Czech

COVID-19 Countermeasures in Czech Republic

Summary

Area
Title
Description
Labour law
Antivirus programme
Compensation paid by Czech Labour Office for employers affected by the pandemic. Up to 80% of salary (max. CZK 39000)
Tax
Tax Relief Package
Tax returns deadlines prolonged, waiver on tax advances, waiver for fines and administrative fees related to taxes
Other procedural options aiming to boost cash flows
Application for tax cancellation or deferral

 Loss carry-back  Tax loss generated in 2020 can be applied to 2018 and 2019, up to max amount of CZK 30 mil
Financial support
Loans and grants
Grants of CZK 25,000, guaranteed loans up to CZK 15 million
Other measures
Rental and loan payment
Moratorium on repayment of loans and mortgages, ban on rental termination

Labour market

Antivirus programme
Compensation will be provided to employers whose business activity is affected as a result of the pandemic. The contribution will be provided by the Czech Labour Office in two regimes:

Regime A. - Forced limitation of business operation and quarantine

  • In the event of ordered quarantine, the employee receives a wage compensation of 60%
  • In the event of closure of business due to the Government order, the employee receives a wage compensation of 100%
  • Contribution to employers amounting to 80% of the wage compensation paid, max CZK 39,000
  • Programme within Regime A extended until the end of October 2020

Regime B. - Connected economical difficulties

  • Obstacles to work on the part of an employer due to the ordered quarantine or childcare for a significant proportion of employees (30% or more) — the employee receives a wage compensation of 100%
  • Limitation of the availability of inputs (raw materials, products, services) necessary for the activity — the employee receives a wage compensation amounting to 80%
  • Reduced demand for services, products and other products of the company — the employee receives a wage compensation amounting to 60%
  • Contribution to employers amounting to 60% of the wage compensation paid, max CZK 29,000
  • Programme within Regime B extended until the end of October 2020

Regime C. – For small companies

  • Waiver of payment of social security insurance paid by employers (24.8% of gross salaries) for months June, July, August 2020. The waiver is available only to companies with max 50 employees and under condition to maintain the number of employees and the level of wages at least at 90% compared to March 2020
  • Possibility to defer payment of social security insurance paid by employers (24.8% of gross salary) for months May, June and July 2020 till 20 October 2020. The deferment will be subject to penalty for late payment which will be decreased to 1/5 of the statutory amount (instead of 0.05% for each day of delay only 0.01% will apply)
  • Allowance for taking care of children until the end of June 2020 if the parents do not send children to re-opened schools from objective reason.

Tax provisions

Tax Relief Package

  • Introduction of “loss carry-back” concept (tax loss generated in 2020 can be applied to 2018 and 2019, up to max amount of CZK 30 mil.
  • General waiver of fine for late submission and default interest for late payment in respect of corporate and personal income tax (for tax returns for the 2019 tax period with original filing deadline of 1 April 2020 if submitted/paid by 18 August 2020) – subject to legislation update
  • General waiver of fine for late submission of annual payroll settlement by employer (if submitted by 31 May 2020)
  • General waiver of personal income and corporate income tax advance due on 15 June 2020
  • General waiver of fine for the late filing of VAT ledger statement (only for those filed late between 1 March and 31 July 2020; n/a for filed late based on call of tax office – waiver subject to individual request)
  • Individual waiver of fine for late submission and default interest for late payment in respect of VAT.
  • General waiver of administrative fees in relation to requests for defer of tax payments or for payment of tax in instalments submitted by the end of 2020 (if approved, the interest can be waived)
  • General waiver of fine for late submission and default interest for late payment in respect of tax on acquisition of immovable asset (if submitted/paid by the end of 2020 – subject to legislation update)
  • General waiver of VAT for free supply of basic protective equipment (e.g. facecloths, respirators, disinfections, etc.) between 18 May and 31 July 2020
  • Reduction of the VAT rate from the current 15% to 10% for accommodation services, admission to cultural and sport events and to sport facilities
  • Road tax reduction by 25% on lorries with a maximum permissible weight of more than 3.5 tonnes reflected retroactively from the beginning of 2020
  • Shortening the deadline for refund of excise duty on green diesel within 40 days (currently 60 days)
  • Abolition of tax on acquisition of immovable asset applied in the rate of 4% upon purchase of real estate for all transfers registered in the real estate cadastre from 1 December 2019 and later. This change is accompanied by decrease of eligible amount of interest on mortgage to be claimed as the deduction from personal income tax base from CZK 300,000/y to CZK 150,000/y and by prolongation of the period of ownership of real estate for tax exemption from personal income tax in case of income from the sale of real estate from 5 years to 10 years – valid for mortgage taken and acquisitions realized after 1 January 2021 (waiting for publication in Collection of Law)

