An updated version valid on 11 April 2020
Adopted supporting measures
1. Loan programs titled COVID and COVID II
Do you need a financial injection to cover your operational costs as a result of crisis measures adopted by the government or the Ministry of Health Care?
There are loan programs titled COVID and COVID II designed for small and medium companies, and these programs provide interest-free (and fee-free) loans ranging from CZK 10,000 to CZK 15 million. The loans may be used for purchases of some small tangible or intangible property, for acquiring and financing stocks and other operational costs (wages, energies, rent etc.). The due date of the loan may reach up to 2 years with a suspension of installments for up to 12 months.
Who qualifies as a small or medium company? The category of small and medium companies includes enterprises which employ less than 250 people and whose annual turnover does not exceed the equivalent in Czech crowns to EUR 50 million, or whose balance amount of the annual balance sheet does not exceed the equivalent in Czech crowns to EUR 43 million.
However, due to huge demand for these programs, both of them had suspended the acceptance of applications at the moment. Nonetheless, it is expected that COVID II should reopen for a second round on 20 April 2020. Similarly, there is a plan for COVID III to be launched soon.
2. Suspension of the electronic records of sales
Are you obliged to record your sales electronically? During the effect of the emergency state, you are not obliged to handle authentication data, the certificate for the records of sales and the pad of receipts in a manner which shall prevent their misuse, namely in accordance with Act No. 137/2020 Coll.
Further in accordance with this act, you are not obliged to fulfil your record-keeping obligations and the obligation to publish an informational notification, as otherwise required by legislation governing the records of sales, specifically during the period after the termination of the emergency state and for the following 3 months.
Supporting measures still waiting to be approved
1. Invitation titled Technological COVID 19
Do you engage in business activities focusing on the production of medical tools? You may apply for an aid in the amount of up to CZK 20 million for projects which are directly connected to the action against any further spreading of corona virus. The invitation titled Technological COVID 19 is part of the Operational Program for Business Activities and Innovations for the Purposes of Competitiveness and shall be officially issued in the middle of April 2020.
2. Guarantee titled COVID plus
Those entrepreneurs who are oriented towards export activities shall receive a support in the form of the program offered by the Export Guarantee and Insurance Company (EGAP). This program shall provide guarantees for loans for operational costs, the working capital and investments. The guarantee shall be valid for the period of up to three years for loans for the working capital, and five years for investment loans.
The loan may be requested by entrepreneurs whose percentage of exported goods and services to the total sales for the sale of goods reached at least 20 % for 2019. The EGAP shall provide a guarantee for the principal of the loan up to the amount of its 80 %, and the minimal share of the bank shall amount to 20 %.
The guarantees for loans may be accessible for enterprises with more than 250 employees. Therefore, this measure shall supplement COVID and COVID II programs for small and medium enterprises. At the moment, the proposal is being discussed in the Senate of the Parliament of the Czech Republic. If it is approved, its commencement is expected to take place in the second half of April 2020.
3. Suspension of the installments for mortgages and loans
Are you paying installments for mortgages or loans related to your business activities? In accordance with a proposal of the Ministry of Finance, you shall have a choice to suspend the installments for three or six months, based on notifying the creditor of your intention together with your declaration that you, as a debtor, take this step as a result of a negative economic impact of the corona-virus pandemic. It will not be necessary to prove your reasons in any way. At the moment, the draft had been approved by the Chamber of Deputies during the regime of the legislative emergency, and we are thus only waiting for the approval of the Senate of the Parliament of the Czech Republic now.
4. Impossibility to terminate leases
Are you leasing premises intended for business activities as a lessee and will your rent payments become delayed? Or on the contrary – are you a lessor of any such real estate? Based on the governmental draft, the lessor is not entitled to terminate the lease during the current situation, provided that the delay with the rent payments occurred between 12 March 2020 and 30 June 2020 and that it was causes by extraordinary measures resulting from the corona-virus pandemic – the rent owed shall, however, be repaid by 31 December 2020 based on legislation.
In this case, it is also necessary to wait for the approval in the form of the given legislation which is being discussed by the Senate of the Parliament of the Czech Republic.
Several relieves for entrepreneurs are related to tax matters. The following are the major ones:
5. Option to submit the tax return later
Are you unable to submit the tax return in time? The fine for the delayed submission of the tax return for the income tax for 2019 shall not be exercised, and neither will the interest on arrears, both until 1 July 2020.
6. Cancellation of the June advance payments for the income tax
Should you regularly pay advance payments for the income tax as of 15 June? This obligation is forgiven without any further obligations. The given advance payment for the first half-year / second quarter of 2020 shall not be paid at all.
7. Retrograde effect of the tax loss for the income tax
Do you expect that your tax return for 2020 will show a loss? If so, you may submit an additional tax return for 2019 and apply the loss in it. Thereupon, you will either not have to pay the suspended tax for 2019 in the total amount or you shall receive the amount overpaid.
8. Cancellation of certain penalties in the field of taxes
Will you be forced to submit a tax return or any other tax declaration after the deadline? In accordance with the statement of the Ministry of Finance, you shall not face the penalty if you can prove that the delay occurred due to the corona virus.
As for the fine in the amount of CZK 1,000 for a delayed submission of the VAT control report which occurred during the period between 1 March and 31 July 2020, then these shall be forgiven completely. As for higher fines, the requests for their pardon shall be handled individually – and they shall be granted if the connection to corona virus is proven.
At the same time, the administrative fee for the submission of a request for a deferral or an installment plan for the tax, or for the pardon on interest on arrears, or for the pardon on a fine for not submitting the control report shall be forgiven, provided that the requests are filed by 31 July 2020.
Another package of measures adopted in relation to the corona virus is related to the employment and social issues. The current changes in this area are described in a separate article HERE.
Are you unsure whether you are entitled to any of the above-specified measures? Do you need assistance when applying for any of them? Our experienced attorneys are here for you!
At the moment, we are hereby providing you with an opportunity to attend our webinar which is FREE OF CHARGE and focuses on the topic of “Impacts of the corona-virus on contractual relationships”. It shall be led by Kristýna Dubová, our attorney, and takes place this Thursday, 16 April 2020, between 10:00 and 10:45.