Authors: David Krch, Kamila Chládková
Although there are not many changes for 2022, let us briefly summarise the most important ones and add some insights from recent case law and tax audits. We will also mention the 2021 tax developments that most companies will have to address at the outset of the New Year 2022.
Next year as every year, tax changes will impact the family budget, especially by:
In the context of business trips abroad, we would like to remind you of the employer’s reporting obligations in each Member State under the Posting of Workers Directive.
Regarding corporate taxes, there are no significant changes for 2022, the increase in the maximum deduction for gifts from 10% to 30% of the tax base remains unchanged. However, in connection with the preparation of financial statements and documents for 2021 tax returns, we would like to remind you of the changes in the tax write-offs of intangible assets, which is now governed by the company’s accounting rules, the increase in the limit for the inclusion of separate movable assets in fixed assets for write-offs to CZK 80,000 or the possibility of extraordinary write-offs for assets acquired from 1 January 2020 to 31 December 2021.
In January 2022 the annual Notification of “Exempt” Income Arising Abroad should be filled using a new form, replacing the original monthly report, while the limit of reportable income has been increased to CZK 300,000 per year for the same type of income. The final version of this form and the instructions for filling it in are not yet known, therefore we will inform you of the details at a later date.
It is not only at the end of each year that we recommend reviewing transfer pricing for intra-group transactions, both in terms of the actual prices and the documentation for proving the transactions received and their value. Based on our experience, audits conducted by the tax authorities with a focus on this issue are ongoing, while at the same time, the General Tax Directorate has issued guidance on transfer pricing in financial transactions in 2021. Popular costs that are under the scrutiny of the tax authorities include expenses for advertising, repairs versus technical improvements or documentation of various consultancy services, leases of premises or other similar services in terms of the scope and timing of provision.
Attention should also be paid to the obligation to verify the correctness of the information entered in the register of beneficial owners, which is necessary for any payment of dividends. Similarly, if a member of the company receives remuneration for serving in the office, it is required for such expenses to be tax deductible that all such benefits be regulated under a contract which must be approved by the company’s supreme authority. Otherwise, the member could be deemed to have unjustly enriched themselves with all the legal consequences. For managing directors or chairpersons of the board of directors, a judgment regarding VAT may be relevant, by which it was again upheld that their activities may constitute the execution of an economic activity for VAT purposes. As Czech law does not yet reflect this approach, managing directors can currently choose whether or not they wish to act as entities executing an economic activity.
For VAT payers, most changes have already taken place in the second half of 2021 in relation to cross-border trade, i.e. distance sales of goods to non-taxable persons (B2C), supply of services to non-taxable persons (B2C), and sales of goods via electronic interface (B2C). As part of these changes, the one-stop shop system has been extended to cover VAT on distance sales of goods and the exemption for imports of goods worth up to EUR 22 has been abolished. VAT on the supply of electricity and gas has been waived for November and December.
Travel service providers will, however, face a significant change: rules for VAT applied on the surcharge. It will no longer be possible to calculate the surcharge on travel services in aggregate for the tax period, but it will be necessary to calculate it separately for each travel service provided to a specific customer. It will therefore be administratively burdensome to ensure that VAT is to be declared already on the receipt of an advance payment for a travel service or the splitting of the taxable amount for travel services provided in the EU and in a third country (e.g. an air tour to a third country).
Other changes for 2022 in the field of VAT include the adjustment of the rate for medical devices and their repairs, and in particular changes related to Intrastat reporting or supplies to the UK. From 31 December 2021, there will no longer be the possibility to defer import customs declarations for up to 175 days when exporting goods from the EU to the UK, and from 1 January 2022 it will be required to file standard full declarations or simplified declarations using a UK intermediary. If you are reporting to Intrastat, simplified annual reporting will be introduced for entities with exports/imports worth between CZK 12-20 million that do not trade in goods in the Notice of the Czech Statistical Office on the list of goods excluded from simplified reporting. Other changes include, for example, adding TIN and country of origin to export-related data to be reported and changes to codes designating the nature of transactions.
