For the time being, all measures being approved by the House of Representatives with the aim of supporting business are in the initial stages and are subject to change.
We can refer, for example, to the adoption of the “Antivirus” programme, which introduces a number of subsidies for enterprises that were forced to halt their operation due to the epidemic or a state-ordered measure. You may find more information in the section “Coronavirus and Work”.
State guarantee programmes
During March and April, the state subsidy programmes COVID I, COVID II and COVID Prague have been implemented. They aimed at small and medium-sized businesses as well as sole traders, who were forced to restrict or put on hold their business activity due to a measures against the spread of COVID-19.
The applicants to COVID I programme receive a credit from the government, while other programmes provided state guarantee for commercial credit. Subsidized by the state was also the payment of interest on said loans.
The capacity of each programme was always very quickly exhausted.
Currently, the COVID III programme has been launched, the capacity of which amounts to CZK 600,000,000. It is intended for businesses with not more than 500 employees; it is provided in the form of a state guarantee in the amount of 80 – 90 % of the credit amount of a commercial credit. As usual, the purpose of the credit must be to cover the operating costs.
Please let us know if you are interested in this subsidy.
The “Antivirus for Business” programme
From 6 April 2020, it is possible to file a request to the Employment Office for a subsidy within the newly launched programme “Antivirus for Business”. The programme introduces special conditions for employers whose businesses have been affected by the coronavirus pandemia.
According to the situation, the employer may receive a subsidy of 60 % or 80 % of the salary compensation paid to the employee – see more information in the infoboxes below.
The subsidy can be applied for the period of 12 March 2020 to 31 August 2020.
The application can be filed using the website https://www.mpsv.cz/antivirus. We will be happy to assist you with the application filing.
Taxes and Levies
The Ministry of Finance published a decision that should mitigate the negative impacts on taxpayers in connection with the government measures taken. The decision maintains the original dates for filing tax returns (VAT and corporate and personal income tax). In case of late submissions and payments, the taxable entity will be exempted from related penalties and interest on any arrears under prescribed conditions. This is an extraordinary measure and the next tax period will follow the statutory deadlines.
Below you may find a summary of measures known so far (as of 11 May 2020):
Personal and corporate income tax
- Immunity from fines for the late submission of corporate income tax returns or income tax statements and personal income tax returns if the tax returns or the tax statements for the 2019 tax period are filed no later than 1 July 2020.
- Immunity from late interest payments of income tax liabilities if the taxes are paid no later than 1 July 2020.
- The above does not apply to the submission of an income tax statement in case of employment where withholding tax payments apply or to any related late payments.
- The above waivers will be APPLIED AUTOMATICALLY subject to the above conditions, without the need to file individual requests.
- Waiver of income tax advance payment, payable by 15 June 2020 for taxpayers, whose taxation period is a calendar year. Taxpayers subjects to an economic year may apply for a waiver of advance payment for June (or other months), based on an individual application, with a documentation of reasons for its reduction or cancellation.
- Immunity from fines for the failure to submit a VAT control statement if the obligation related to tax payment occurred between 1 March 2020 and 31 July 2020 (up to CZK 1,000).
- Immunity from interest on late payments or interest on a deferred amount.
- The above waivers will be decided on subject to INDIVIDUALLY FILED REQUESTS that must include a reason and the taxpayer must credibly prove that the delay in the payment of the tax was due to extraordinary measures. Such measures may include demonstrating the effects of quarantine, illness, related care for a household member, or a list of cancelled tickets / events / package tours, compared to the occupancy or sales for the previous period; demonstrating production shortfalls, etc.
- Immunity from fines for late submissions provided that interest on the late payment of the declaration was at least partially waived.
- Waiver of VAT for a gratuitous provision (i.e. donation) of face masks, ventilators, COVID-19 testing kits, safety wear, gasmasks, safety glasses and gloves, as well as other goods designated as medical material in the connection with COVID-19 in the HS nomenclature, if such goods were delivered gratuitously in the period from 12 March 2020 until the end of the emergency status.
- Waiver of VAT for a gratuitous provision (i.e. donation) of goods to a payer, who is entitled to production of disinfectants, alcohol solutions, sterilisers, cleaning solutions etc., if such gratuitously provided goods have been used for the production of said products and the gratuitous provision has occurred in the period from 12 March 2020 until the end of the emergency status.
One of the Corona pandemic related regulations is a new bill which, if approved, would extend the VAT refund period from 30 to 45 days. This shall be introduced by an amendment of the Tax Administration Code. The current VAT refund period of 30 days will thus be kept until 31st December 2020, regardless of when this amendment of the Tax Administration Code becomes effective. Simultaneously, the instrument of VAT refund advance payment is temporarily postponed as this can only be applied in the extended 45 days.
