Reduction of penalties for late payment of social security premiums by employers

The Government approved a legislative proposal reducing penalties for late payment of social security premiums and contributions to the State employment policy by the employer. The proposed measure aims to improve the employers’ cash flow by postponing their liabilities towards the State.

The draft legislation concerns premiums levied by employers in the amount of 24.8% of their employees’ wages (employer’s premiums) payable for the calendar months of May to July 2020. If the due premium is paid not later than by 20 October 2020, the employer will be required to pay only 20% of the standard penalty for late payment stipulated by the Insurance Premiums Act. The reduced penalty will thus correspond to approx. 4% interest rate per annum.

To obtain the reduction, the employer must pay the part of the social security premiums levied for employees properly and in due time, i.e. in the amount set out in the overview for the relevant month and by the 20th day of the following calendar month. Employers are thus still obliged to submit overviews and pay premiums for their employees by the regular deadlines.

On the other hand, the Government’s proposal does not require employers to prove a negative impact of the COVID-19 extraordinary measures, and the reduced penalty for late payment of the employers’ premiums is thus available to all employers.

Any outstanding premiums and penalties in the period between 21 June and 20 October 2020 will not be considered arrears in premiums and penalties for the purposes of confirming the employer’s good standing, which means that postponement of payment of the employer’s premiums for the months of May to July until 20 October 2020 should not prevent them from obtaining a possible refund under the Antivirus programme.

The amendment further introduces mandatory electronic submission of overviews (save for certain exceptions, e.g. technical difficulties in submitting an electronic overview) and cashless payments of premiums. The proposed amendment must be approved by the Parliament and signed by the President.

Penalties for late payment of health insurance premiums for the period from March to August 2020 have already been waived by an amendment to the Public Health Insurance Premiums Act, on condition that the premiums are paid not later than by 21 September 2020. The waiver of penalties for health insurance premiums should apply to late payment of both employer’s and employees’ premiums.

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