The Ministry of Industry and Trade has re-launched the COVID - 2021 and COVID - Uncovered Costs subsidy programmes. They are aimed at helping companies and self-employed persons to get over the difficult period when trade and services must be reduced due to COVID-19. Compensations will be paid for the reference period from 1 November to 31 December 2021. Below you can find a brief description of the two subsidy programmes.
We would like to point out that the income from these programmes is a taxable income.
Entrepreneurs and companies are eligible for the subsidy if they can prove that their sales have been decreased by at least 30% in the decisive period compared to the same period in 2019 and that the entrepreneur will be in loss in that period, then the amount of subsidy is 40% (70% if their sales have been decreased by at least 50%) of the uncovered costs for the decisive period; however, the maximum amount of subsidy which an applicant can receive is limited to CZK 30 million.
The COVID 2021 and COVID - Uncovered Costs programmes cannot be combined with each other, nor can they be combined with the compensation bonus. On the other hand, it is possible to use the combination with the Antivirus program. Details are published at www.mpo.cz. Similarly, as in the previous period, applications for subsidies will be made through the information system AIS.
We will of course be happy to help you with the completion and submission of the COVID 2021 and COVID - Uncovered Costs subsidy applications. If you are interested, please do not hesitate to contact us. We will inform you about the specific date of the application later.
Due to the unfortunate pandemic situation, the government has also decided to expand the Antivirus program in order to protect jobs in times of declining sales due to anti-epidemic measures which have an impact on many employers.
Regime A is currently being extended until 28 February 2022 and within, it is possible to provide a contribution to cover the costs incurred by employers in paying wage compensation to employees who have been ordered to stay in quarantine or isolation. The amount of the contribution is 80% of the paid wage and insurance premiums; however, a maximum of CZK 39,000 per employee per month.
At the same time, regime B is renewed for the period from 1 November 2021 to 28 February 2022 when it is possible to provide employers with a contribution to the costs incurred in this period by paying wage compensation to employees in the situation of the obstacle to work on the side of the employer. The amount of the contribution is 60% of the paid wage and insurance premiums, but a maximum of CZK 29,000 per employee per month.
The entire Antivirus program will be valid until 30 June 2022 when it is possible for the government to extend the period of eligibility of expenditures for individual schemes or set new periods. The condition for obtaining the contribution is the conclusion of an agreement on the provision of the contribution from the Antivirus program between the Labor Office of the Czech Republic and the employer by 28 February 2022. In the event of exhaustion of funds, the government has the option to suspend the provision of contributions, temporarily until the funds for the realization of the program are secured. In the event of exhaustion of funds, the government has the option to suspend the provision of contributions, temporarily until the funds for the implementation of the program are secured. Other program conditions remain unchanged (see manual for employers, only in Czech).
Simultaneously, we point out that although the income from the Antivirus is tax exempted, the related costs for which the subsidy is provided, i.e. social security and health insurance contributions paid on behalf of the employee, are considered as tax non-deductible costs.
The following measures (i.e. the compensation bonus, the employee's quarantine contribution and nursing allowance amendments) are currently going through the legislative process. The current situation is that these proposals were approved by the Senate and on 16 December 2021 signed by the President. All that is left for their entry into force is their subsequent publication in the Collection of Laws.
Following the restrictions as of 22 November 2021, the so-called compensation bonus was revived, namely within two new bonus periods, i.e., the first from 22 November to the end of 2021 and the second from the first day of the new year until 31 January 2022, including the provision that it will be possible to add additional monthly bonus periods based on a government decision in the future. Entitlement arises for self-employed persons, shareholders of limited liability companies or so-called "contractors" whose activities (or the activities of their employer) have been significantly affected by the measures, if it represents a majority of their income.
The first reason for arising of the compensatory bonus entitlement is ordered quarantine or isolation, both for contractors as well as for self-employed persons and shareholders (if they meet other requirements). In this case, the bonus amounts to CZK 500 for each day.
On the other hand, only self-employed persons or shareholders (if they meet other specific requirements) may obtain a second type of compensation bonus, as the precondition is a decrease in revenues or incomes of at least 30% if it occurred in connection with anti-pandemic measures. Thus, from this point of view, the conditions are a bit more relaxed compared to the last compensatory bonus, which was conditioned by a decrease of more than half.
Another significant change compared to previous regulations is the fact that the so-called comparison period is not the calendar month immediately preceding the bonus period, but the calendar month that falls entirely within the bonus period. For the first bonus period, the comparison period will be December 2021 and for the second bonus period January 2022. On the contrary, the comparative (decisive) period is represented by any 3 consecutive calendar months in the period from June to October 2021, resp. for seasonal activities in the period from 1 November 2019 to 31 March 2020.
The daily benefit may amount to a maximum of CZK 1,000 per day, but it may not exceed the so-called limit amount which is calculated as the difference between the average monthly income in the comparative period and the income in the comparison period divided by the number of its calendar days. This measure shall prevent situations when the aid exceeds the overall drop in sales.
Essentially, the compensation bonus shall be considered as a tax refund. The Financial Administration will keep the public informed about the possibility of submitting bonus applications. However, it is recommended to not submit the application before 1 January 2022, since only then the first comparison period will elapse.
Details regarding the employee's quarantine contribution and nursing allowance amendments can be found in an article prepared by our sister company Contract Administration at the link here. The current version has already been adopted by the Senate. These supports, together with the compensation bonus, are exempt from income tax.
We would also like to provide brief information to you on the following measures.
Given the current situation, the government came up with a so-called extraordinary financial subsidy called "MOP Covid-19". This subsidy will cover persons who are justifiably in financial distress due to coronavirus. The subsidy also applies to parents of children under the age of 10 who stay at home being paid so-called nursing contributions due to the closure of schools and school facilities or because of quarantine.
We would also like to remind you that in October of this year, the Minister of Finance extended the VAT pardon for the supply of filter masks and respirators until the end of 2021. The pardon also applies to situations where goods are acquired from another Member State or imported.
There is also a VAT pardon on testing devices and vaccines associated with covid-19 until 31 December 2022. Details can be found in Financial Bulletin No. 35/2020 (only in Czech).
Further, we would also like to remind you of our recent article on the topic "VAT pardon on electricity and gas".
For the sake of completeness, we point out that the electronic registration of sales continues to be deferred until 31 December 2022, both for entities that fell into the first two waves and for entities that were originally scheduled to start recording from 1 May 2020. It will be interesting to observe how the incoming government will respond to this overall obligation.
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