- Waiver of interest fees and the interest on deferred amount for road tax advances, payable by 15 April and 17 July, provided that the payment of such advance payments occurs by 15 October at the latest.
Real estate acquisition tax
- Real estate acquisition tax statement, which is to be filed between 31 March and July 31, can be filed, without any sanctions, by 31 August. Until said date, it will be possible to defer the payment of tax or advance on tax. Such a deferral can be reached by a general waiver of fines for a late filing of the statement as well as the interest payment of the payment for tax deferral.
- If the tax statement is not filed and the tax is not paid by 31 August 2020, the general waiver shall not be applied and the sanction shall be calculated to run from the original due date.
- The Czech Government has also presented a bill on abolition of the real estate acquisition tax, based on which (if approved) the real estate acquisition tax would be abolished even retroactively for transfer from 1 December 2019 onwards - you can find more information here.
- A waiver of administrative fees for filing an application for the waiver of late payment interest or interest on a deferred amount, an application for the waiver of a tax payment or an application for the waiver of a fine due to the failure to submit a VAT control statement if the application is submitted no later than 31 July 2020.
EET will be postponed to 2021
On May 4, 2020, the government has approved the proposal of the Ministry of Finance to postpone all waves of the Electronic records of sales (the "EET") to January 1, 2021. The postponement will affect the business owners of the first and second wave of the EET (wholesale and retail, gastronomy and accommodation) as well as those, who were supposed to record their sales starting on May 1, 2020.
The EET was originally suspended by a special act issued in March that has the obligations under the EET Act postponed for a three months, i.e. to June 2020.
Pension insurance payments
The state has also adopted an act that waives all self-employed persons from needing to pay compulsory pension insurance between March and August. In their annual statement, the total premium will be reduced by the amount corresponding to the minimum pension insurance payments for six months.
Deduction of tax loss
The government is preparing an amendment to Income Tax law which expands tax loss carry back options for two preceeding taxable periods. The amendment also introduces a prolongation of loss deduction from the current 5 subsequent taxable periods to 6 . The tax payer could exercise the tax loss carry back right by submitting an additional tax return or within the course of an ongoing tax audit. This could first apply for tax loss assessed for the period ending 30th June 2020 or later.
School attendance allowance
Self-employed persons will newly receive a school attendance allowance of CZK 424 per day, from April 500 CZK per day, respectively, which can be applied for when filing an application under the following link (in Czech only) https://osetrovne-osvc.plus4u.net/info/
A bill that increases the day-care allowance from 60 to 80 percent has been adopted. The recipient of this allowance shall thus receive approximately up to 90% of his net income. The increased allowance will continue to apply to parents taking care of their children up to age of 13 years who cannot attend school and pre-school institutions due to coronavirus measures and caretakers of disabled persons living with them in a common household. The increased allowance will apply for the period from 1st April to 30th June 2020.
Compensation bonus for freelancers and small ltd.
Entrepreneurs can start claiming a compensation bonus approved on 9 April 2020.
The compensation bonus can be claimed by all entrepreneurs who as of 12 March 2020 performed their business activity as
a) main undertaking activity or
b) secondary undertaking activity due to a reason other than employment.
The compensation bonus is set in the amount of CZK 500 per each day, in which the entrepreneur fulfils the statutory conditions. Thus, the entrepreneur may apply for a subsidy for the whole period, which amounts to CZK 25,000 at maximum. The bonus cannot be claimed for the days when the entrepreneur received an unemployment subsidy.
The compensation bonus can be REQUESTED with the competent tax office. The request can be submitted by an interactive form which is published at website of the Ministry of Finance. An obligatory part of the request is an affidavit of the entrepreneur that he was unable to fully or partially conduct his business due to measures related to COVID-19, mainly due to:
- closing or partial closing of the premises,
- quarantine of the entrepreneur or his employee/s,
- child care,
- decreased demand or
- lack of supplies.
The compensation bonus is approved automatically as of the day in which the request is delivered to the tax office. The request must be filed by 30 June 2020 at the latest.
The compensation period has originally been set for 12 March 2020 to 30 April 2020. However, according to the government's statements, it was intended this period to be extended until 8 June. Based on the approved amendment a second compensation period from May 1st, 2020 to June 8th, 2020 has been introduced.
The amendment also allows for a further extension from June 9th, 2020 to August 31st, 2020, which could take the shape of a government regulation, provided that crisis measures will still be in place in the period at stake.
Making mortgages more available
The Czech National Bank has moderated the conditions on the provision for mortgages. In particular:
- The limit of mortgage amount to the value of real estate is increased from 80 % to 90 % .
- The ratio between the sum of total monthly expenses for the given credit and the net monthly income is increased from 45 % to 50 %.
