Summary of measures aimed at providing support and relief to businesses and employees

TAX MEASURES RESULTING FROM THE GOVERNMENTAL TAX LIBERATION PACKAGES

Generally-applicable measures not requiring individual applications:

• Waiver of penalties for the late filing of personal and corporate income tax returns for the 2019 taxable period without the tax advisor’s assistance and a waiver of default interest for the late payment of an income tax liability if the return is filed and the tax paid before 1 July 2020.
• Waiver of personal and corporate income tax prepayments payable on 15 June 2020 without having to apply for a waiver. This only applies to taxpayers using the calendar year as the taxable period.
• Suspension of electronic reporting of sales (ERS) until three months after the end of the state of emergency, declared on 12 March 2020 for 30 days and subsequently extended until 30 April 2020.
• Waiver of penalties for the late filing of tax returns where individual applications for the waiver of default interest or interest on the deferred sum for the late payment of tax in connection with these tax returns have been granted.
• Waiver of CZK 1,000 penalty for the late filing of VAT ledger statements between 1 March and 31 July 2020. These penalties are charged for the late filing of VAT ledger statements if the statement is submitted before the tax administrator’s call on the taxpayer to do so.
• Waiver of penalties for the late filing of VAT returns where individual applications for the waiver of penalties for the late filing of VAT ledger statements have been granted (i.e. penalties other than basic ones of CZK 1,000 waived on a general basis), but only if the taxpayer submits a VAT return no later than on the date a late VAT ledger statement is filed.
• Waiver of penalties for the late filing of immovable property acquisition tax returns and related default interest for the late payment of tax or its prepayment. This applies to all tax returns with a filing deadline between 31 March and 31 July 2020.
• Waiver of administrative fees for selected applications relating to taxes and customs filed before 31 July 2020.
• Waiver of default interest and interest on the deferred sum for the failure to pay road tax prepayments payable on 15 April and 15 July 2020 if these are paid before 15 October 2020.
• For VAT payers, a waiver of VAT on the gratuitous delivery of goods intended to fight the coronavirus pandemic or the gratuitous delivery of goods needed to produce such goods (e.g. selected medical supplies or devices, or protective supplies).

Measures requiring individual applications:

• On an individual basis, it is possible to apply for a waiver of default interest, interest on the deferred sum and other penalties for the late filing of VAT ledger statements if a causal relationship with the coronavirus can be sufficiently proven.
• A special application is required for tax deferral.
• Based on guidelines of the GDF of 15 April 2020, it is newly also possible to apply for deferral of advance payments with regard to personal income tax on dependent activities for the period from February to July 2020, and in the case of the withholding tax payable by 31 March at the latest, for deferral up to 31 August 2020, which was not possible under the previous guidelines. However, the deferral cannot go beyond 30 September 2020 and it is necessary to prove a causal relationship with the coronavirus pandemic.

Proposal to abolish immovable property acquisition tax

The Government has passed a proposal to abolish immovable property acquisition tax for transfers of property; the proposal will thus be further discussed by the Parliament. The proposal is related to an amendment to the Income Tax Act and includes the following conditions:

• abolition of the tax concerns transfers of immovable property where the deadline for filing a tax return expires on 31 March 2020 or later, i.e. transfers registered in the Land Registry after 30 November 2019;
• cancellation of the option for natural persons to deduct from the tax base interest on loans used for financing their housing needs, specifically for purchases effected after 1 January 2022;
• extension of the time test for exemption of income from the sale of immovable property not intended for the owner’s own living, specifically from 5 years to 10 years (the original proposal suggested a 15-year test). This extension should apply to sales of immovable property carried out after 1 January 2021;
• the exemption will remain in effect if the seller uses the proceeds from the sale to satisfy his/her own housing needs.

SUPPORT FOR BUSINESSES THROUGH FULL OR PARTIAL COMPENSATION OF WAGE EXPENSES (ANTIVIRUS) 

On 1 April 2020, the Government approved “Antivirus”, a targeted programme to support employment, defining the rules for the provision of contributions for wage expenses to employers directly or indirectly affected by the governmental emergency measures. From 6 April 2020, employers may apply for contributions for March, i.e. for the period from 12 March to 31 March and subsequently for the months of April and May. Moreover, it is debated whether the programme should also include wage expenses of employers who managed to stay in business or are in the process of its renewal. 