Other procedural options aiming to boost cash flows:

  • Application for the cancellation of an obligation to pay corporate income tax prepayments: If a decline in income is expected, it is possible to apply for the cancellation of a duty to pay tax prepayments
  • Application for tax deferral (in form of a postponement of the tax due date or the payment of tax in instalments): The tax administrator can allow the deferment of a specific tax liability amount (such as VAT or income tax).
  • Extension of the deadline for filing corporate income tax returns (including fiscal years): It is possible to apply for the extension of the statutory deadline for up to three months, or 10 months where income from abroad is also involved.

Provisions for entrepreneurs:

  • Extension of the deadline for filing Overviews for 2019 until 3 August 2020 (for health insurance) or until 18 September 2020 (for social security)
  • Waiver in respect of prepayments on social security and health care insurance from March to August 2020
  • Allowance for taking care of children (CZK 424/day for March 2020, CZK 500/day for April, May and June 2020

Financial support

  • Direct subsidy of CZK 25,000 to entrepreneurs for months March and April 2020 in case their business was affected by coronavirus (the subsidy is extended to 8 June 2020 and might be extended until August 2020 if emergency status is declared in the amount of CZK 500/day).
  • Direct subsidy of CZK 44,500 (500/day from 12 March to 8 June 2020) to shareholders of limited liability companies with a maximum of two shareholders who are individuals (or more individual shareholders of one family) in case their business was affected by coronavirus. The applicant must be an active shareholder, cannot be concurrently employed (only in the given company or only based on work performance agreement or working activity agreement subject to sickness insurance), may not draw a contribution under the Antivirus program and a compensation bonus for entrepreneurs.
  • Direct subsidy of CZK 31,150 (350/day from 12 March to 8 June 2020) for persons working based on work performance agreement or working activity agreement subject to sickness insurance who were not able to fully or partially perform the activity due to the coronavirus. The condition is the performance of the activity based on the agreement for at least 4 months in the period from 1 October 2019 to 31 March 2020 and the applicant did not perform any other employment activity .
  • Direct subsidy of CZK 5,000 for pensioners (including old and disabled). The contributions should be received as part of the December pension payment.
  • Interest free loans with delayed repayment of the loan within program COVID I (currently suspended).
  • Guarantee for loans provided by commercial banks guaranteed by Czech-Moravian Guarantee and Development Bank within program COVID II to finance wage and energy costs, rent payments, payment of invoices, pre-financing of receivables, acquisition of property, inventory and other small assets. The guarantee applies to loans for up to 3 years up to 80% of the loan, the loan is max. up to CZK 15 mil. Further, the interest will be reimbursed up to CZK 1 mil. (currently, the 2nd round is running). 
  • Guarantee for loans provided by commercial banks guaranteed by Czech-Moravian Guarantee and Development Bank within program COVID Prague for small and medium-sized businesses operating in Prague, which have been negatively affected by government measures against the spread of coronavirus. Parameters are the same as in the case of COVID II (currently, the program is closed as fully used up but the subsequent program COVID III for self-employed persons and businesses up to 500 employees is started as of 18 May 2020). 
  • Subsidy in the form of 50% reimbursement of costs on renting premises for business from 1 April to 30 June 2020 within program COVID-Rent. The condition for receiving the subsidy of 50% (max CZK 10 mil.) is 30% discount on the rent fee provided by the landlord. In case of rental from the state subject, the subsidy will be automatically in the amount of 80% as state subjects will be providing 30% discount automatically Applicants may apply since 26 June 2020 electronically. There is condition to pay at least 50% of the rent before submitting the application. 
