Ministry mulls tougher criteria for business visas

This article is an extended version of the report which appeared in April 20's print edition of The Prague Post.

The Interior Ministry has confirmed it is considering setting a minimum investment level for non-European Union nationals seeking residency by establishing a business here, but did not comment on reports this limit could be as high as 5 million Kč ($297,500).

The ministry also suggested, meanwhile, that self-employed foreigners could soon face a Czech-language test in order to renew their residency permit.

Petra Schneiderová, spokeswoman for the Interior Ministry, said the ministry was considering requiring "certain levels of investment for entering the Czech Republic with the aim to run a business," without specifying an amount.

The daily Lidové noviny reported last month that a 5 million Kč limit was being considered in order to counteract abuse of the business-visa system for residency purposes.

Schneiderová clarified that the "proof of minimum investment" would apply specifically to those seeking "permission for entry," while those already with legal residence seeking to establish a business would need only to satisfy the same residency requirements as employees.

She added that highly skilled individuals could offset their investment requirement, and that after two years of legal stay here a foreigner could apply for a separate residency permit without having to invest. She said the proof of investment would apply only to business visa (known as the D visa) applicants, and not to trade licenses.

"Foreigners working on trade certificates would after the new law coming into effect only have to comply with the rules for residence extension, not with the new law for entering the country," she confirmed.

She said that for such foreigners in future, the "the requirements for extension will be similar to the existing rules," but added that a Czech-language test was on the way. "A self-employed person will be newly required to have a knowledge of the Czech language, which will be examined during the extension" application process, she said.

'Huge chaos'

Roald A van de Munt, director of Prague expat accountancy firm Alexio.cz, said that, if implemented, a 5 million Kč minimum investment would "kill off 90 percent of businesses owned by foreigners" in the Czech Republic.

Van de Munt told The Prague Post he believed the government was intentionally making it harder for non-EU nationals to live and work here. "Overall, it has become more complicated and more expensive to stay as a foreigner after the initial six-month business visa," he said.

"I have the strong impression that the current changes to the Aliens Act were not at all thought through completely," he added, in reference to a set of changes  introduced Jan. 1 that had only been passed by parliament just ten days beforehand.

"As usual for Czech Republic, something has been implemented without thinking of the consequences and government personnel being trained and being ready for the job. In short: it is a huge chaos, with months of delay, unclear rules causing visas and trade licenses of people that have been here for years to expire, leaving them without possibility to legally stay or earn money."

Jana Zelová, a manager at the Global Visa solutions department of PwC, agreed that the Jan. 1 changes consisted of the Czech government being "stricter and more selective" with its immigration rules, but added that many of the changes were required under EU directives.

Van de Munt said he believed "the new requirements for the minimum income for people on a [trade license] for extending a D-visa for business purposes will have a catastrophic effect to thousands of foreigners. Many of them will not be able to meet these requirements and will be forced to leave."

Zelová agreed, estimating that the requirement for a bank balance to demonstrate financial means would run as high as "160,000 Kc for a spouse and two kids, even if the head of the family is employed and receives a regular salary. "For some foreigners or companies, these rules can be deciding factors whether to stay in the Czech Republic," she said.

Regarding insurance, Van Van de Munt said, "It used to be 5,000 Kč per year for the 'emergency' health insurance, which is now only acceptable to the first [six-month] business visa. For an extension of a D-visa other than for employment purposes, the 'complex care' health insurance [starting at 14,000 Kč per year] is required."

However, he said, he believed this rate was "actually not such a bad deal" and pointed out EU citizens have long been paying monthly health insurance contributions that can run to as much as 3,000-10,000 Kč a month.

Zelová said many of her clients were upset by both the new insurance requirements and the income requirement. "Our clients were surprised by the new requirement on complex health insurance (which is very expensive), especially when they already have some kind of insurance from their employer which covers the whole family (any medical expenses are fully covered) but which is not accepted by the ministry. "Also, the need to prove the balance of their bank account is very unpleasant for them," she said.

Van de Munt said that while he did not object to having legal limits in place to police immigration, he said he would much prefer a "a stricter selection at the gate, and a stricter check to see if the foreigner - after getting the visa - really is living here, but lower income requirements than what is used now."

"I think it is extremely difficult to set up a business and have a decent income all within six months of arrival to a strange country. Usually, it takes several months before people get settled. Therefore, I am also not too thrilled about the first business visa being only six months instead of 12," he said.

"Worst of all is that so many of the renewals are still pending, so it is extremely hard to predict which applications are successful and which are not," he continued.

"We had hoped that after the March 31 deadline for filing income tax, renewal applicants would get notified, and that the ministry would use the income tax return to 'filter out' anybody with too little income," Van de Munt said. "However, this has not been the case. Still simply everybody is waiting."

Zelová echoed the complaint about the paperwork backlog. "The ministry inherited more than 10,000 undecided applications, and this has drastically delayed the decision-making process; unfortunately, even four months after the takeover of the agenda, these delays have not been reduced, and we have certain clients who have been waiting for the decision on extension of their visas since October 2010," she said.

Schneiderová said the aim of recent changes to requirements for business visas related to insurance and income checks was to ensure "the circumvention of requirements for the issuing of permits would be prevented."

Last year, the Finance Ministry said that out of the 61,000 third-country nationals registered for business purposes, only 18,500 register with tax authorities as required by law within 30 days of being authorized to trade here.

Zuzana Šermesová, director of the Contact Center for Foreigners in Plzeň, said last year that most of the around 500 clients her organization deals with each month come from Vietnam, Ukraine and Mongolia, and that she had heard "many people lie about owning businesses to stay in the country." (See "Visa rules change," The Prague Post, June 9, 2010)

January blues

Under changes to the Aliens Act implemented Jan. 1, non-EU nationals were no longer able to apply in-country for visa and residency permits, the required minimum health insurance coverage for such applicants was doubled to 60,000 euros, and applicants had to prove they had secured accommodation. The bulk of the application process for obtaining a visa or residency permit was also transferred from the Foreigners Police to the Asylum and Migration Policy Unit, a division of the Interior Ministry.

This change was designed by the government to both streamline the application process and free up the Foreigners Police to conduct more audits and investigations to track down people staying here illegally.

Zelová said that this move away from what she called "the infamous Foreigners Police" was to be welcomed, and said her company had observed that "the approach to foreigners is friendlier thanks to the transfer of competencies to the Interior Ministry."

Further changes being implemented May 1 will mean all applications and renewals for long-term and permanent residency must submit photographs and fingerprints. The requirement for all foreigners to come in person - and not just send an intermediary - for any business related to their applications will also take effect next month.  

The Czech Republic has also introduced the EU-wide Blue Card program, under which highly skilled non-EU nationals can obtain a two-year residency without going through the full work-permit process.

To secure a Blue Card, applicants must be university-educated and have an offer of a job that would earn them more than 1.5 times the national average wage, currently around 26,000 Kč.

The Czech visa process proves a chaotic experience for most foreigners, including students who may face several months of paperwork even though they will only be in the country for six months.

Kimberly Strozewski, director of CET Prague Programs, told The Prague Post earlier this year that every semester, the company loses an average of 10 students who simply give up on their study abroad due to paperwork problems, costing the firm revenues of $200,000.

-          Klára Jiřičná contributed to this report.

Bill Lehane can be reached at
blehane@praguepost.com