The Antivirus Programme distinguishes between Regime A and Regime B, varying in the grounds on which the impediment to work arose and in the provided contribution amount.

Regime A

• In the case of a quarantine order, employees will receive wage compensation equal to 60% of average reduced earnings (impediment on the employee’s part);
• In the case of a closure of premises/operations due to the governmental resolution, employees will receive a 100% wage compensation (impediment on the employer’s part).

Regime B

• Impediments to work on the employer’s part due to a quarantine order or care for children involving a significant part of employees (30% and more) – employees will receive wage compensation equal to 100% of average earnings;
• Unavailability of inputs (raw materials, products, services) necessary for business activities –  employees will receive wage compensation equal to 80% of average earnings;
• Restriction of demand for services, products and other deliveries –employees will receive wage compensation equal to 60% of average earnings.

Under Regime A, the state will provide employers with a contribution equal to 80% of the wage compensation paid to employees subject to quarantine order (i.e.  80% of the wage compensation determined as 60% of average earnings) and to employees of closed premises/operations (i.e. 80% of wage compensation determined as 100% of average earnings). The monthly wage compensation per employee amounts to a maximum of CZK 39,000.

Under Regime B, i.e. the restriction of production due to the lack of raw materials/materials, shortage of labour or the lack of demand, the state will provide employers with a contribution equal to 60% of the wage compensation paid to employees (wage compensation equalling 60% to 100% of average earnings). The monthly wage compensation per employee amounts to a maximum of CZK 29,000.

The amount of compensation/contributions provided to employers is derived from the average super-gross wage including mandatory payments (CZK 48,400): 80% and 60% of this amount under Regime A and Regime B, respectively.  

Support can be obtained by employers who:   

• have at least one employee under an employment relationship who participates in the sickness and pension insurance scheme  
• fall under Regime A or Regime B criteria of the Antivirus Programme; 
• have actually paid wages or wage compensation to their employees while also making relevant mandatory insurance payments.  

On 2 April 2020, the Ministry of Industry and Social Affairs published a manual for employers containing detailed information on how to apply for contributions, clarifying who may not apply for contributions and specifying the programme’s criteria in more detail. The manual has been prepared for informative purposes only and is being continuously updated by the ministry. Currently, the fourth version of the manual is valid.

The Antivirus Programme does not apply to the following situations:  

• Salary compensation (state employees, etc.).  
• Compensation of wages if these are covered by other public budgets – it must be proven that the employer is not drawing double support for a wage or its part for the same period (and separate records must be maintained). Companies receiving investment incentives or grants should therefore be extra careful!
• Reimbursement of expenses arising from agreements to complete a job or agreement to perform work.  
• Employees who have been given a notice of termination of employment (excepting notices pursuant to Section 52 (g) and (h) of the Labour Code).  

• Employers who have received other contributions for their employees from the Czech Labour Office.  
• Applicants subject to liquidation/bankruptcy proceedings. 
• Applicants on whom penalties for allowing the performance of illegal work (i.e. enabling foreign nationals not having residence permits to perform work) have been imposed over the last three years. 
• The condition of non-existence of the applicants’ debts towards public budgets was cancelled by an amendment to the law as of 14 April 2020. It is thus no longer necessary to prove the non-existence of debts; nonetheless, employers should honour their obligations towards public budgets.
• Moreover, the entitlement does not cover members of the governing body, i.e. for example, executive directors and members of the board of directors. The Antivirus programme provides a partial refund of the employer’s costs of the statutory compensation for salaries paid to employees during the existence of impediments to work, and therefore does not, as a rule, apply to the discharge of the office of director. The refund under the Antivirus programme may only be granted for directors who are simultaneously employed with the company under an employment contract. The manual clarifies that the Ministry of Labour and Social Affairs does not consider a contract signed by the same person on both sides (i.e. both for the employer and for the employee) to be a valid employment contract.
• Foreign employers are also entitled to support from the Antivirus programme according to the manual; this is provided that they have employees with contracts governed by the Czech laws and meet other conditions of the Antivirus programme. This is true even of employers without a Czech identification number, who are asked to give their social security number in the relevant on-line application instead. Foreign employers must, however, open an account with a Czech bank because the refund cannot be remitted to a foreign bank’s account.