One of the most interesting judgments in the field of VAT is the judgment challenging the historical information of the Ministry of Finance according to which a house built on a turnkey basis cannot be considered as self-created property for VAT purposes. In the field of tax liability, we should mention a ruling in favour of taxpayers holding that it is not sufficient for fulfilling the conditions for liability if the recipient qualifies as an unreliable taxpayer. The tax authorities must also examine and prove other circumstances based on which the recipient could and should have known that the tax would not be paid.
From the perspective of tax audits and VAT, supply chain fraud and the related so-called knowledge test are probably the most topical issues for the tax authorities now. Any recipient in this chain is called upon to prove that it did not know and should not or could not have known of the tax fraud. A mere lack of the recipient’s prudence is sufficient to challenge entitlement to the deduction.
There are continued efforts in the tax process to simplify tax administration and communication between the tax administrator and the taxpayer. The Moje Daně (My Taxes) project is continuing to achieve a larger scale of electronic filing for 2021 tax returns in the coming year. This is supported by the extension of the basic deadline for filing tax returns electronically by 1 month (i.e. until 2 May 2022). In addition, the control procedures will be simplified, a remote form of communication is allowed for initiating a tax audit and a change in the scope of the audit can be arranged by correspondence. However, in the case of additional tax returns, we would like to draw your attention to inadmissible submissions and the related penalty if the additional return is submitted before the tax authorities assess the tax according to the previous submission.
We will be happy to assist you in setting up processes taking into account not only the 2021 and 2022 tax novelties or in identifying and addressing areas to reduce the tax and legal risk for your company and yourself.
Thank you for helping us write our story for the last 20 years. We wish you a very happy and peaceful Christmas holidays, good health, much happiness, and professional and personal success in the New Year!
The particular nature of agency agreements triggers the application of a specific competition law regime. This regime is based on a split between (i) the role assumed by the agent acting as an intermediary of the principal (i.e. where he is trying to secure transactions for the principal) and (ii) the position of the agent as a provider of agency services to principals (i.e. where he seeks appointments as an agent).
With regard to the second aspect, the agent acts as an undertaking that is separate from the principal. It makes agency services available to the market. In this context, the rules of EU competition law apply in their entirety, as they would in any other situation where companies offer services.
The position is different with regard to the first aspect. This is where the specific competition law regime comes into play. Indeed, the agent acts as an extension of the principal. The agent reaches out to secure business for the principal. Under specific conditions, this role of the agent does not trigger the application of the EU competition rules as the agent is deemed an integral part of the principal (similarly to the employees of the principal).
If the specific conditions are met, the practical consequences are considerable. The principal will be able to dictate the price at which the agent must conclude business transactions on his behalf. This means that there is no risk of prohibited vertical price fixing or RPM. The principal can also dictate in the most absolute terms where the agent may be active and with which customers he may deal. This means that there is no risk of prohibited territorial or customer restrictions.
The current Vertical Guidelines accompanying the current VBER provide that the determining factor in defining an agency agreement for competition law purposes is the financial or commercial risk borne by the agent in relation to the activities for which he has been appointed by the principal (the “agency test”). In accordance with the case law of the European Court of Justice, the agency test is only met if the agent does not bear any or only insignificant risks associated with the transactions he concludes or negotiates on behalf of the principal.
Imagine that an agent is required to bear the cost of transporting the goods of the principal to the customers, or that he must maintain stocks of such goods at his own cost. In these cases, the agent assumes risks endangering his status as a “genuine” agent for EU competition law purposes. The nature and the level of such financial or commercial risks result in the agent acting as an independent market participant, rather than as a market player whose market behaviour is attributable to the principal.
The Vertical Guidelines refer to three categories of risks that are material and include a non-exhaustive list of practical examples for each category:
If the agency test in relation to the aforesaid categories of risks is not met, the agent will be subject to the same EU competition law regime as an independent distributor. In the opposite scenario (meaning that no or insignificant risks are borne), the agent will not be subject to that regime and will be deemed an integral part of the principal.
The current Commission proposals maintain the agency test, which is based on the absence or insignificant level of the risks assumed by the agent. It is fair to assume that this position will remain unchanged in the future amended proposals (to be expected beginning of 2022) and in the definitive texts. Hence, the crux of the agency test remains the risk criterion. The current proposals of the Vertical Guidelines add, however, that this exception must be interpreted narrowly.
