covid-19: ey czech republic relief measures · 2020-05-07 · covid-19: relief measures 7 may 2020...

COVID-19:EY Czech Republic

Relief measures7 May 2020

COVID-19: Relief measures

7 May 2020 COVID-19: Relief measures

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Legal framework

► “Liberation packages” published as Financial Bulletins no. 4/2020, 5/2020 and 6/2020by Ministry of Finance of the Czech Republic

► Targeted Employment Support Program “Antivirus” adopted on 31 March 2020 by theCzech Government

► Law Bill aimed at mitigating the negative economic impacts of emergency measures ontenants as passed by the Chamber of Deputies on 8 April 2020

► Law Bill adopting moratorium on loans, borrowings and other similar finance services aspassed by the Chamber of Deputies on 8 April 2020

► Other Governmental measures and law amendments

Areas being addressed:

1. Targeted Employment Support Program “Antivirus”

2. Support of self-employed individuals

3. Program “COVID I“, “COVID II“, “COVID Praha“, “COVID III“ and“COVID Plus“

4. Moratorium on loans

5. Postponement of rent payments

6. Other COVID-19 related relief measures

Targeted Employment Support Program “Antivirus”


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The Government partiallycompensates employers forthe costs of wagecompensations paid toemployees during periods ofwork-related obstaclescaused by the quarantineand/or closure/limitation ofoperations of the employersdue to various reasonsrelated to COVID-19infection.

Who is eligible?The key conditions for entitlement tocompensation under the AntivirusProgram include:

► The employer is a company in thebusiness sphere, i.e. wage costs arenot covered from public budgets;

► Employees are in an employmentrelationship and participate in Czechsickness and pension insurance;

► The employer operates in strictaccordance with the Labour Code;

► The employee is not on notice andhas not been dismissed;

► The employer pays the employee thewage compensation and pays therelated social and health insurancepremiums (for itself and foremployees); and

► If the employer is an employmentagency, the employment relationshipof the employee must have startedbefore the date of the emergencydeclaration on 12 March 2020 andmust have been agreed at least till30 April 2020.

For more informationMartina Kneiflova

[email protected]

+420 731 627 041

What does it cover and how is itaccessed?Support will be provided under twoschemes:

► Scheme A: This is intended for casesof (i) business closure or restrictionof business operations as a result ofthe crisis or emergency measuresand (ii) for situations where theemployee could not work due toquarantine.

► The contribution to the employer bythe Government will be in theamount of 80% of paid wagecompensation (including theemployer’s statutory contributions),up to a maximum of CZK 39,000 permonth per employee.

► Scheme B: This applies to employerswhose employees do not work due toobstacles on the part of theemployer in relation to the spread ofCOVID-19.

► The Government contribution shouldreach 60% of paid wagecompensation (including statutorycontributions), up to a maximum ofCZK 29,000 per employee permonth.

Practicalities► The eligibility period was

provisionally set to 30 April 2020;however, given the evolution ofCOVID 19, the Ministry of Labor andSocial Affairs extended itsapplication to 31 May 2020.

► The program is made available via aweb-based application portal(https://antivirus.mpsv.cz/).

► The payment of Governmentcontribution requires filing ofmonthly reconciliation.

► Audits are expected in the futurereviewing the entitlement to theGovernment contributions.

Support of self-employed individuals


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Self-employed persons mayapply for a one-off cashsubsidy of CZK 25,000from the Government tocompensate for the effectsof the COVID-19 relatedcrisis.

Moreover, the obligation topay the minimum socialsecurity and healthinsurance payments for allself-employed individuals iswaived for the period Marchto August 2020.


[email protected]

+420 731 627 041

Dora Horakova

[email protected]

+420 225 335 634

Adam Linek

[email protected]

+420 730 191 859

One-off cash subsidy of 25,000CZK► The subsidy is aimed at individuals

affected by the COVID-19 relatedcrisis who have business as aprimary and secondary activity(although individuals who aresimultaneously employed and theirincome is subject to social securitycontribution to sickness insuranceare excluded from the program)

► The subsidy covers the period from12 March to 30 April 2020, theindividual needs to apply for it until29 June 2020.

► Business activities for thesepurposes are any sole freelanceractivities considered as self-employment activities based on theCzech pension insurance act.