Cost eligibility period: 12 March to 31 May 2020. Any other extension of the cost eligibility period is subject to approval by the Government and further development of the epidemiological and economic situation. 

Acceptance of applications (from 6 April 2020): 

Application submission

• Via a web application. 
• With a local labour office based on the employer’s registered office address. 
• To file applications, employers must have a data box or an email address with a recognised electronic signature. 

Documents supporting applications  

• Document on the opening of the applicant’s bank account to which the labour office will send funds. 
• Document on the representation of an employer (by the authorised person) only if a person other than a person authorised to act on behalf of the applicant has been authorised to deal with the application and only if such a document has not already been submitted to the labour office in the past. 

Concluding an agreement  

• An agreement is generated automatically after an application is filled in. 
• An agreement is concluded once it is signed by the labour office and send back to the applicant via a data box or an email with a recognised electronic signature. 

Statement of compensated wages

• Employers shall perform a monthly payroll close and pay wage compensation and relevant mandatory payments to employees within a standard deadline.  
• Subsequently, employers shall submit to the labour office the statement of compensated wages including mandatory payments.  
• The statement must contain a list of employees for whom contributions are requested, with their birth certificate numbers or insured persons’ registration numbers

Providing contributions

• Contributions will only be provided in respect of employees employed by the applicant after any relevant checks have been performed. 

Inspections and sanctions 

• The manual points out that the adherence to labour-law regulations and the fulfilment of criteria for the payment of contributions will be subject to inspections by the appropriate authorities, in particular the Labour Office of the Czech Republic in cooperation with the State Labour Inspectorate Office. 

SUPPORT FOR THE SELF-EMPLOYED

• Filing of annual statements of income, expense and premiums paid for health insurance purposes has been postponed until 3 August 2020. The statutory deadline for filing annual statements for social security insurance purposes for 2019 has not been extended; however, the Czech Social Security Administration has declared a similar procedure with regard to premiums for social security. 
• Health insurance underpayments will have to be settled in line with the new deadline for filing the statements; the same should apply to social security insurance underpayments, as declared by the Czech Social Security Administration.
• Monthly prepayments for health and social security insurance premiums for the period from March to August 2020 will not have to be paid.
• The annual social security premium for 2020 will be reduced by CZK 2,544 for a person’s primary activity/CZK 1,018 for their secondary activity for each month between March and August in which the independent gainful activity was performed.
• Underpaid health insurance premiums, i.e. amounts exceeding the minimum monthly prepayments for the period from March to August 2020, will only have to be settled within 8 days of filing the statement for 2020.
• A carer’s allowance of CZK 424 a day will be paid to the self-employed who since the implementation of the governmental emergency measures have had to take care of children younger than 13 years or dependent children up to 26 years old in need of the help of another person (at least Stage I dependence). Carer’s allowances are provided to the self-employed based on the Ministry of Industry and Trade’s programme called Carer’s Allowances for Self-Employed Persons. Call I is currently open until 30 April with funds for allocation amounting to CZK 100 million. It is possible to apply for a carer’s allowance via an application for a subsidy through the Ministry of Industry and Trade for the period from 12 March to 31 March 2020.
• Self-employed persons are entitled to a compensation bonus not exceeding CZK 500 per calendar day of the bonus period, which is from 12 March to 8 June 2020.
  • The compensation bonus applies to self-employed persons operating under the law governing pension insurance unless their activity results in participation of the given person in sickness insurance as an employee.
  • A crucial criterion is that the self-employed could not have fully or partly performed their activity due to a threat to health or the governmental emergency measures.
  • The self-employed must have performed their activities on the date the state of emergency was declared (i.e. 12 March 2020).
  • The compensation bonus will be considered income decisive for determining the entitlement to allowances paid pursuant to the Act on Assistance in Material Need and the Act on State Social Support.
  • Self-employed planning to draw the compensation bonus will not be entitled to unemployment benefits for any calendar day in which they receive the compensation bonus.
  • Self-employed receiving unemployment benefits during the bonus period will not be entitled to the compensation bonus for the calendar days in which they receive unemployment benefits.
  • Applications for the compensation bonus must be submitted within 60 days of the end of the bonus period.
  • Rules and form of the application for the compensation bonus (it is possible to also apply via e-mail).
• The self-employed may also apply for a special immediate emergency allowance provided by the Czech Labour Office to persons whose social and property circumstances do not allow them to overcome an unfavourable situation.