The same three types of risks are identified in the current proposals, but a new test is added to measure the significance of the risks undertaken by the agent. Reference is made to the revenues generated by the agent from providing the agency services (e.g. the commission paid by the principal to the agent) rather than the revenues generated by the sale of the goods or services covered by the agency agreement or the overall business profile of the agent (for whom the agency activities performed for the principal may represent only a fraction of his overall activities).
The current proposals of the Vertical Guidelines clarify that a principal may use various methods to eliminate the risks for the agent by reimbursing the relevant costs. To that end, a principal may reimburse the precise costs incurred, provide a fixed lump sum or pay the agent a fixed percentage of the revenues realized from the goods or services sold under the agency agreement. Any such a reimbursement method is only effective if it ensures that the agent bears no or only insignificant risks.
According to the Commission, it may therefore be required to provide a simple method for the agent to declare and request the reimbursement of any costs exceeding the agreed lump sum or fixed percentage. It may also be necessary for the principal to systematically monitor any changes to the relevant costs in order to adapt the lump sum or fixed percentage accordingly.
Where the relevant costs are reimbursed by way of a percentage of the price of the products sold under the agency agreement, the principal must also take into account the fact that the agent may incur relevant market-specific investments (the second type of risks) even where he makes limited or no sales for a certain period of time. Such costs must be reimbursed by the principal irrespective of the level of the activities conducted for the principal.
There are at least three striking features in the current Commission proposals and it will be interesting to see whether they will be retained in the amended proposals:
The current Commission proposals cast some doubt as to whether costs incurred on other relevant markets may be relevant to the agency test. The case law of the Court is clear in this respect and such extension is not justified. The references to the Mercedes case law in the current proposals seem inappropriate in this context.
The “DLC countdown” newsletters are offered to you by HAVEL & PARTNERS.
If you need more information or our assistance with setting up the distribution system, please contact Robert Neruda or Štěpán Štarha, who are the firm’s partners responsible for this area.
WANT TO KNOW MORE? STAY TUNED…
Counting down towards 1 June 2022, we aim to provide you with regular updates and the necessary legal knowhow in order to fully prepare your business for the future. Please also check out the Distribution Law Center platform (www.distributionlawcenter.com) and our LinkedIn page for much more information on the laws governing vertical agreements, covering both competition and commercial law. 27 specialized teams from all over the EEA are working hard to turn the platform into your favourite source of guidance and information.
The law firm HAVEL & PARTNERS has provided legal advice and assisted in a one of the biggest venture capital investments in Slovakia. We have provided legal services to the investors Credo Ventures and Earlybird Digital East Fund as well as to Photoneo, a Slovak start-up, which raised a total of USD 21 million, i.e., nearly half a billion Czech crowns, in new capital upon the successful completion of the Series B investment round.
The transaction was facilitated by M&A and venture capital specialists – Václav Audes, a partner, Tomáš Navrátil, a senior associate, Ivana Gajdošová, an associate, and Kristína Očenášová, a junior associate, who rendered comprehensive legal advice on the investment on behalf of HAVEL & PARTNERS.
Apart from Credo Ventures and Earlybird Digital East Fund, other investors that participated in the investment round included IPM Group, a global asset manager focusing on technology companies, together with Venture to Future Fund and other funds.
Photoneo specialises in R&D activities in 3D sensing technology and vision-guided robotics and focuses on new comprehensive solutions for fully automated distribution centres. Photoneo intends to use the raised capital to accelerate its production of the 3D sensing technology equipping robots with shape detection, space-orientation and goods-sorting abilities. It also intends to invest the capital in its new product BRIGHTPICK, an automated e-shop order handling and dispatching solution.
Jan Žižka, a co-founder and the CEO of Photoneo, said: “The potential of this new-generation warehouse automation technology is immense since it is extremely flexible, expandable, and it maximises the output with minimum effort. It helps optimise processes, save space and triple to quintuple the efficiency compared to manual work.”
Authors: František Korbel, Dalibor Kovář
Source: Building World (december 2021)
In view of the current efforts to digitalise all kinds of procedures and acts, it is not surprising that the most debated act of recent years, Act No. 283/2021 Sb. (the “new Construction Act”), introduces a number of principles and provisions that are to lead to the efficient collection and use of information and data in electronic form in the coming years.
