicly traded on an OECD market if these assets are to form 5% or less of the cover of its technical reserves, (2) credits and loans granted to nonresident borrowers by an insurance company if these assets are to form part of the cover of its technical reserves, and (3) deposits of funds with nonresident institutions by a private pension fund or by an insurance company if these assets are to form part of the cover of its technical reserves.
Limits (min.) on investment portfolio held locallyYes.
Currency-matching regulations on assets/liabilities compositionYes.
Pension funds
Limits (max.) on securities issued by nonresidentsControls apply to the purchase by a private pension fund of (1) capital and money market securities other than those issued by governments and central banks of OECD member countries on a foreign market, and (2) collective investment securities issued on a foreign market.
Limits (max.) on investment portfolio held abroadControls apply to (1) the purchase of or swap operations by a private pension fund in instruments and claims on a foreign financial market other than those issued by or contracted with governments and central banks of OECD member countries, (2) credits and loans granted to nonresident borrowers other than governments and central banks of OECD member countries by a private pension fund, and (3) deposit of funds with nonresident institutions by a private pension fund if these assets are to form part of the cover of its technical reserves.
Limits (min.) on investment portfolio held locallyn.a.
Currency-matching regulations on assets/liabilities compositionn.a.
Investment firms and collective investment fundsn.a.
References to legal instruments and hyperlinksn.a.
Changes during 2006
Exchange measuresDecember 20. The Czech Republic notified the IMF that it maintains restrictions in accordance with EU Council regulations. These include the freezing of funds and economic resources of Belarus, Bosnia and Herzegovina, Côte d’Ivoire, and Croatia; of certain individuals and entities of the Democratic Republic of the Congo, Iraq, the Democratic People’s Republic of Korea, Lebanon, Liberia, Myanmar, Sudan, Uzbekistan, the former Federal Republic of Yugoslavia, and Zimbabwe; of persons and entities associated with Osama bin Laden, Al-Qaida, and the Taliban; and of certain other persons, groups, and entities, with a view to combating terrorism.
Changes during 2007
Exchange measuresApril 20. Restrictions were imposed with respect to certain individuals and entities of the Islamic Republic of Iran.

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