CARER´S ALLOWANCE FOR EMPLOYEES

• Carer’s allowances will be paid in respect of children younger than 13 years over the period of school (and other children’s facilities) closures, until 30 June 2020 at the latest, and dependent persons with disabilities (at least Stage I dependence) without an age limit, over the period of closure of certain social service facilities for persons with disabilities.
• Carer’s allowances will be paid monthly and will equal 60% of the reduced assessment base for the period ending on 31 March and 80% of the reduced assessment base for the period from 1 April.
• Carer’s allowances are claimed via prescribed forms. Employees may apply for carer’s allowances through their employers, based on confirmations issued by schools or other children’s facilities.
• New rules enable parents to switch in caring for their children repeatedly.
• Parents who cannot send their child back to school or kindergarten for objective reasons after these facilities reopen are also entitled to the carer’s allowance. These reasons include health risks if the child is especially susceptible to illness or lives in a common household with someone belonging to a high-risk group. Account was also taken of the insufficient capacity and short opening hours of school groups.

Persons working based on an agreement to perform work or an agreement to complete a job are also entitled to the carer’s allowance during the term of his/her agreement (but only until 30 June 2020) if the respective agreement was executed before 11 March 2020 and the relevant premium for sickness insurance was paid for the month in which the need for care arose or for the month of February (if the applicant applies for the carer’s allowance with effect from March 2020). It is possible to apply for the carer’s allowance retroactively as from the time when the extraordinary measures came into effect.

REDUCTION OF PENALTIES FOR LATE PAYMENT OF SOCIAL SECURITY PREMIUMS BY EMPLOYERS

• Reduction of penalties for employers for late payment of premiums for social security and contributions towards the State employment policy in the amount of 24.8% of the employees’ salaries (premiums paid by the employer); 
• concerns premiums for the calendar months of May, June and July 2020, payable in each case by the 20th day of the following month;
• 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 properly pay the social security premiums levied for employees by the 20th day of the following calendar month;
• no proof of a link to COVID-19 is required; 
• 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. 

COMPESATION BONUS FOR SHAREHOLDERS OF LIMITED LIABILITY COMPANIES WITH NO EMPLOYEES AND FAMILY COMPANIES

• Any natural person can apply for a compensation bonus if, as of 12 March 2020, he/she was a shareholder of a limited liability company founded with a view to generating profit, which has:
  • no more than 2 shareholders who are natural persons and whose shares are not in the form of share certificates, or
  • only shareholders who are members of one family (i.e. direct relatives, siblings and spouses, or partners under the law on registered partnership) and whose shares are not in the form of share certificates.
• The shareholder’s activity may not result in his/her sickness insurance as an employee, except for employment in the limited liability company where he/she is a shareholder; simultaneously, he/she must be considered a Czech tax resident, or a tax resident of another Member State of the EU/EEA, as of 12 March 2020 provided that at least 90% of his/her total income in 2020 comes from sources located in the territory of the Czech Republic.
• The limited liability company must not be insolvent or in liquidation and must not be considered an unreliable payer for the purposes of VAT during the decisive period (i.e. in the period from 12 March to 8 June 2020, or to 31 August 2020 if the bonus period is extended).
• The company’s turnover (under the Accounting Act) for the completed corporate income tax period immediately preceding the bonus period must exceed CZK 180,000, or the company must presume that its turnover for the first uncompleted corporate income tax period during which the company performed its activity will exceed CZK 180,000. 
• As of 12 March 2020, the company must be a tax resident of the Czech Republic or a tax resident of another Member State of the EU/EEA provided that it gained a majority of its income in the above period from sources located in the territory of the Czech Republic.
• The amount of the compensation bonus is CZK 500 for each day of the decisive period for which the shareholder of a limited liability company did not receive any other compensation of the restriction of his/her gainful activity due to COVID-19 or related emergency measures. If the applicant is a shareholder in several limited liability companies and meets the above conditions, he/she is entitled to only one bonus for each calendar day. 
• Applications for the compensation bonus must be submitted within 60 days of the end of the decisive period.

