The Czech Government announces further economic support measures

Czech Republic

Correct as of 17:00 CET, 24 March. This article is not being maintained.

Yesterday, 23 March, the Czech Government announced several new initiatives to support businesses in relation to the fallout from the coronavirus crisis.

The first, named Program Antivirus, outlines five schemes relating to salary support for employees and financial support for businesses, as the Government is proposing to contribute a significant part of employees' lost income. It has similarities Germany’s Kurzarbeit programme, which is considered one of the key reasons why Germany recovered so quickly from the 2008/9 financial crisis.

The five schemes proposed by the programme are:

  1. Employees in quarantine will receive 60% of their basic wage, all of which will be refunded by the state to the employer.
  2. Employees of companies that have suspended or closed operations due to government orders will be paid their full salary, and 80% of which will be refunded to the employer by the state.
  3. Where more than 30% of employees are unable to work due to quarantine or caring for a child, an employee will receive their full wage, with 80% of this amount to be refunded by the state to the employer.
  4. Employees who cannot work due to a lack of necessary resources available for their company to function will be paid 80% of their wage. Half of this will be refunded to the employer by the state.
  5. Employees who cannot work because of reduced demand for their company´s services or products, will receive 60% of their wage. Half of the amount paid will be refunded to the employer by the state.

These schemes will only apply if it is proven that the current coronavirus situation is the reason behind the employee’s inability to work. Companies which continue to operate during this crisis period may be entitled to positive stimulus, however the nature of these is still to be discussed.

The state contribution regarding the above schemes will be provided by the Labour Office and will be back dated to 1 March. The amount of compensation and the period which it will cover will depend on the reason for the obstacle to work and when it began. Decisions will be made on a case-by-case basis for each employee and employers will need to apply for reimbursement of wages each month. The programme is scheduled to launch on 1 April.

Second, the Czech Government has passed the second part of its tax liberation package. The first package approved, among other things, the possibility to submit income tax returns and tax payments until 1 July, with no penalties or interest for late payment imposed until that date.

The second package approves waivers on personal and corporate income tax advances paid in June, and on penalties regarding late tax on the acquisition of immovable property returns or late payment, applicable for the period between 31 March and 31 July. It also allows for individuals or companies to postpone the filing of an immovable property tax return until August 31 this year.

Third, the Government announced a retroactive tax return measure enabling entrepreneurs and companies to recover any loss reported in 2020 from their 2019 and 2018 tax base through claiming a refund from the General Financial Directorate.

Fourth, the Government has launched its second loan programme for companies, the COVID2 programme.

Although, the exact details are yet to be announced, the Czech Moravian Bank has indicated that the programme will have the same requirements as COVID1, with the loans only to be made available to companies with 250 employees or less. It will be comprised of two parts; first, CZK 5 billion of interest free loans will be given by the Czech Moravian Guarantee Bank and second, CZK 5 billion will provide guarantees for company loans from commercial banks, with some of the money used to pay interest on the loans. The government also announced that there will be CZK 500 billion in subsidies available for companies that invest in the healthcare and medical devices sectors.

Additionally, the Minister of Finance announced that she requested the European Commission for a waiver on customs duty and tax (VAT) on imports of medical products and devices.