Browse topics

• Governing law

  Name	Law or Code?
  Civil Code, Act No. 89/2012 Coll.	Law
  Consumer Protection Act, Act No. 634/1992 Coll.	Law
  Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation or GDPR)	Law

  Last modified 7 Aug 2019

• Extra-territoriality

  Czech regulators do not enforce rules against entities operating abroad, unless such entities focus on Czech customers in their activities or otherwise conduct their activities in the territory of the Czech Republic.

  Last modified 7 Aug 2019

• Skills competitions

  General conditions relating to prize promotions stemming from consumer protection law must however be observed. In particular:

  • Competition rules must be transparent, understandable and not mislead consumers.
  • The competition rules should be as detailed as possible in relation to the terms of participation in the contest and the method of determining or selecting winners.
  • It is necessary to plan for a situation when multiple winners share first place, which can happen in certain skill, speed or betting competitions. Unless other terms and conditions have been agreed, participants who achieve the same result would be entitled to an equal share of the prize. If this is not desired, such eventuality should be excluded in the rules. It follows that terms and conditions should be very clear on this point, e.g. by determining the winner as the one who has not only achieved the correct result, but who was the first person to do so.

  Last modified 7 Aug 2019

• Prize draws

  Yes. However, in this scenario, it is necessary to avoid a situation where the prize promotion could be interpreted as a game of chance. Operation of games of chance is regulated by Czech law and is not allowed without a permit. The general distinction is that in order to be interpreted as a game of chance (and therefore subject to gambling regulation), the customer must provide a stake the return of which is not guaranteed and the result of the game must be determined based on chance or other unknown circumstance. In other words, it is not considered as gambling when the game either (i) does not require the customer to provide any stake or (ii) a stake is provided, but the result of the game is not in any way dependent on chance.

  This means that if an element of chance is present in the selection of the winner, the participants must not provide any stakes (payment) the return of which would not be guaranteed.

  Purchase of goods at their usual price or participation in a marketing event is not considered to be a stake. However, participation in a prize promotion cannot be tied, for example, to the purchase of goods at a price above their normal price. Similarly, if the prize promotion takes place via text messages (SMS), the price may not exceed the standard price according to the tariff of the mobile operator. Otherwise, the difference between the normal price and the increased price could be considered to be a stake within the meaning of the gambling regulation.

  Last modified 7 Aug 2019

• Selection of winners

  It is however strongly recommended to set out requirements for the selection of winners and the awarding of prizes and restrictions in the terms and conditions applicable to the prize promotion, especially if the promotion will be offered to consumers.

  The terms and conditions have to be transparent for participants before they enter the prize promotion, which means that among other things, information must be provided about how winners will be selected (e.g. by random draw) and notified (e.g. by email, telephone or regular mail) and what prizes will be awarded and when.

  Last modified 7 Aug 2019

• Judges

  No, there are no particular requirements in relation to judges or judging for skills competitions, but any judging process has to be communicated in the associated terms and conditions of the respective competition in a clear and unambiguous manner before entering the competition, so that the participants are not misled about the judging process.

  Last modified 7 Aug 2019

• Prizes

  There are no particular restrictions on prizes awarded; however, it must be legal to distribute the prize to the person who wins (e.g. no alcohol/ weapons/ tobacco products to minors).

  Last modified 7 Aug 2019

• Registration requirements and fees

  Registration Requirements

  • Prize promotions do not require any registration or permit.

  Fees/Taxes payable

  • The tax consequences must be assessed on a case by case basis.
  • The general rule is that the individual receiving a prize is subject to Personal Income Tax at the rate of 15%. This tax is applicable in case the value of the prize exceeds CZK 10,000 (approx. US$440) and the individual receiving the prize is obliged to observe this tax obligation in his/her tax return.

  Last modified 7 Aug 2019

• Other local requirements

  No.

  Last modified 7 Aug 2019

• Timing

  There are no special requirements in this regard.

  Last modified 7 Aug 2019

• Translations

  Yes. The terms and conditions and other documents relating to the prize promotion must be translated to Czech whenever the prize promotion is directed at consumers.

  Last modified 7 Aug 2019

• Penalties for non-compliance

  Prize promotions are in general supervised by the Czech Trade Inspection. Misleading the consumers in connection with prize promotions may lead to a fine of up to 5 million CZK (approx. US$220,000).

  There is also a possibility that the personal data processing aspects of the promotion could breach the GDPR, which imposes fines of up to 20 million EUR (approx. US$22.4m) or 4 % of the entity's worldwide annual revenue.

  If the prize promotion fulfilled the criteria of gambling as explained above, the entity operating such prize promotion without a permit could be fined with an administrative penalty of up to 50 million CZK (approx. US$2 million) if the entity is a company and up to 500,000 CZK (approx. US$22,000) if the entity is a private individual. Operation of gambling without a license may also trigger criminal liability.

  Last modified 7 Aug 2019

• Restrictiveness of regulations

  As there is no registration requirement for prize promotions in the Czech Republic, and the distinction from illegal gambling is quite clear, we do not consider the legal obligations under Czech law to be onerous.

  The rules in the Czech Republic allow for the organization of prize promotions quite easily without formal requirements. Having said this, it should be taken into account that GDPR has introduced various obligations around processing personal data which have significant application to prize promotions (e.g. use of submissions including personal data, winner publicity, etc.).

  Last modified 7 Aug 2019

• Regularity of sanctions

  As regards sanctions for non-compliance with regulations specific to prize promotions (i.e. as explained above, mainly consumer protection laws), these are not very common. There are cases where companies have been fined for advertising prize promotions with rules which were not transparent for consumers or pretending to run prize promotions while no actual prizes were awarded (false offers of prizes). Such actions were considered by the regulator to be aggressive, misleading or generally unfair commercial practices towards consumers.

  As regards sanctions for unlawful operation of gambling (without a license), these are more common and the regulator in this field imposes serious sanctions for non-compliance. It is therefore important to carefully assess whether the prize promotion does not fulfill the criteria for being understood as gambling in order to mitigate this risk.

  Last modified 7 Aug 2019

• Key contacts
  

  Petr Sabatka

  Partner DLA Piper Prague LLP [email protected] T +420 222 817 670 View bio

  

  Jan Karabeles

  Associate DLA Piper Prague LLP [email protected] T +420 222 817 815 View bio