CONDITIONS OF TRADESMAN ENETERPRISING IN SELECTED EU COUNTRIES

Elena Širá

ABSTRACT This article represents various conditions for tradesmen in chosen EU countries. We have analysed tradesman entrepreneurship in Spain, Germany and Czech Republic. Slovak tradesmen must undergo specific procedures before starting business abroad. KEY WORDS Formation and the Creation of Business. Tradesman. Enterprising. Trade Licence.

JEL classification: L29.

INTRODUCTION The most common legal forms among small and medium-sized enterprises are tradesman businesses in Slovakia. After accession of Slovakia to the EU, the new conditions for enterprising abroad have been available for Slovak tradesmen. Individual countries differ in conditions and legislation for the establishment of a new business.

BACKGROUND AND METHODOLOGY This paper consists of research survey where we analyzed the available data concerning conditions for operating tradesman businesses in the selected EU countries. The main sources of information are websites devoted to this area, such as web site of Regional Advisory and Information Centre (RAIC), the National Agency for the Development of Small and Medium Enterprises and others. The main objective of this paper is to provide basic information about the differences, conditions and requirements on setting up the tradesman business in the selected EU countries. Our paper deals with this phenomenon in these selected EU countries: Spain, Germany and the Czech Republic. Following methods are exploited in this study:

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- The analysis, which was used for data processing and knowledge processing dealing with conditions of enterprising of tradesmen in the selected EU countries, - Comparative analysis was applied in comparison of different conditions in selected EU countries.

ACHIEVED RESULTS AND DISCUSSION Conditions of tradesman enterprising in selected EU countries

The four EU fundamental rights include the free movement of persons, goods, capital and freedom to provide services. Besides the right to seek in all EU countries, the citizens of Slovakia have the same right to perform business in the EU countries since 1st May 2004 as their own citizens. However, not all EU countries opened their labour markets to citizens of the SR immediately.

Opening of the labour market has had three phases: 1. From 1st May 2004 to 30 April 2006 - access to the EU labour market depends on the legislation of individual member countries. Free access to the labour market was possible for all the citizens of enlarged EU countries (new twenty five) in these countries: Cyprus, the Czech Republic, Estonia, Ireland, Latvia, Lithuania, Hungary, Malta, Poland, Sweden, Slovakia, Slovenia, the United Kingdom. 2. These labour markets - Finland, Greece, Portugal and Spain - were fully opened from 1st May 2006. From 21st July 2006 Italy opened its labour market without any restriction. Partial opening of the labour market was in Belgium, Denmark, France, Luxembourg and the Netherlands. 3. The third period lasted from 1st May 2009 to 30th April 2011. Thereafter, it is not possible to restrict the free movement of workers within the EU and Germany and Austria had to open their markets. [2]

Residents of Slovakia can perform their services in the EU countries after fulfilling the same criteria as the citizens of the given country, regulated by national legislation and trade laws. The basic condition is to prove the expertise and competence to perform the profession. Procedure for handling documents in different countries varies.

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Tradesman Enterprising

Trade licence issued by the trade law is not valid in the EU countries. The member country can set its own conditions for the recognition of professional qualifications. The Slovak citizen can perform its business based on Slovak certificate and officially translated into the language of the selected country in the EU countries only temporarily, intermittently, respectively only once, but not more than 183 days a year. If a Slovak tradesman wants to perform his business in the EU system as a self-employed person, he must comply with trade law and residential rules, like citizens of the given country, if the period of stay exceeds one month. [7] Before the Slovak citizens start to seek authorization to perform trade in the EU countries, they have to visit the regional offices in Slovakia in their place of residence. They issue certificates that allow the applicant to apply for membership in the selected European Union country and to confirm their business licence. The document can be obtained via administrative proceeding within 30 days. The licence is the relevant document for the competent authority of the EU country demonstrating expertise and it also can be issued for such tradesmen, who do not need to prove their professional competency in compliance with the Trade law. The application for the tradesman licence should be completed with these relevant documents demonstrating at least one of the following activities: • experience in entrepreneurship, • experience as a leader of a company, • experience in an employee position, experience as a manager responsible for at least one department of the company, • certificate of education, • trade licence. [7] Certificates from the business practice have had relatively wide range of application. The candidate may use them when dealing with a trade license authorization in one of EU member state, but also in negotiating with business partners, or when applying for a with the foreign employers. Many countries offer the possibility of electronic submission and registration of documents. The basic requirement is to manage the official state language. The other documents must be settled in location where the tradesman wants to operate his business. [8]

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RAIC Prešov developed the recommended procedure for the applicants of tradesman business abroad. The procedure includes the following steps: 1. Find out the contacts on relevant institutions abroad. 2. To be informed about the conditions of enterprising in the target country. 3. To settle the tradesman certificate on the regional office in Slovakia. 4. To ask for E Request forms for social security registration for the given country. 5. Travel abroad and to be registered with the competent institution. [7]