  • Subsidy in the form of vouchers for spa´s clients within program COVID-Spa in the amount of CZK 4,000 for an adult with a permanent residence in the Czech Republic and registered in local health insurance system. The condition is to spend at least six nights and use at least five procedures in the spa facility in the period 1 July-31 December 2020 (possible extension of accepting vouchers also in 2021 is currently discussed). The approved limit for this program aiming to support spa facilities and cities is CZK 1 billion which corresponds to 250,000 vouchers.
  • Direct subsidy of CZK 100-330 per room and night for accommodation facilities within program COVID-Accommodations. The decisive period for subsidy is from 14 March to 24 May 2020 when accommodation facilities had to be closed. Airbnb types of accommodation are excluded from subsidy. If the support was already drawn in the form of a direct subsidy (for self-employed persons and for l.l.c.) mentioned above, the accommodation support will be reduced by this paid bonus. On the contrary, it is fully compatible with the Covid-Spa and Covid-Rent programs. The program should be launched in September 2020 (waiting for start of the he programme.
  • Direct subsidy of 50% eligible costs within program COVID-Culture to entrepreneurs in the culture business to compensate costs incurred in the period from 1 October 2019 to 17 May 2020 for culture events planned in the period from 10 March to 31 August 2020 but were canceled, postponed or organized on a smaller scale. The subsidy is aimed at organizers of the events, artists and agencies representing the artists as well as at entreprenerus and companies providing technical services in connection with cultural events. The maximum amount of the subsidy per business entity is CZK 5 million and the total budget of the program is CZK 900 million. Applications can be submitted online from 18 August 2020 til the end of September 2020. The 2nd wave of this subsidy is planned to be applicable also to organizers of exhibitions and congresses.
  • Direct subsidy of 50% total eligible costs within program COVID-Sport to sports organizations to compensate costs incurred on the organisation of sporting event or fixed costs due even if the facility was closed during emergency period. The decisive period for subsidy and other conditions depend on the form of support. There are three areas of support: A (operation of sports facilities), B (organization of sports events) and C (rental of sports facilities). Applications can be submitted online from 15 June 2020 to 31 August 2020.

Other measures

Other provisions to help companies and entrepreneurs with cash flows:

  • Termination of obligation in respect of e-sales until the end of 2020
  • Interest free loans with delayed repayment of the loan within program COVID I (currently suspended).
  • Guarantee for loans provided by commercial banks guaranteed by Czech-Moravian Guarantee and Development Bank within program COVID II to finance wage and energy costs, rent payments, payment of invoices, pre-financing of receivables, acquisition of property, inventory and other small assets. The guarantee applies to loans for up to 3 years up to 80% of the loan, the loan is max. up to CZK 15 mil. Further, the interest will be reimbursed up to CZK 1 mil.
  • Moratorium on repayment of loans and mortgages arranged prior 26 March 2020 binding for all banks and non-banking companies for 3 or 6 months upon notification of a debtor to its creditor.
  • Impossibility to terminate the lease in respect of premises for living as well as for business if the lessee is in delay with the payment of rent due to difficult financial situation in relation to coronavirus pandemic. The due rent must be repaid by 31 December 2020  (cancelled as of 5 June 2020).

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Dorota Pieszczoch
Dorota Pieszczoch
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