From March 15 on, almost all businesses in the Czech Republic have been affected by the anti-coronavirus measures introduced by the government. While restrictions are slowly being lifted, the economic outlook for many of the businesses hit hardest by the coronavirus pandemic remains tentative.
In an effort to aid both employers and businesses, the Czech government is offering financial support to those affected by the pandemic. If you are one of those individuals or businesses who have experienced a loss of income or economic hardship during the state of emergency, you should be entitled to support.
We asked Lukáš Vajda of Sniehotta & Vajda Legal, a Prague-based law firm that specializes in providing legal services to foreign companies, managers and expats in general to give an up-to-date overview of the situation that reflects legislation passed from the beginning of the lockdown measures in March up until the most recently announced legislation and subsequent deadlines.
The “antivirus” program
The Antivirus program (kurzarbeit) is aimed at helping both employers (enterprising individuals-freelancers and companies) and employees recover from the impact of the emergency measures. The benefits are available for those who were forced to reduce their operations as a result of the emergency measures adopted by the government. The contribution for the employer consists of 80% of the compensatory wage, including any levies, paid by the employer to the employee, up to a maximum of CZK 39,000 per month.
At the end of April, this program was prolonged for another month, making it possible to now apply for the contribution for the period starting from March 12 until the end of May. In addition, in cases of related economic difficulties brought on by the COVID-19 outbreak, the contribution for the employer is 60% (up to a maximum of CZK 29,000 per month).
To apply for this benefit or read more, visit www.mpsv.cz
Nursing allowance benefit
In addition, a “nursing allowance” benefit is intended to compensate employees who could not work because they were caring for a child under the age of 13, a child with a disability, or a person with a disability during the closure of the school and other facilities. The nursing allowance will be increased from the current 60% to 80% of the daily assessment base and also applies to employees doing contract work performed outside an employment agreement, according to the newest legislation.
To apply for this benefit or read more visit www.mpsv.cz
For freelancers (this does not apply to companies), the government has made it possible to apply for a compensation bonus, currently, a one-time assistance provided upon request for the period from March 12, 2020, to April 30, 2020, in the maximum amount of CZK 25,000. This benefit is meant to help recover economic damage caused by government measures. It requires a statutory declaration (affidavit) — the form is available here — stating that the self-employed has met the conditions for this bonus. An extension of this benefit is currently in the legislative process and it will likely be prolonged until June 8, 2020.
Freelancers also have the option of applying for the nursing allowance, a subsidy in the amount of CZK 424 per day. The Czech government is currently working out an increase of the nursing allowance to the amount of CZK 500 per day.
Another benefit for freelancers is the forgiving of the minimum mandatory payments for pension insurance and health insurance. In the period from March 1, 2020, to August 31, 2020, an exemption from monthly payments of the minimum mandatory payments for social security insurance and health insurance is applicable (a total of CZK 29,376). The deadline for submitting the statement of income and expenses for 2019 (regarding social and health insurance) and payment of outstanding insurance premium calculated from this statement has been extended until August 3, 2020.
Benefits for businesses
For small and medium-sized enterprises the COVID program I, II, and COVID Prague were established as a guarantee on bank loans from cooperating banks and offer a financial contribution to help pay interest on these loans. Since these packages are currently used up, there is another one to apply for – COVID III. This program will only provide a bank guarantee to loans from the cooperating bank. According to the latest information, it will be provided in the first weeks of May. Moreover, subsidy programs for the production of medical devices, technologies, products, and solutions related to direct combat against COVID-19 as well as programs for Czech exporters and farmers are being prepared.
It is also possible to postpone both consumer and business loans. The debtors (entrepreneurs and non-entrepreneurs) may ask the bank or other creditors to postpone the installments of the loan for a period up to October 31, 2020. During this period, the creditor is entitled to receive the agreed interest (however, this would be paid once this period terminates) and, in the case of a debtor – a legal person, to other payments under the loan agreement.
The Czech government is also preparing a compensatory bonus for executive directors and associates of limited liability companies. It will be possible to apply for this bonus for the period from March 12, 2020, to June 8, 2020, and the amount of the compensatory bonus should be 500 CZK per day.
Commercial and individual rent payments
There are other important measures that should be mentioned. A postponement of rent payments for commercial or housing lease has been adopted. The lessor cannot unilaterally terminate the lease until December 31, 2020, only due to the lessee’s delay in the payment of the rent, if the delay occurs in the relevant period from March 12, 2020, to June 30, 2020 (for business lease) or in the relevant period from March 12, 2020, to the day following the end of the emergency measures, but no later than July 31, 2020 (for housing lease). The delay must be due to the spread of COVID-19. The lessee will be then obliged to pay this rental debt by December 31, 2020.
Additional measures for both (entrepreneurs and non-entrepreneurs)
- Submission of the income tax return and settlement of withholding tax has been extended until July 1, 2020.
- Fines, penalties, and interests for late claiming of specified taxes may be waived under specific conditions.
- Suspension of the obligation to apply and use the electronic registration of sales.
- General remission from advance payments of income tax made in June 2020. The remission of advance payments does not mean the remission of the tax itself.
The last legislative update should ease the current economic situation for businesses with a possible postponement of payments for social security insurance for three to six months. More specific information is yet to be announced but you can follow apps.odok.cz for regular updates.
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