Spain

To set up the business in Spain is relatively complicated and time consuming. Moreover, each autonomous region can further adjust the trade law to their regional legislation. It is advisable to contact the local chambers of commerce, providing information, taking into account the differences of the legislative autonomous region, and having knowledge of the local business environment. A useful source of basic information may also be a www site of Spanish Agency for investment support. Entrepreneurs must perform the following activities: • apply for an identification number for foreigners NIE (Numero de identificación de extranjeros), • ask for tradesman licence authorization, • subscribe to the Social Security Office for the payment of social insurance (in Spain it is connected with the health, pension insurance,etc), • register with the tax office and after assigning the NIE ask for a NIF (Numero Fiscal de identificaction), • in the case of performing services to the general public, such as operation of cafes and shops, it is also required so-called opening permit (license de apertura) issued by local government. [5] The least administratively demanding is to perform the business as an individual entrepreneur, respectively self-employed. For most trades it is sufficient to submit the qualification certificate issued by the Slovak trade association. Supplemented certificates may be required for some tradesman businesses. Recognition of qualifications in these cases is in the responsibility of the autonomous regional authorities.

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Cross-border provision of services Slovak entrepreneurs can perform their services in Spain, as well as in other EU countries temporarily with the Slovak tradesman license. The basis for cross-border services provision is the existing contract between the Slovak entrepreneur and Spanish partner. Slovak tradesman should let his business license be supplemented by Appostile clause, confirming the validity of the document in the Slovak Republic and ask the Spanish authorities about the possible need for recognition of qualifications. This recognition is inevitable in some countries for certain professions for the temporary provision of services. The same procedure is connected with taxation. Before leaving Slovakia to start a business in Spain, the Slovak tradesman must first comply with for cross-border service provision requirements according to Slovak legislation, and then, the conditions applicable in the destination country, i.e. Spain. Entrepreneurs and tradesmen working in Spain should visit these websites: - www.rmc.es - Central Business Register, - www.icex.es - Institute for Foreign Trade. [5]

Germany

In the case of free tradesman licence, the company is set up on the day of notification, after fulfilling the general conditions. In the case of regulated industries, requiring expertise and professional qualification, the issue of business licence is connected with fulfillment of the following prerequisites: • automatic recognition system is applied in the case of the professions as such as doctors, nurses, dentists, veterinarians, midwives, pharmacists and architects, • a system of recognition of professional practice is applied in professions such as production of textile products, manufacture of transport equipment, chemicals and . In some cases, 8 year domestic practice is required., • general system of recognition of professional qualifications is applied to all other professions. In case of significant differences the recognition authority in Germany may set additional compensatory measures or tests. In the case of activities in the with the registration requirement pursuant to Annex A Craft Regulations (Handwerksordung, HwO) the tradesman business should be listed into the Trade Register (Handwerksrolle) by the local chamber of . [4]

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Provision of services by self-employed in Germany Before leaving Slovakia to start a business in Germany, the Slovak tradesman must first comply with for cross-border service provision requirements according to Slovak legislation, and then, the conditions applicable in the destination country, i.e. Germany. Conditions for tradesman performing business abroad valid in Slovakia: • Confirmation that there is that it must be carried out in Germany (locatio operis or order from the German partner), • confirmation that the trader pursues an economic activity in Slovakia, usually at least 2 months (tradesman licence), • confirmation that the trader would be able to work in Slovakia after returning from Germany and continue their existing activities (payment of premiums for the period abroad, operating plant, etc.).

When all these conditions are fulfilled, the local branch of the Social Insurance Agency shall issue a certificate E101 for tradesman, confirming that he has fulfilled the conditions for deployment, and that he is exempt from paying contributions to the German social security system. In the case of regulated professions it is necessary for the trader to show their craft qualification to local chamber (Handwerkskammer, HWK), of the location of his business. For this purpose the most appropriate document is the certificate of the nature and length of practice issued by the local competent Regional Office in Slovakia, depending on the location of business of the self-employed person. To avoid undergoing differential tests or other compensatory measures for regulated trades, the tradesman should have experience in the relevant field for at least two years in proceeding 10 years. This procedure is not required if the work carried out in Germany is the subject to free trade. Entrepreneurs and tradesmen working in Germany should visit these websites: - www.ihk.de - Chamber of Commerce, - www.bm.wi.de - Ministry of Economic Development, - www.zdh.de / org_hwk / HWK / vrtlr.htm - Association. [4]

Czech Republic

In the case of free tradesman licence, the company is set up on the day of notification, after fulfilling the general conditions. In the case of regulated professions, the self-employed are required to prove sufficient qualifications to perform the business in the Czech Republic by the competent Czech authorities. For this purpose the most appropriate document is the certificate of the nature and length of practice issued by the local competent Regional Office in Slovakia, depending on the