 

LOANS AND OTHER SUPPORT

COVID III loans

• Unlike its predecessors, COVID III will provide support not only for small and medium-sized enterprises but also for big companies with up to 500 employees (the number of employees must be proved separately for each applicant). 
• This time, the programme will have countrywide scope and will thus also help businesses seated in Prague. 
• The application procedure – the company must pre-negotiate the loan with its own bank, which will then complete the application with the Czech-Moravian Guarantee and Development Bank (CMZRB). 
• The Government will provide 30% guarantees in an aggregate amount of CZK 150 billion, which makes it possible to support loans in a volume of up to CZK 500 billion. 
• The specific parameters then depend on the size of the business. While for businesses with up to 250 employees, the State guarantee will cover 90% of the principal amount of an individual loan, for companies with up to 500 employees, this ratio will be 80%. In both cases, the maximum amount of the loan is CZK 50 million and the duration of the guarantee will not exceed three years. 
• The programme is aimed at covering operating expenses, such as salaries, rents, payments for utilities, supplier-customer invoices and procurement of inventories and materials.

 

Covid Plus – loans for companies with more than 250 employees

• This programme provides guaranteed loans for large businesses with at least 20% of their total annual revenue from sales coming from export. 
• Guarantees should be provided only to enterprises: 
  • having more than 250 employees (even if seated in Prague); 
  • whose share of exports in the total annual revenues from the sale of products, provision of services and sale of goods reached at least 20% in the last accounting period; a manufacturing or trading company may prove its share of export indirectly through the exporter’s share of export; 
  • not benefiting from any other State aid in the form of loan guarantees in connection with the COVID-19 pandemic; 
  • which have submitted an affirmation declaring, in particular, that the enterprise has experienced a sudden lack of liquidity, was not insolvent before 12 March and has no overdue liabilities towards the State. 
• The applicants must meet mainly the following conditions: 
  • To pay liabilities towards suppliers properly and in due time; 
  • To pay wages to employees properly and in due time; 
  • Limitation of payment of dividends or other shares of profits, prohibition of sale of equity interests and sale of any tangible and intangible fixed assets or their encumbrance by third-party rights without the consent of the financing bank during the term of the guarantee. 
• The maximum amount of the loan for which the guarantee will be provided may not exceed 25% of the borrower’s total annual sales in 2019. The minimum amount of the loan is set at CZK five million. 
• When applying for the COVID plus support, the company must first contact its bank and arrange the loan conditions with the bank. 
• As such, the provision of the guarantee depends on evaluation by EGAP in each case. That means that EGAP’s internal rating of the individual applicants is an important parameter. Companies rated above B- will obtain a guarantee of up to 80% from EGAP. For B-, the maximum guarantee will be 70%. Applications of businesses rated lower than B- will be denied.
• The loans and guarantees will be provided for a maximum of 3 years for operating loans and loans financing working capital and maintenance of business activities, and for a maximum of 5 years for investment loans, where the loan margin of the financing bank cannot exceed the following numbers for the duration of the loan:
  • 1.5% p.a. on loans provided for up to 1 year;
  • 2.5% p.a. on loans provided for up to 3 years;
  • 3.5% p.a on loans provided for up to 5 years;
• The list of annexes necessary for filing applications is available here. 

 

Call to participate in the COVID 19 Technology Programme

• Support for the manufacture of medical devices necessary to fight the coronavirus (subsidies for the purchase of machines and equipment necessary for the businesses to launch the production).
• The call was announced on 15 April 2020. 
• The subsidy is intended only for small and medium-size businesses.
• The total allocation equals CZK 300 million; one project may receive support from CZK 250 thousand to CZK 20 million.
• As a percentage, a subsidy of 50% of eligible costs.  
• Applications will be accepted from 27 April to 29 May 2020.  
• The projects may be implemented by the end of 2020.
• Only expenses incurred from 1 February 2020 will be eligible.

