Ammunition has its own law. What should licensed companies not underestimate?
A new law on ammunition came into effect at the beginning of the year. In addition to the legal definition of ammunition, the new regulation introduces a number of changes in compliance, internal processes, security, and record keeping. Some of the new obligations must be fulfilled within six months of the law coming into effect. We summarise the key changes that companies should be aware of.
End of paper documents and ascent of digitisation
Physical documents, such as ammunition cards and ammunition licences, have been replaced this year by electronic records in the Central Firearms Register. The decisive factor is therefore the existence of authorisation in this register. Communication with administrative authorities takes place primarily electronically.
Watch out for deadlines
Holders of ammunition licences must fulfil the following obligations within six months of the law coming into effect:
- register employees with ammunition permits in the central register
- make an inventory of ammunition
- submit to the police their internal rules for handling ammunition drawn up in accordance with the requirements of the new law.
Holders of ammunition handling cards will be required to provide a new medical certificate upon request by the police.
Stricter internal processes and clear rules
Another fundamental change is that ammunition licence holders are now required to develop and regularly update internal regulations and compliance programmes that reflect the new requirements of the law. These requirements include, in particular, electronic records of ammunition and its movement, transport reporting and security obligations, increased safety and storage standards, and employee training at least once a year, including electronic records of completed training. The law also sets out a clear framework for enforcing these obligations.
Impact on transfer pricing
The new law may also affect the setting of transfer prices for intra-group transactions. If companies' expenses increase in connection with the new obligations, or if the distribution of responsibilities and risks between companies involved in these transactions change, it is advisable to check whether these changes are correctly reflected in transfer prices and whether the related documentation has been updated. This will enable companies to avoid ambiguities during tax inspections.
We recommend that companies operating in the ammunition industry review and update their internal processes in a timely manner to ensure compliance with the new legislation. Failure to develop internal rules in accordance with legal requirements or to keep records of regular employee training may result in fines of up to CZK 500,000. Serious deficiencies in an entity’s records of ammunition and its movement may, in extreme cases, even result in a ban on activities.
Serious breaches of obligations may lead not only to administrative sanctions, but also to criminal liability that may affect both the company and the members of its statutory bodies. Properly designed compliance programmes can influence the court's decision on the proportionality of the penalty or even lead to exemption from criminal liability. In addition to public-law sanctions, it is also necessary to consider the possible private-law liability of statutory bodies for breaches of their duty to act with due care.