In July 2021, the new Construction Act was finally passed by the Chamber of Deputies. Thanks to the fundamental changes in the mode of operation of building authorities in the Czech Republic and certain aspects of the building approval and zoning procedures, it will be possible to create brand new processes on a digital basis, which do not constitute a mere transformation of hard copies of documents into digital form. Digital services in the context of the new Construction Act will be provided by the National Building Administration through new public administration information systems.
Specifically, these include the Builder’s Portal, the National Zoning Geoportal, the Construction Procedure Register, the Electronic Documentation Register, the Building Identification Number information system and other systems.
In matters relating to zoning and building procedures, the above systems will be administered by the recently established Supreme Construction Office, which will start its de jure operation on 1 January 2022 and will become the central administrative authority not only in matters of zoning, but also in matters concerning building procedures and expropriation.
Some of the information systems already exist today and, given the establishment of the National Building Administration system, they will be gradually taken over by the Supreme Construction Office; other information systems will only come into existence upon the entry into force of the new Construction Act.
The Builder’s Portal will be an independent public administration information system, which will be the primary access point for individuals and legal entities to other national building administration information systems (the Register of Zoning and Construction Procedures and other processes; the Electronic Documentation Register; the Building Identification Number and the National Zoning Geoportal). The Builder’s Portal will interconnect these systems and the communication with building and zoning authorities and other concerned authorities through interactive forms.
The Builder’s Portal will be a single online portal in which it will be possible to apply for all decisions and other measures. People will be able to use it to perform digital acts vis-à-vis the building authority and refer to electronic documents in information systems. The portal will also enable all authorised persons, based on the extent of their authorisation, to inspect the files of the building authorities and other digital repositories via remote access.
The Builder’s Portal will also be loosely connected to the functionalities of the Building Identification Number and the statements of owners and managers of technical infrastructure. A separate Building Identification Number information system will primarily be used to assign unique identifiers to buildings. The system will therefore uniquely identify a building within all existing systems and associate all data and documents kept in the systems in relation to the given building, thus virtually concentrating all data in a single place.
The National Zoning Geoportal information system will be used mainly for publishing outputs from zoning activities, enabling access to zoning records, monitoring the progress in obtaining zoning documentation or providing spatial data on planned land use.
Once established, the National Zoning Geoportal will ensure access to data and information from zoning activities in electronic form in a uniform data standard and in a machine-readable format. At the same time, this information system will be used to provide spatial data, i.e. data that directly or indirectly refer to a specific location or geographical area on the subject of planned land use in accordance with environmental protection requirements. The administrator and operator of the zoning geoportal will be, once again, the Supreme Construction Office.
The Construction Procedure Register will enable the storing of data on pending proceedings under the Construction Act, acts undertaken by the participants and the building authority in the proceedings and data related to these acts (in particular information on the authorised officials, their acts and how they contributed to the resulting decision) and the decisions of the building authority or other authority concerned. Once established, the Construction Procedure Register will make information and documents available in a way that allows remote access, therefore simplifying the processes for applicants in application procedures under the Construction Act. This will make it possible to obtain information on the status of the proceedings and undertaken steps without the need to look into the hard copies in person.
This information system will become a data repository for project documentations and similar documentations in electronic form, both in PDF and a machine-readable format. Applicants should enter their project documentation into the register via the Builder’s Portal.
The right to access data and electronic documents kept in the Construction Procedure Register and in the Electronic Documentation Register will be only granted to persons authorised to inspect the file pursuant to the Administrative Procedure Code, in order to abide by the principle of non-publicity of administrative proceedings.
The data will thus be accessible only to the participants in the proceedings, their agents and other persons that prove a legal interest. In addition to these persons, the new Construction Act allows access to the project documentation to those who are required by law to comment on it. Persons authorised to access the registers will have the right to remote access, including machine searches for information and the making of extracts and copies.
The full use of the above-mentioned information systems should be achieved after the new Construction Act becomes fully effective, i.e. from July 2023. From 2022 onwards, the individual information systems should be gradually put into operation, especially in technical and architectural terms. However, the most difficult task will ultimately be for the Supreme Construction Office to fill the individual information systems with sharp data, and for the new Chamber of Deputies to maintain, or at least to refrain from hampering, the described setting of the basic principles of the new Construction Act.