 

Rise Up – Smart Measures against COVID-19

The programme supports companies in their own initiatives to fight COVID-19 and is also intended for larger entities.  

Rather than reimbursing research and development costs, this programme aims to compensate companies for expenses incurred in the implementation of new solutions. The Ministry of Industry and Trade provides examples of supported activities: 3D printing of respirators, new lung ventilators, applications facilitating logistics activities, etc. In specific cases, the programme will also support operating expenses relating to projects aiming to expand the production capacities for protective supplies and devices or to introduce the production of new protective supplies and devices. The above applies on condition that the new solutions are placed on the market. 

• A subsidy per project should amount to at least CZK 500 thousand and shall be provided up to the de minimis limit (i.e. a maximum of EUR 200 thousand per one applicant over a period of three years). 
• As a percentage, a subsidy should amount to 50–90% of eligible costs, depending on the activity type.  
• Applications are accepted from 2 April 2020. 
• More than one application can be submitted per one identification number; the applicant’s only limit is de minimis subsidy amount.  

 

Country for the Future Programme

Within this programme designed for small and medium-size companies it is possible to apply for support for putting innovative solutions into operation, including innovative procedures (installation of new or enhanced production technologies) and organisational innovations (innovated logistics methods, navigation systems, etc.).

• A subsidy per project of up to CZK 25 million. 
• As a percentage, a subsidy of 50% of eligible costs.  
• Applications are accepted from 3 April to 15 May 2020.  
• Two applications per one applicant (identification number) can be filed. 

 

COVID - RENT Programme

• The programme is primarily targeted at entrepreneurs operating a retail business or providing services to customers on premises leased or subleased before 12 March 2020. 
• These businesses will be able to request support amounting up to CZK 10 million per business, applicable to rents payable from 1 April to 30 June 2020. 
• A key precondition for obtaining the support, covering 50% of the rent, is that the landlord provides a discount in the amount of 30% from the rent.
• This programme is waiting for approval by the European Commission.

 

Suspension of repayment of loans and mortgages contracted before 26 March 2020

Statutatory moratorium on repayment of loans and mortgages is binding for all banks and non-banking companies. 

• It is possible to suspend the repayment of both consumer and business loans including mortgages for a period of three or six months, without the debtors being charged any fees.  
• The moratorium applies to loans and mortgages contracted and drawn (or even only approved , in case of mortgages) before 26 March 2020. 

Conditions:  

• Notifying the creditor of the suspension of repayments.  
• Declaring that this is due to the negative economic effect of the coronavirus pandemic.  
• These reasons will not have to be supported in any way. 

The period over which a loan and related interest will be repaid will be adequately extended by the period of repayment suspension. Corporate entities may only utilise the option to suspend the repayment of principal, but related interest must be paid over the entire period of the repayment suspension.  

• Interest will remain in the contractually-agreed amount. 
• However, for consumers, interest may amount to up to the statutory default interest amount equal to the repo rate increased by eight percentage points. 

The moratorium does not apply to credit cards, overdrafts, revolving loans, operating leases, loans associated with trading in capital markets, and loans whose debtors were in default for more than 30 days as at 26 March 2020. 

 

Deferral of rent for entrepreneurs

• The law prohibits landlords to terminate unilaterally a lease only on the grounds to the tenant’s default in payments of rent. 
• In contrast to the original Government proposal, the tenant will be obliged to pay for utilities and other services. 
• The following conditions must be met to qualify for the deferral of rent: 
  • The rent is payable for the period from 12 March 2020 to 30 June 2020. 
  • The tenant must prove that his/her inability to pay the rent has been caused by the coronavirus pandemic, which prevents or significantly limits his/her activities. 
• Instalments on rent will be deferred until the end of 2020 (the deadline originally suggested by the Government was as late as 31 March 2022). If the tenant does not pay the instalments even by the new deadline, the landlord will be entitled to terminate the lease after 5 days. 
• These provisions do not prevent the landlord from terminating the lease on other grounds.

Note: updated on 25 May 2020