► The subsidy will not be subject topersonal income tax and socialsecurity and health insurancepayments.

Waiver of social security andhealth insurance payments► All self-employed persons,

irrespective of whether they engagein main or secondary businessactivities, are not obliged to pay theminimum social security and healthinsurance payments (“SSHI”) fromMarch to August 2020.

► In cases where a self-employedperson would have been obliged topay a higher SSHI payments than theminimum amount, the correspondingSSHI for the period from March toAugust 2020 will be calculated andsettled in the annual reconciliation,i.e. in 2021. However, the finalamount of SSHI due will be loweredby the amount of minimumpayments waived.

► If a self-employed person hasalready made advance payments forMarch, the advance payment will beconsidered as the advance paymentfor the month of September.

Childcare benefits due to COVID-19


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Employees that cannot workdue to taking care of theirchildren up to 13 years whostay at home during schoolclosure may receive statebenefit in the amount of80% of their reducedaverage earnings.

Self-employed persons inthe same situation mayapply for a subsidy.


[email protected]

+420 731 627 041

Adam Linek

[email protected]

+420 730 191 859

State benefit for employees► Employees who have to stay at home

to take care of their child/ren areentitled to a childcare benefit paidby te Czech social security authorityas a compensation for their absencefrom work.

► The period of provision of the benefitprovision has been temporarilyextended for the entire period ofschools closure while the child agelimit has been temporarily increasedfrom 10 years to 13 years.

► The amount of the state benefit istemporarily increased from 60% to80% of the reduced averageearnings.

► Only one parent may receive thebenefit at the same time, yetrecipients may change – e.g. twodays a week one parent, three days aweek the other parent.

► The benefit is not subject to personalincome tax and social security andhealth insurance payments.

Childcare benefit for freelancers► Due to the current situation, Czech

Government intends to reimbursealso self-employed individuals whohave to take care of their child/renand cannot thus perform self-employment activities.

► Similarly to employees, this supportaims at individuals having child/renof the age of up to 13 who cannotattend schools during the generalclosure.

► The amount of the benefit is CZK424 per day for March and CZK 500per day as of April.

► The benefit is provided by the CzechMinistry of Industry and Trade as aform of a subsidy.

► The subsidy can be claimed by thefreelancer only if nobody else isclaiming this subsidy or employeechildcare benefit on the very samechild.

► The subsidy is generally subject topersonal income tax and socialsecurity and health insurancepayments.

Closed Programs “COVID I”, “COVID II” and COVIDPRAHA


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The purpose of the COVID Iand II programs were toprovide access to businessfinance for soleentrepreneurs, along withsmall and medium-sizedbusinesses.

It was intended for thosewhose economic activitiesare limited due to theoccurrence of COVID-19infection and relatedpreventive measures.

Who was eligible?► The COVID I and II programs were

made available for soleentrepreneurs and small andmedium-sized businesses carrying ontheir business activity outside ofPrague.

► COVID Praha program was madeavailable for sole entrepreneurs andsmall and medium-sized businessescarrying on their business activity inPrague.

► Programs were in the form ofguarantees for loans up to CZK 15m.The guarantees were to allow for:

► An annual deferral ofrepayments; and

► To have the Czech-MoravianGuarantee and Development Banksubsidizing the interest rate.

► The application process for COVID ICOVID II and COVID PRAHAprograms has now been closed.

What did it cover and how was itaccessed?The Government introduced the COVID Iloan program in the amount of CZK 5bn(approximately €180m, being 0.1% ofGDP). The purpose of this program wasto enable eligible businesses to apply fora direct interest-free loan in the rangeof CZK 0.5m to 15m. The loans were tobe:

► Granted in an amount of up to 90% ofeligible expenditure;

► Have a maturity of 2 years; and

► With the possibility of deferredrepayment for up to 12 months.

The government also approved theCOVID II loan program with another 5bnCZK in the form of guarantees for loansup to CZK 15m held with commercialbanks. In order to facilitate thedistribution of up to CZK 30bn amongthe program participants, theguarantees were to allow for:

► An annual deferral of repayments;and

► To have the Czech-MoravianGuarantee and Development Banksubsidizing the interest rate

COVID PRAHA was generally the sameas the COVID II.