223 location of business of the self-employed person. To avoid undergoing differential tests or other compensatory measures for regulated trades, the tradesman should have experience in the relevant field for at least two years in proceeding 10 years. This procedure is not required if the work carried out in the Czech Republic is the subject to free trade. 1 This document, along with other documents must be delivered to the Ministry of Industry and Commerce of the Czech Republic in Prague before starting the business. Following the successful fulfillment of qualifications the Czech authorities put these companies into the Czech register of persons temporarily or occasionally active in the CR. This notice is valid one year. Then the tradesman has to be careful not to establish permanent premises (e.g. own office), permanent establishment or to exceed 12 months after which permanent establishment is automatically set in the building site in the Czech Republic. To register a trade licence, the certificate for the given activity or certificate of secondary education is needed. The tradesman enterprise is then listed in the Czech commercial register. The registration in the chamber of tradesmen is optional. For the production of food and materials with potential impact on human health, tradesman must seek permission from the district hygiene institution. The businessmen and tradesmen operating in the Czech Republic should visit these websites: - www.mpo.cz - Ministry of Industry and Trade of Czech Republic, - www.komora.cz - Economic Chamber. [3]

CONCLUSION Tradesman entrepreneurship is the most prevalent form of enterprising, therefore we decided to study and analyze the conditions in selected foreign countries. We find out these common and different features of these countries. The potential tradesman performing business in these countries must fulfill several criteria such as: knowledge of the language of the selected country and tradesman licence notified in Slovakia. Then, they should have certificates confirming the length of their practice as well as certificates of formal qualifications which are required for some types of trades. Another common feature of the analyzed countries is visiting the websites of the institutions providing advice for start-ups. Since in each country there are different terms for different trades, such institutions provide information to new entrepreneur and also provide an overview of where, on what institutions and offices the prospective entrepreneur must register to.

1 The list of regulated professions in the Czech Republic is available on http://uok.msmt.cz/ru_list.php

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The most difficult conditions for new entrepreneurs from the selected countries are in Spain. This is due to a large autonomy of regions and areas in regulation of regional development policies. One kind of business can have different conditions and rules in each region. It is due to complicated system for the prospective entrepreneur to obtain an identification number for foreigners NIE, later NIF for tax purposes, and in the meantime, to arrange permission to trade and report on the Social Security Office. In providing cross border services, in addition to contracts with foreign partners the so-called business licence need to be supplemented by Appostile clause, confirming the validity of the document in the Slovak Republic. Compared to conditions in Spain, the tradesman enterprising in Germany and the Czech Republic is easier. In case of free trades in Germany and the Czech Republic, fulfillment of general requirements for starting a business is the only requirement. In the case of regulated trades in Germany, in some professions there is automatically recognized qualification, in others the practice must be demonstrated and the other may require additional compensation tests or exams. Document on the nature and length of experience that can replace the differential tests in the Czech Republic must be submitted when listing new regulated business. After submitting these documents to the ministry, the trader is put in the Czech register. After fulfilling given conditions for particular forms of enterprising, the tradesman is registered in the Commercial Register. Registration of traders in the Chamber of tradesmen is not required in the CR.

LITERATURE [1] Ako podnikať v krajinách EÚ. [online]. [citované 3.11.2011]. Dostupné na internete: http://www.nadsme.sk/sk/content/ako-podnikat-v-krajinach-eu> [2] Otvorenie pracovného trhu pre občanov SR. [online]. [citované 15.11.2011]. Dostupné na internete: http://www.profesia.sk/cms/dokumenty-na-stranke/hladanie-prace/co-znamena- otvorenie-pracovnych-trhov-pre-obcanov-sr/43190> [3] Podnikanie v Českej republike. [online]. [citované 12.11.2011]. Dostupné na internete: http://www.nadsme.sk/files/Czech_republic.pdf> [4] Podnikanie v Nemecku. [online]. [citované 12.11.2011]. Dostupné na internete: http://www.nadsme.sk/files/Deutschland.pdf> [5] Podnikanie v Španielsku. [online]. [citované 12.11.2011]. Dostupné na internete: http://www.nadsme.sk/files/Spain_SOPK.pdf>

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[6] Podnikateľské podmienky v Španielsku. [online]. [citované 12.11.2011]. Dostupné na internete: http://www.expatica.com/es/finance_business/business/Business-climate-in- Spain_15719.html> [7] Podnikanie v krajinách EÚ. [online]. [citované 3.11.2011]. Dostupné na internete: http://www.rpic.tv/web/rpic/europe/texty/podnikanie.html> [8] Vykonávanie živnosti v zahraničí. [online]. [citované 10.11.2011]. Dostupné na internete: http://www.eures.sk/vykonavanie-zivnosti-v-zahranici-155-1.html>

*The scientific paper was presented at International Scientific Correspondence Conference EAEP 2012, which took place in the period from 26th to 30th November 2012 (Prešov, Slovak Republic).

CONTACT ADDRESS Ing. Elena Širá, PhD., Faculty of Management, University of Prešov in Prešov, Konštantínova 16, 080 01 Prešov, email: [email protected]

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