Czech Republic: Act on cash payments restriction

Czech Republic

On 1 July 2004, the Act on Cash Payments Restriction, No. 254/2004 (the "Act") will become effective. This Act obliges individuals and legal entities to make payments exceeding EUR 15,000 (or the equivalent in another currency) by bank transfer through a bank; foreign bank branch; savings bank; credit institution or via a postal services provider by way of a voucher payment into a bank account and not in cash.

The obligation to make payments by way of bank transfer applies to payments made between individuals/legal entities resident/having a registered office in the Czech Republic as well as payments by such individuals/entities in favour of individuals/legal entities resident/having a registered office in a foreign country.

The EUR 15,000 limit includes payments made by one payer in favour of another payee in any 24-hour period.

Under the Act, a breach of this obligation may result in a fine being imposed by the relevant authorities (local financial bodies/customs bodies) of between CZK 10,000 (minimum) and CZK 5,000,000.

The Act has partial retrospective effect as it stipulates that if discharge of an obligation by a cash payment, exceeding the limit referred to above, was agreed prior to the date of effectiveness of the Act, such cash payment must be made no later than one year after this Act becomes effective.

For further information please contact Kveta Vojtova at [email protected] or on +420 221 098 847.