For more informationMartin Hladky

[email protected]

+420 225 335 645

Programs “COVID III”, “COVID Plus”


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The purpose of the COVID IIIand COVID Plus programsare to provide access tobusiness finance for soleentrepreneurs, along withsmall and medium-sizedbusinesses and largeenterprises.

They are intended for thosewhose economic activitiesare limited due to theoccurrence of COVID-19infection and relatedpreventive measures.

Who is eligible?► The COVID III is made available for

sole entrepreneurs and small andmedium-sized businesses up to 500Employees carrying on their businessactivity in whole area of the CzechRepublic (including Prague).

► The COVID Plus is made available forlarge enterprises from 250Employees carrying on their businessactivity in whole area of the CzechRepublic (including Prague).

► Programs are in the form ofguarantees for loans up to CZK 50min program COVID III and from 5m to2bn in program COVID Plus. Theguarantees were to allow for:

► An annual deferral ofrepayments; and

► To have the Czech-MoravianGuarantee and Development Banksubsidizing the interest rate.

► The application process for COVIDIII COVID Plus programs areexpected to open in the beginningof May.

What does it cover and how is itaccessed?The Government introduced the COVIDIII loan program of CZK 150bn(approximately €5.5bn). The purpose ofthis program was to enable eligiblebusinesses to apply for a loan up to CZK50m. The loans are made to cover:

► Acquisition of small tangible orintangible assets;

► Acquisition and financing ofinventories or materials;and

► other operating costs/expenses ofthe beneficiary.

Another introduced program is COVIDplus program, where guarantees forloans are provided through the ExportGuarantee and Insurance Corporation(EGAP) with minimal amount of loanCZK 5m. EGAP covers the loan principalup to 80%. In order to maintainbusiness, the loans are made to cover:

► Operation costs

► Working capital

► Innovation and improvement ofproduction

At least 20% of sales of goods, productsand services must be from exports (forthe last accounting period).

For more informationMartin Hladky

[email protected]

+420 225 335 645

Moratorium on credits, loans and liabilities fromsimilar financial services


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The Law adopting themoratorium on loans(“Moratorium”) wasapproved by the Parliamentand is now effective.

Upon the request of theborrower, the financialinstitutions are obliged toprovide deferral ofrepayments of credits, loansand liabilities arising onsimilar financial servicessuch as financial leases(“loans”).

Who is eligible?The scope of eligibility for theMoratorium is wide, i.e. it applies to allloans granted before 26 March 2020.

However, the Moratorium does notapply mainly to:

► Liabilities which are overdue morethan 30 days;

► Investment instruments (e.g. bonds);

► Credit card obligations; and

► Liabilities from operating leases.

What does it cover?The time of fulfilment of the debtor’smonetary debts to the creditor ispostponed by the length of theprotection period that lasts from thefirst day of the calendar monthfollowing the notification (at the earliestfrom 1 May) to

► 31 October 2020 or

► 31 July 2020, if the debtor sorequests).

During the protection period, thecreditor is entitled to:

► the maximum interest rate equal tothe repo rate as published by theCzech National Bank increased by 8p.p. (i.e. 9% in total) where thedebtor is a consumer;

► the interest rate as agreed in theoriginal loan agreement where thedebtor is an entrepreneur.

This interest shall not bear interest.

The maturity of this interest ispostponed until the end of the loanrepayment period for natural persons;for legal entities, the interest is payableat the time agreed.

Debtors - natural persons (regardless ofwhether they have used the protectionperiods or not) - will not be subject topenalties for late payment until 31October 2020.

PracticalitiesThe debtor notifies its intention to usethe Moratorium for the protectionperiod which starts from the first day ofthe calendar month after thenotification was made.

The Law Bill has been approved and iseffective from 17 April 2020.

For more informationKarel Hronek

[email protected]

+420 225 335 654

Postponement of rent payments


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The Law enables a deferralof rent payments duebetween 12 March 2020and 30 June 2020.

However, the tax obligationsof landlords will generallyremain the same andcontractual sanctionsshould still be applicable totenants.

General informationThe Law allows for the following:

► Tenants of business premises: tenants can postpone the payment of rent due in theperiod from 12 March 2020 to 30 June 2020 (unless the emergency measures areterminated earlier) until the end of 2020.

► Until 30 June 2020, landlords will not be able to unilaterally terminate a lease dueto a delay in the payment of rent referable to the aforementioned period as a resultof emergency measures in an epidemic. However, this is not applicable to utilitiesand services payments.

