Free trade licence

What it means

A free trade licence is a notifiable trade for which the Act asks no professional qualification. The general conditions are enough - age, legal capacity and a clean record - which is what separates it from a craft trade and a regulated trade.

It is not a separate kind of business, only the least demanding of the three notifiable trades; the licensed trade stands outside them. The Ministry of the Interior keeps a list of recommended wordings, yet the list is open: an activity no other statute governs can be notified as well.

Not every activity can be notified as a general trade. Some professions do not run under the Trade Licensing Act at all but under their own statutes: legal practice, medical practice or audit, for example. A loosely worded business activity does not get round those rules; no authorisation for that work arises.

How it works in practice

The notification goes to the trade licensing department of the district office, which acts as a single point of contact: one filing covers the register entry and the notice to the health insurer. The authorisation arises on the day of notification unless a later day is stated.

An administrative fee is charged per activity notified, but the schedule charges nothing for a free trade notified electronically: on paper a long list of activities costs money, through the portal it does not. For income tax the tax office registers the entrepreneur of its own motion from the register data.

When setting up an s. r. o. we notify the general trades as one of the first steps, because the trade authorisation is a basis for entry in the Commercial Register. We word the business activities identically in the deed of incorporation, the Commercial Register and the Trade Register, so the court and the bank read them as one list.

What to watch out for

The list of activities is copied from a competitor and what the firm actually does is missing from it. Invoicing outside the authorisation is unlicensed trading, which the trade office fines, and a public contracting authority will not accept the work as a reference.

The trader moves house or changes the place of business and does not tell the office. Failing the notification duty can bring a fine, and the data in the Trade Register stay out of date, so other authorities go by them too and letters are sent to an address where nobody collects them any more.