Before diving into the individual restrictions of competition that typically appear in vertical agreements, it is useful to first focus on the main types of distribution systems. Such types include exclusive distribution, non-exclusive or free distribution, selective distribution, franchising and agency. Suppliers can opt for a single system that covers the entire EEA, but may also combine distribution systems. This is for instance the case where a supplier applies non-exclusive distribution in certain parts of the EEA and selective distribution in other parts.
An alternative (with important competition law implications) is to organize the distribution of products or services by means of vertical integration. This implies that a supplier distributes either directly by itself or through group entities which are under the same control.
Such a vertical integration scenario does not fall within the scope of Article 101 TFEU (this is the Treaty provision dealing with agreements that are restrictive of competition). The reason is simple. The application of Article 101 TFEU requires the involvement of at least two independent undertakings. Legal entities that are part of the same group of companies are considered a single undertaking. Hence, in a case of vertical integration, there is only one undertaking involved and the prohibition of Article 101 TFEU is simply not applicable. This means that there is no need to consider a block exemption in that context. Vertical integration is therefore a valid strategy to avoid, or in any event reduce, competition law problems.
Commission Regulation 330/2010 is the block exemption regulation currently in force. It is often referred to as the VBER, and it is applicable to any of the distribution systems referred to above. Although the VBER does not explicitly refer to franchising, this type of distribution system is also covered.
Hence, in order to benefit from the safe harbour of the block exemption, there is no need to prefer one distribution system over another. The devil will rather be in the details. The restrictions that can be imposed under the block exemption will differ depending on the chosen distribution system. A pragmatic way forward in this respect is to make a distinction between selective distribution agreements and non-selective distribution agreements. The individual restrictions that are benefiting from the block exemption will indeed differ depending on whether the distribution agreement falls in one category or the other.
The definition of a non-selective distribution agreement is rather straightforward. It is any distribution agreement that does not meet the definition stated in the VBER of a “selective distribution system”. A selective distribution system is defined as any system “where the supplier undertakes to sell the contract goods or services, either directly or indirectly, only to distributors selected on the basis of specified criteria and where these distributors undertake not to sell such goods or services to unauthorized distributors within the territory reserved by the supplier to operate that system”. In future “DLC countdown” newsletters, we will come back to this definition and consider it in greater detail.
The current proposals of the Commission for the future block exemption regime do not alter the coverage of the wide range of distribution systems referred to above. The basic distinction between selective and non-selective distribution agreements remains applicable. Furthermore, the definition of a “selective distribution system” is left untouched. We expect this approach to remain in place when the amended proposals are issued in 2022.
Against this background, it is somewhat surprising that the text of the current draft VBER and the current draft Vertical Guidelines explicitly refer to a third category of distribution agreements, notably those that are neither exclusive, nor selective (so-called “free distribution”). However, the individual restrictions that are blacklisted for this third category are identical to those that are blacklisted for exclusive distribution agreements. Hence, the reality is that both exclusive and free distribution are part of the same category of non-selective agreements under which exactly the same individual restrictions must be avoided (the so-called “black list” or “list of hardcore restrictions”). Both legally and practically speaking, whilst it may seem otherwise, nothing changes compared to the existing regime.
Considering the current Commission proposals, there will be no need to consider changing the distribution systems that are currently put in place by suppliers. The coverage of the block exemption remains as broad as is the case under the VBER. The fundamental choice to be made remains that between a selective system and a non-selective system.
As the block exemption remains the single most important EU competition law instrument to ensure the validity of distribution agreements, the continued broad coverage envisaged in the current Commission proposals must be welcomed. It would indeed be unfortunate, as was the case during the first decades of EU competition law, if parties were to select a particular distribution system in order to benefit from a block exemption (which scope was much narrower at the time), rather than relying on economic and business considerations when making their selection. We would, however, recommend that in the amended proposals the addition of a separate category of free distribution in the hardcore list of Article 4 of the draft VBER is removed. In order to make the future block exemption as user-friendly as possible, it would be helpful to inject explicitly a simple distinction between selective and non-selective distribution agreements. This recommendation does not alter in any respect the substance of the draft VBER, but makes matters clearer for businesses and users of this legal instrument.
