Czech Business Today

Most entrepreneurs do not distinguish whether an exemption, requirement, or obligation has been added by national or European legislation. For them, the obligations simply come as a package. But all that glitters is not gold: when European law is transposed into the Czech legal system, additional obligations sometimes appear on top of those required by the EU directive. European rules (directives and regulations) are incorporated not only into acts adopted by Parliament but also into secondary legislation (decrees, government regulations). This is when “gold plating” occurs. Sometimes it is intentional—trying to be “more Catholic than the Pope,” or using the opportunity of opening a law to add various amendments—but sometimes it results from an error or an incorrect interpretation. We all remember the unfortunate case of the need to pack any simple doughnut required by the Czech legislation, while pretending the EU wanted.

For companies, such gold plating means additional costs, a weakening of their position, and an overall deterioration of business conditions on the internal market, including legal uncertainty due to differing interpretations of the rules.

And what can we do about it?

1. It would be effective to consult Czech stakeholders affected by the changes already at the very beginning of the creation of a European regulation—that is, during the formulation of the Czech position on EU initiatives—in order to avoid unnecessary administrative burdens. After 21 years in the EU, the Czech Chamber of Commerce is consulted only when the final version is agreed and being transposed into Czech law! This is in contrast to national legislation, where it is consulted from the very beginning. We still treat EU law as an appendix rather than as our own law.
2. We need high-quality impact assessments (RIA) of the economic effects that the transposed EU legislation will have on Czech entities. This cannot be brushed aside with a simple phrase like “the economic impact will be minimal.”
3. Using a “public-law obligations table,” in which each law is analyzed individually and its often complex text is clearly structured in table form, would help us understand what additional obligations we are adding at any given moment.
4. By conducting reviews of the effectiveness of imposed obligations, we could determine whether individual obligations are still necessary, actually complied with, monitored, and—if needed—sanctioned. Such reviews would assess the bureaucratic burden associated with fulfilling each obligation—whether the burden is still justified and whether it could be reduced in the coming period. This review could also serve as feedback for the European Commission and as a potential signal for amending or correcting an act.

This topic is being addressed within the Czech regulatory landscape by MEP Jan Farský, who organized a debate on this issue in early December in Prague together with AMO – the Association for International Affairs. To address gold plating, it’s not only about changing methods and guidelines for public administration and politicians; it’s more about cultivating a mindset and willingness to regulate less — and regulate better.

Alena Mastantuono, Representative of the Czech Chamber of Commerce in Brussels