COVID-19 Countermeasures in Czech Republic

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

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 August 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 (subject to legislation update)
• 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 (approx. 4% p.a. vs. 18% p.a.)
• 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 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. – subject to legislation update
  

• General waiver of fine for late submission and default interest for late payment in respect of corporate and personal income tax including WHT (for tax returns for the 2019 tax period with original filing deadline of 1 April 2020 if submitted/paid by 1 July 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 (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 31 August 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 (subject to legislation update)
• 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 (subject to legislation update)
• Shortening the deadline for refund of excise duty on green diesel within 40 days (currently 60 days) (subject to legislation update)

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
• Waiver in respect of prepayments on social security and health care insurance until August 2020
• Direct subsidy of CZK 25,000 to entrepreneurs in case their business was effected by coronavirus
• Allowance for taking care of children (CZK 424/day for March, CZK 500/day for April 2020)
  

• 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 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 active shareholder, cannot be concurrently employed (only in the given company), may not draw a contribution under the Antivirus program and a compensation bonus for entrepreneurs.
• 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 shall be 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 is 30% discount on the rent fee provided by the landlord (in the status of proposal by the government).

Other provisions to help companies and entrepreneurs with cash flows:

• Termination of obligation in respect of e-sales until the end of 2020 (subject to legislation update)
• 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.