The “DLC countdown” newsletters are offered to you by HAVEL & PARTNERS.
If you need more information or our assistance with setting up the distribution system, please contact Robert Neruda or Štěpán Štarha, who are the firm’s partners responsible for this area.
WANT TO KNOW MORE? STAY TUNED…
Counting down towards 1 June 2022, we aim to provide you with regular updates and the necessary legal knowhow in order to fully prepare your business for the future. Please also check out the Distribution Law Center platform (www.distributionlawcenter.com) and our LinkedIn page for much more information on the laws governing vertical agreements, covering both competition and commercial law. 27 specialized teams from all over the EEA are working hard to turn the platform into your favourite source of guidance and information.
The law firm HAVEL & PARTNERS has responded to clients’ needs and introduced another innovative solution. Under the brand named Certoo, it offers a unique opportunity to obtain indisputable, secure and immutable proof of authorship of documents and data. Certoo protects ownership with an irrefutable blockchain time stamp and ownership certificate, which could also be used as valid evidence in court in the future.
The Certoo project is the result of cooperation between the law firm and ARTinii Production, a technology company, aimed at bringing state-of-the-art solutions to the legal issues in IP law that HAVEL & PARTNERS encounters in its practice.
“Efficient prevention of copying or imitation of a work is extremely difficult nowadays. In practice, we evidence how difficult our clients often find it to prove they are the authors of a certain work. Certoo intends to address this issue with the help of blockchain, a state-of-the-art technology tool. We are a leader in legal services innovation and since we enjoy the synergy of law and technology and see a huge potential in it, we have created this joint blockchain project,” explained Robert Nešpůrek, a partner in the law firm.
Though Certoo accounts, clients will have access to their private storage and be able to upload any file or folder they seek to protect. Certoo will encrypt the files and save their digital records as encrypted codes on the blockchain.
Blockchain makes it possible to protect the authorship to digital works as well as and non-digital works converted to digital form. These can typically include photographs, architectural designs, pieces of music or other sound recordings but also texts, e.g., articles, agreements, papers or last wills.
Blockchain is a technology consisting of interconnected data blocks. Given the chaining of blocks, it is virtually impossible to tamper with the data in the blockchain, ensuring strong protection of the uploaded data. The authorship imprint in the blockchain therefore safeguards secure and provable protection of copyright work.
The authorship on the blockchain is proved by a blockchain certificate. It contains the author’s identification data (name, address, year of birth, etc.), information on data recorded on the blockchain and the certification date. These data make it possible to prove that a certain file was indeed in your possession at the time concerned. To conclude, Certoo is a simple online tool enabling quick and simple certification of ownership of any digital files.
Dear Clients and Business Partners,
One of our competitive advantages apart from providing state-of-the-art legal and tax advice is the ability to lead our clients in their businesses and allow them to get ahead of their competitors. In the new edition of our online and PDF version of H&P Magazine, we bring you articles, information, analyses and interviews that may inspire you in your business. Most of them relate to the most progressive business fields today and address the hottest topics such as digitisation, sustainability, ESG, and the real estate market crisis.
Throughout the 20 years of our presence on the market, we have managed to build a law firm with a formidable reputation and economic stability, which are attributes covered in our magazine and which give our law firm the hallmark of exceptional trustworthiness. This is something prominent companies look for when they select our law firm as their business partner.
We are pleased to see that the unique position of HAVEL & PARTNERS on the legal services market has once again manifested itself in our outright victory in the competition Law Firm of the Year 2021 in the Czech Republic. We won the main prize for the best domestic law firm and an award for the best client services, and, what is more, we also won the M&A, Telecommunications & Media and Health Law categories. In 15 other sector categories, HAVEL & PARTNERS ranked among the most recommended (top-tier) law firms. These are historically the best results, which, along with defending our victory in the prestigious global Chambers Europe Awards, strengthen our long-term position as a leading law firm on the market in Central Europe.
I am happy to thank not only all our colleagues who have contributed to this extraordinary success through their hard work, loyalty and commitment, but above all our clients and business partners, because your trust in our law firm is our driver and commitment to always be one step ahead. Thanks to you, at HAVEL & PARTNERS we have a strong will and great desire to keep constantly moving ahead towards new challenges.
