Types of association
Position of an alien in the process of establishing an association
Why establish a civil association
Further life of a civil association
Cessation of a civil association

Types of association

The law On the Association of Citizens regulates the establishment of societies, associations, unions, movements, clubs and other civil organizations, including trade unions, and associating in them. This law does not apply to:

• association of citizens in political parties and movements that is regulated by the law No 424/1991  On Associating in Political Parties and Political Movements;

• association of citizens with the aim of engaging in gainful activity that is regulated by the law No  513/1991, the Commercial Code;

• association of citizens to ensure due execution of certain professions that is regulated by laws which regulate associating in professional associations;

• association in churches and religious communities that is regulated by the law No 3/2002 Churches and Religious Communities.

 

Position of an alien in the process of establishing an association

Association comes into existence on the basis of the registration by the Ministry of Interior of the Czech Republic. Proposal for the registration needs to be submitted by three citizens as minimum, at least one of them must be over 18 years of age. These persons represent a preparatory committee. Members of the preparatory committee need to have personal identification numbers which they indicate in the proposal for registration. This means that aliens who have no personal identification numbers, cannot submit their proposal on their own. If aliens without permanent stay in the CR want to establish a civil association, they need to find at least three persons who have been granted permission for permanent stay in the CR, who set up a preparatory committee and develop a proposal for registration.

Personal identification number is issued by police to aliens who have applied for permanent stay according to the law No 133/2000 On Recording of Citizens and Personal Identification Numbers. They sign the proposal and they indicate their names and surnames, personal identification numbers; also they indicate a member over 18 years of age, who is a proxy authorized to act on their behalf.

Enclosed to the proposal is the Statutes in two copies which needs to include: name of the association, its seat, objectives of its activity, bodies of the association, method of their establishment, appointment of bodies and officials authorized to act on behalf of the association, provisions concerning its organizational units (if established and if they are to act on their behalf), management principles. It is recommended that the Statutes should define who is a member, how to become a member and how one ceases to be a member, what happens to the property (assets) of the association in case that the association ceases to exist.

The Statutes shall not force anyone to associate or to engage in an activity, it shall not prevent anyone to absent from the association

If the proxy of a preparatory committee does not receive the decision of the Ministry of Interior of the CR on rejecting the registration, the association comes into existence on the day following the deadline; this is the day of registration.

The Ministry of Interior shall decide on the rejection of registration within 10 days from the commencement of proceedings. Decision shall be delivered to the proxy of a preparatory committee. Members of the committee can appeal the decision to the Supreme Court of the Czech Republic within 60 days from the delivery of the decision.

When registered, the association is assigned the identification number of an organization by the Ministry of Interior and it needs to register with the Tax Office appropriate to the seat of the association within 8 days from the registration.

Detailed information on setting up civil associations, political parties or political movements, as well as their lists, can be found on the website of the Ministry of Interior of the Czech Republic

Why establish a civil association

If a larger number of people wish to systematically engage in an activity based on a common interest, or an activity in a cultural or social sphere etc. (i.e. not to do a business or engage in a gainful activity), it is possible -and sometimes even useful- to set up a civil association, i.e. an entity which has a legal personality. What are the benefits of this step:

·         If a given group of people engages in an activity under a name, such trademark can be better protected against misuse by other persons when it is a name of a legal entity. It will be more difficult for an informal group of people to prove its authorship of this name.

·         Legal entity can acquire assets, i.e. contributions to support the activity will become membership fee. Things intended for the activity of the association are secured for this purpose in a much better way, if they are in the ownership of the association than if they remain to be owned by individual members.

·         Donations to a civil association usually are not subject to taxation.

·         Property of the association is separated from the property of its members. If the activity financially fails, the association ceases to exist but the property of its members remains untouched.

·         Statutes of the association ensure that  the group  becomes organized (mostly democratically) and develop  the rules for the handling of conflicts which can help overcome this type of problems.

Further life of a civil association

Association should function in compliance with its Statutes. If the Statutes are breached, it is not the issue for the state but a member of the association needs to file a sue to the court to determine, whether a decision of the association complies with the statutes.

Tax return shall be submitted (every year by the end of March) in case that the association has generated an income which is not exempt from taxation.  Exempt from taxation are e.g. membership fees or donations to finance activities of the association in the field of culture or sports, if these activities are indicated in the Statutes. (see Art.20, par.4 of the law No 357/1992 and Art.38 par.7 of the law No 586/1992 On the Inheritance Tax, Gift Tax and Real Estate Transfer Tax.

Amendments of the Statutes shall be reported to the ministry within 15 days from their adoption; the ministry can reject them, if they are contrary to law.

Cessation of a civil association

·        as a result of voluntary dissolution or a merge with another entity which can be decided by the supreme body of the association, as a rule by General Assembly. The Statutes can define a different method of the cessation of association, e.g. due to the decline of membership below a certain number.

·        due to the dissolution  by the Ministry of Interior in case that the association breaches the law or that it introduced a change in the Statutes which is contrary to law (this decision can be appealed to the Supreme Court).

·        due to death or disappearance of the last member (assets then automatically devolve onto the state).

A long term inactivity and malfunction of the association does not result in its dissolution; it is a breach of the Statutes which can be sued at the court.

If the association is wound up, it is liquidated by a liquidator appointed by the Ministry of Interior. Property of the association shall be devolved onto a subject defined by the Statutes, otherwise onto the state.

 Legislation:

Law No.  83/1990   On the Association of Citizens

Law No  357/1992  On Inheritance Tax, Gift Tax and Real Estate Transfer Tax

Law No.  586/1992  On the Income Tax

Law No.  133/2000  On  Recording of Citizens and Personal Identification Numbers