- The Bank has also revoked the obligation to evaluate the number of household's yearly incomes needed to pay off all its debts.
State subsidy for the lease of closed business premises - COVID-Nájemné
On May 4, 2020, the Government approved the proposition of the Ministry of Industry and Commerce to provide a contribution to the entrepreneurs who were negatively affected by the Government restrictive and preventive measure in regard to the COVID Epidemic via the subsidy program "COVID - Rent".
Under this program, the state will offer 50 % of the rent for the business premises for April, May and June 2020. Each subsidized subject may obtain up to CZK 10,000,000. The subsidy will be granted under the condition that the landlord waives 30 % of the rent.
Penalty for social security contributions
The Act on the reduction of penalty payments for social security insurance has been adopted by the Senate, as proposed by the Chamber of Deputies.
The approved Act reduces the penalty for social security contributions (as for the part paid by the employer), which the employer shall pay, for May (due date between June 1st to 20th), June (due date July 1st to 20th), and July (due date between August 1st – 20th), by October 20th, 2020, at the latest. In such a case the penalty, accruing due to the late payment of insurance payment for employer, shall be reduced by 80%. The remaining part of the penalty corresponds to a yearly interest rate of less than 4 %. The unpaid insurance shall not be deemed to be an outstanding sum on part of the employer for purposes of e.g. confirmation of non-arrears.
A necessary condition of reducing the penalty is the proper payment of social security insurance, which the employer pays for the employee.
Bill on relief of social security payments
Besides the already approved act on the reduction of penalty for the late payment of social security, the Senate is currently discussing another bill, which fully relieves the employers from the duty to pay social security payments. This will affect payments for June, July and August 2020. A waiver of social security payment is deemed to be a reduction of the employer’s assessment base for the months in question.
This reduction may apply when the following conditions are met:
- The number of the employees (in an employment relationship) participating in sickness insurance, does not exceed 50 for the given month;
- There has not been a decrease of the number of employees, who are participating in the sickness insurance system, or a decrease of the value of assessment base, by more than 10 %, in comparison with the last day of March 2020;
- The amount of insurance which the employees are subject to is duly paid;
- No compensation of salary expenses from the COVID 19 program is taking place.
The reduction of insurance payment (the assessment base), can amount to up to 1,5 times the average salary per employee, for employees, whose employment relationship lasts at the end of the respective month. The reduction of insurance cannot be applied for retroactively, and thus should be taken into account while preparing the regular monthly overview.
Extension of the compensation bonus to shareholders of limited liability companies (s.r.o.)
An amendment to the Compensation bonus act has been adopted, which extends the possibility to apply for a compensation bonus to shareholders of limited liability companies. The compensation bonus may be applied for by shareholders of limited liability companies with up to 2 shareholders, or more shareholders, provided that these are members of one family. The compensation bonus does not apply to shareholders of limited liability companies that were being dissolved or bankrupt during the “bonus period” or ones recorded as unreliable VAT payers. To apply for the bonus, the company also needs to reach a minimum turnover of CZK 180,000.
The amount and other conditions of applying for the compensation bonus are similar to the original conditions for the freelancer compensation bonus.
Tax Liberatisation Package
On June 8 the government appoved a "Tax Liberatisation Package". Now, the package will be subject to the legislative process.
- De facto postponement of filling of real estate acquisition tax returns until end of the year 2020 (remission of sanctions arising from late filling and payment).
- VAT exemption for free of charge supply of protective equipment, in particular face masks, respirators, disinfectant agents etc., where the obligation to submit the tax returns has arisen in the period between of May 18 and July 31.
- De facto postponement of the deadline for filling of the income / corporate tax returns to August 18. This date has been chosen with regards to the extension of the deadline for approval of regular financial statements of corporations (waiver of sanctions regarding the late filling and payment).
- Automatic waiver of interest for default and interest for deferred payment that have arisen in the period from March 12 to December 31 in the cases in which the tax administrator individually allowed the deferral or payment in instalments on the grounds regarding the coronavirus pandemic.
- Waiver of the administrative fee for the filing of applications with the financial or customs authority by the end of 2020 (application for tax deferral or instalment plan, application for waiver of the interest for delay, application for waiver of the penalty for non-filling the VAT Control Statement etc.).
- De facto postponement of the deadline for announcement of tax-exempt income to August 18 (waiver of penalties for the late submission).
- Waiver of the penalty for late submission of employer statement (on personal income tax from dependent activity), if the employer's statement was filled until May 31.
- De facto postponement of the deadline for filling of the supplementary income tax return for 2018 for tax subjects, who have during 2019 changed the mode of deduction of expenses, have started bookkeeping or the keeping of simplified tax records etc. The deadline for the filling and payment of the tax is postponed on August 18, 2020 (waiver of penalties regarding the late filling or payment).