I therefore hope that we will continue to stay connected to you through success in the years to come.
Kind regards,
Managing Partner
HAVEL & PARTNERS, the largest Czech-Slovak law firm, has expanded its team specialising in tax litigation prevention and resolution to include two female experts having unique tax administration know-how. Hana Erbsová, who previously worked as a tax administration methodologist and head of department at the General Financial Directorate, and Alice Zemánková, who has experience as a legal expert at the Appellate Financial Directorate, have joined the tax and tax law group.
“We have our legal and tax services closely linked because we want to provide our clients with excellent comprehensive service as a one-stop shop. Our legal-tax practice is one of the fastest growing areas of HAVEL & PARTNERS’ services, which is why we have strengthened our team with other experienced colleagues who specialise in tax litigation,” said Jaroslav Havel, managing partner of the firm.
“Both Hana and Alice are important and valuable additions as they bring unique know-how directly from the top tax administration authorities to the firm. We also have colleagues on our team who have worked on tax issues in the judiciary, including the Supreme Administrative Court. Thus, we bring to our clients a completely new dimension and a higher added value to our tax litigation service, which we now complement with an extremely valuable view of tax issues from the ‘other side’, i.e., from the side of the tax administrator and the authorities that decide on tax litigation matters,” said tax partner David Krch.
Hana Erbsová has 15 years of experience in financial administration, including at the General Financial Directorate as a tax administration methodologist, and subsequently worked with leading international consulting firms (PricewaterhouseCoopers, Deloitte). Since 2018, Hana has been working as an attorney-at-law specialising in tax, international taxation, tax arbitration and tax litigation. She provides clients with comprehensive support in tax inspections and other stages of tax proceedings, as well as in proceedings before courts, including the Supreme Administrative Court, and in resolving double taxation disputes (tax arbitration). She also focuses on the area of the private law liability of executive bodies of legal entities for the fulfilment of tax and other public law obligations. Another specialisation of Hana Erbsová is representation of and legal assistance to clients in audits focused on compliance with subsidy conditions and in proceedings for the imposition of a levy for breach of budgetary discipline.
Alice Zemánková specialises in tax law. Alice has experience from the Appellate Financial Directorate in Brno, where she prepared decisions and documents in appeal proceedings and worked as an expert advisor in the direct tax department. She also focuses on administrative law, in particular administrative proceedings and administrative court proceedings, and public procurement issues.
HAVEL & PARTNERS’ specialised tax law group currently has a stable team of more than 15 associates and tax advisors with many years of experience (10 to 20 years), as well as extensive experience in representing multinational corporations and the world’s major players in the respective fields.
HAVEL & PARTNERS advised the client on the sale of 100% of its shareholding in KLEIN automotive. The company, which has so far been owned by Czech owners through the investment fund K-Invest, is now being acquired by the global company MAGNA Automotive Europe. The acquisition is the largest investment in the industry this year.
The client was advised on the sale by the firm’s specialised M&A team consisting of partner Václav Audes, senior associate Silvie Király and legal assistant Filip Pavlík.
KLEIN automotive, a Czech company with a manufacturing plant in Štíty, specialises in the manufacture and supply of car bodies and other automotive components and employs around 500 people. The Canadian MAGNA Group is one of the world’s largest automotive suppliers. It focuses on the manufacture and supply of automotive systems, assemblies, modules, and components for original equipment manufacturers of passenger cars and light commercial vehicles. It has a total of 347 manufacturing sites and 87 development, engineering, and sales centres in 28 countries around the world. It employs nearly 160,000 people.
The merger between MAGNA Automotive Europe and KLEIN automotive was also subject to approval by the Office for the Protection of Competition. The latter has already approved the transaction in a simplified procedure.
No business wants to run the risk that its distribution, agency or supply agreements (also known as “vertical agreements”) are found to be unlawful and invalid. Even worse, no business wants to be trapped by a competition authority and pay fines or be sued by its clients for private damages because of such unlawfulness. Compliance with competition law is key and the only sensible way forward.