► Tenants of residential apartments: this is similar to that for tenants of businesspremises, except that the protection period lasts until 31 July 2020.

It should be noted that the Law neither attempts in any way to mitigate the relatedfinancial impact on landlords, nor their tax obligations to the Government. Further,contractual sanctions based on the respective rent agreement should still be applicableto tenants in the protection period.

Most landlords will be required by law to pay VAT on these rentals by the regulardeadlines and apply the income tax for 2020 also to revenue that may remain unpaid.

On the other hand, tenants who are in arrears with invoice payment are not preventedby the new rules from claiming the VAT deduction (if the standard conditions are met),meaning they will receive an additional cash flow advantage at the expense of thelandlord.

For more informationEva Zemanova

[email protected]

+420 731 627 027

David Kuzela

[email protected]

+420 731 627 085

Vaclav Toman

[email protected]

+420 730 191 853

PracticalitiesBoth landlords and tenants should notunderestimate this area and considertimely and appropriate adjustments toexisting contractual arrangements(taking into account the related taximplications).

The Law became effective on 27 April2020.

Other COVID-19 related relief measures


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Due to the COVID-19pandemic, the Ministry ofFinance announced varioustax liberation measuressuch as the relief of varioussanctions for late filling ofselected tax returns andrelated tax payments.

Tax deferralsThe following tax deferrals have beenput in place:

► For entities with a standard deadlineof 1 April 2020, both the corporate /personal corporate income taxreturns and annual withholding taxstatements for 2019 may be filed(and the related tax paid) by 1 July2020 without a penalty or relatedlate payment sanctions;

► The automatic removal of penaltiesfor the late filing of real estateacquisition tax returns and relatedlate payment sanctions provided thetax return is filed by 31 August2020; and

► The automatic removal of penaltiesfor late payment of road taxprepayments due on 15 April 2020and 15 July 2020, provided the taxprepayments are settled by 15October 2020.

Waiver of tax payments► For taxpayers with a calendar year

tax period, the requirement to paythe June advance payment ofcorporate income tax has beenremoved. This removal is automaticand taxpayers will not be required tofile any application.

► Since 12 March 2020 until the end ofthe emergency measures, VAT onfree-of-charge supply of goods orservices to selected recipients iswaived.

Electronic records of salessuspensionObligations from filing of electronicrecords of sales during the state ofemergency and also during the threesubsequent months have beensuspended. In addition it has beenannounced that the suspension will beextended until the end of 2020.

Tax loss carry-backIntroduction of Tax Loss Carry-Back for2020 tax losses to be potentiallydeducted against 2019 and 2018 taxlosses. This Law Bill is still subject to theapproval of the Parliament of the CzechRepublic.

For more informationDora Horakova

[email protected]

+420 225 335 634

Intention to abolish the realestate acquisition taxBased on the Government’s Law Bill, thereal estate acquisition tax is to beabolished with respect to transfersregistered in the real estate cadastersince December 2019. However, thisLaw Bill is still subject to the approval ofthe Parliament of the Czech Republic.

Global EY COVID-19 Stimulus Response Tracker


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Our tracker provides asnapshot of the policychanges that have beenannounced in jurisdictionsaround the world inresponse to the COVID-19crisis.

Policy changes across theglobe are being proposedand implemented on a dailybasis.

The document will beupdated on an ongoingbasis but not all entries willnecessarily be up to date asthe process moves forward.

Key jurisdictions covered by the Response Tracker include:

► Australia

► Austria

► Belgium

► Brazil

► Canada

► China

► Colombia

► Cyprus

► Czech Republic

► Denmark

► France

► Germany

► Greece

► Hong Kong

► Indonesia

► Italy

► Japan

► Luxembourg

► Malaysia

► New Zealand

► Norway

► Puerto Rico

► Singapore

► Slovak Republic

► Slovenia

► South Korea

► Spain

► Sweden

► Switzerland

► Taiwan

► Thailand

► Ukraine

► United Kingdom

► United States

To download the latest Response Tracker visit:ey.com/en_us/tax/how-covid-19-is-causing-governments-to-adopt-economic-stimulus--

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covid-19: ey czech republic relief measures · 2020-05-07 · covid-19: relief measures 7 may 2020...

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