Entrepreneur

What it means

Under the Commercial Code, an entrepreneur is a person entered in the commercial register, a person doing business under a trade licence, a person doing business under another authorisation under a special law, such as a doctor, lawyer or architect, and a self-employed farmer entered in the relevant register.

Entrepreneur status changes the rules that apply. Dealings between entrepreneurs are governed by the Commercial Code, different limitation periods and late-payment interest rules apply, and an entrepreneur cannot invoke the protection the law grants a consumer.

What matters is whether the person acts within their business activity. A sole trader buying a family car is a consumer for that purchase; buying a van for the business, they act as an entrepreneur. The same applies to providing services and entering into contracts.

How it works in practice

When contracting it pays to check whether the other side is an entrepreneur and to state this in the contract along with the company ID. It determines whether the Commercial or the Civil Code governs the contract, which deadlines apply to complaints, and whether consumer information must be provided.

Entrepreneurs also have public-law duties: registering with the tax office, keeping books or tax records, paying contributions, in some cases using eKasa, and showing mandatory details on invoices and websites. These apply whether or not the activity makes a profit.

For individuals it is important to separate business and private assets, at least in the records. A sole trader is liable for business debts with all their personal assets, which is why riskier activities often prompt a move to an s. r. o. with limited liability.

What to watch out for

Doing business without authorisation, meaning a continuous activity for profit without a trade licence or other permit, is illegal. It brings fines and back taxes and contributions, and contracts made in the course of such activity may cause trouble when enforcing payment.

An entrepreneur who sells to consumers must follow strict consumer protection rules: information duties, the right of withdrawal in distance selling, warranties and complaints. Ignorance of these rules is no defence during an inspection.