The most efficient way to secure the validity and enforceability of vertical agreements under EU competition rules is to make use of a so-called “block exemption”. The concept of a block exemption is rather straightforward and relies on a “tick the box” exercise. If that exercise is successfully carried out, the agreement and each of its restrictions benefit from an automatic exemption. No problems of validity or enforceability, no risk of fines. The block exemption operates therefore as a safe harbour for distribution, agency and supply agreements.
It is a must for legal practitioners (both in-house and external) to be familiar with the block exemption and its requirements. Better safe than sorry. The block exemption is relevant in every EEA country and in every line of business.
Currently, Commission Regulation 330/2010 provides the block exemption that applies to distribution, agency and supply agreements. It is often referred to as the “VBER”. The VBER is accompanied by the “Vertical Guidelines”, which are designed to help businesses to assess the distribution law rules.
The VBER’s impact is wide ranging. It covers all types of distribution set-ups, including exclusive distribution, selective distribution, free distribution, agency and franchising. It contains rules concerning e-commerce. It addresses specific restrictions such as limitations on the setting of prices, exclusivity, territorial restrictions, location clauses, customer restrictions, non-compete obligations and the like.
The VBER will expire on 31 May 2022.
Preparations for the new block exemption regime are in full swing. The European Commission has published its proposals for a new VBER and a new set of Vertical Guidelines. Public and expert consultations are in the meantime taking place. The general direction for the future is therefore gradually becoming known. Amended proposals are expected to be released beginning 2022.
Important changes are in the pipeline, affecting all players in the field operating at different levels of the production or distribution chain. These new rules will apply with respect to any offline and online businesses, and those of their suppliers, customers, distributors and competitors. Put differently, these changes will have a direct impact on every company that makes use of distribution agreements.
However, the differences with the existing VBER regime are often rather technical and the practical implications are not always immediately apparent. It is therefore not so easy to know what is coming and how to best prepare. This may lead to legal uncertainty and therefore, up-to-date guidance is key.
One of the missions of the Distribution Law Center is to provide accessible information on the law applicable to vertical agreements. In line with that mission, the Distribution Law Center will start as of next week with the release of “DLC countdown” newsletters providing practical, comprehensive and hands-on guidance on the changes to be expected. The input is based on the most recent proposals issued by DG Competition and may change as amended proposals become available.
Counting down towards 1 June 2022, we aim to provide you with regular updates as well as the necessary legal knowhow in order to fully prepare your business for the future. We will be your reliable source of information with respect to this complex area of law.
MORE CONTENT OFFERED BY THE DISTRIBUTION LAW CENTER
Feel free to check out the Distribution Law Center platform for much more information on the laws governing vertical agreements, covering both competition and commercial law. 27 specialized teams from all over the EEA are working hard to turn the platform into your favourite source of guidance and information.
The “DLC countdown” newsletters are offered to you by HAVEL & PARTNERS.
If you need more information or our assistance with setting up the distribution system, please contact Robert Neruda or Štěpán Štarha, who are the firm’s partners responsible for this area.
The other law firms participating in the Distribution Law Center are the following: Arntzen de Besche, Arnecke Sibeth, Banning, Cederquist, Chrysses Demetriades & Co, CMS Francis Lefebvre, contrast, Delchev & Partners, Dittmar & Indrenius, Divjak Topić Bahtijarević & Krka, Eisenberger + Herzog, Eversheds, Horten, Kyriakides Georgopoulous, Modzelewska & Paśnik, Muşat & Asociaţii, Pavia e Ansaldo, Pérez-Llorca, Philippe & partners, SBGK, Šelih & partnerji, SRS Advogados and TGS Baltic.
WANT TO KNOW MORE? STAY TUNED…
Counting down towards 1 June 2022, we aim to provide you with regular updates and the necessary legal knowhow in order to fully prepare your business for the future. Please also check out the Distribution Law Center platform (www.distributionlawcenter.com) and our LinkedIn page for much more information on the laws governing vertical agreements, covering both competition and commercial law. 27 specialized teams from all over the EEA are working hard to turn the platform into your favourite source of guidance and information.
Overview of existing regulations or emergency measures governing liability for harm caused by COVID 19 vaccine (liability for result of vaccine application, assuming there are no vaccine defects, i.e. general rules on liability for defective medicinal products excluded)
