In accordance with such principle, Article 56 of the Treaty establishing the European Community prohibits any restrictions of the free movement of the capital, both between European Union member states and in relation to third countries. On the basis of these freedoms, citizens of the European Union are free to acquire real estates in other states of the European Union without any restrictions. Upon its accession to the European Union, the Czech Republic was granted two exemptions related to the above mentioned Article 56 of the Treaty establishing the European Community, which were implemented by the introduction of the so-called transition periods for the acquisition of real estate in the territory of the Czech Republic.

During these transition periods, certain restrictions were maintained in the area of the acquisition of domestic real estate by foreign persons, and that in the duration of 7 years for the acquisition of farmland and woodland, and in the duration of 5 years for the acquisition of other real estate. Both transition periods became effective as of the Czech Republic’s accession to the European Union, i.e. as of 1 May 2004, and were incorporated into documents signed by the Czech Republic upon its entry into the European Union. These transition periods are implemented in the Czech law by the Foreign Exchange Act (Act No. 219/1995 Coll.).

With respect to the above mentioned, in the case of land which is part of the agricultural land resources, and land designated for the fulfi lment of forest functions, the transition period still lasts and will end in May 2011 (i.e. on the expiry of 7 years from the Czech Republic’s accession to the European Union). As regards other types of real estates – especially residential and commercial – the exemption restricting their acquisition by the foreign persons, granted for 5 years from the Czech Republic’s accession to the European Union, expired in May 2009. The acquisition of this type of real estates is thus no longer restricted, despite the fact that the respective amendment to the Foreign Exchange Act has not yet been approved by the Parliament of the Czech Republic.

To summarize, as regards the acquisition of real estates in the Czech Republic by the foreign entities, the Foreign Exchange Act still distinguishes two categories of real estates, namely the agricultural and forest land, and other real estates. Both types of real estates may be acquired without restrictions by individuals with permanent residence on the territory of the Czech Republic or legal entities with the registered offices in the country (resident status). Foreign individuals and legal persons (non-residents) are restricted at present only from the acquisition of the agricultural and forest land because, due to the expiry of the five-year transition period, they are entitled to acquire other real estates under the same conditions as the resident individuals and legal entities.