Support in the form of subsidies or "carer allowance" for self-employed UPDATE02
As of April 1, 2020, self-employed persons (“self-employed persons”) can file applications for so-called carer allowance benefits at the Trade Licensing Office in the amount of CZK 424 per day. However, it is not a special social benefit, as initially envisaged, but a State aid in the form of a grant with a stricter regime. Below is a brief overview of the conditions for obtaining this form of assistance.
On 26 March 2020, the Government adopted Resolution No. 311, which took note of the so-called Carer allowance Program for Self-Employed Persons (full name Support program for small businesses affected by the worldwide spread of COVID-19 caused by SARS-CoV-19 - "Carer Allowance for self-employed persons). The Ministry of Industry and Trade (“MIT”) was entrusted with the implementation of this program. The Trade Licensing Offices were entrusted with the acceptance of applications for a “carer allowance for self-employed persons”.
It is clear from the above that the carer allowance for self-employed is not nearly the same as the carer allowance benefit for employees.
In the case of employees, this is a sickness insurance benefit paid pursuant to Act No. 187/2006 Coll., On Sickness Insurance, in conjunction with the brand new Act No. 133/2020, on Certain Social Security Adjustments in Connection with Emergency Measure in the 2020 pandemic. On the contrary, in the case of self-employed persons it is state aid in the form of a subsidy provided under Act No. 47/2002 Coll., on support for small and medium-sized enterprises and an amendment to Act No. 2/1969 Coll. of the State Administration of the Czech Republic, as amended. It is on the basis of this Act that the program “Carer allowance for Self-Employed” is implemented.
Although the MIT states that the "carer allowance" provided through this program fulfills the conditions of small-scale public support under the EU de minimis Regulation, it therefore intends to enter it in the Central Register of Small-Scale Supports ("De minimis Register"). However, since the Czech Republic is in a regime that can be assessed as an emergency within the meaning of Article 107 (2) (a) of the Treaty, (a) of the Treaty on the Functioning of the European Union, and the purpose of 'carer allowance' in this case is to remedy the impact that school closure has on the self-employed, this procedure seems unnecessary, since aid of this kind could automatically be regarded as compatible with the internal market and hence vacation. In addition, this approach would avoid the problems of receiving 'carer allowance' for self-employed persons who have already exhausted de minimis support.
The Carer Allowance Program for Self-Employed emphasizes that the support in the form of a subsidy is intended for a self-employed person who is actually affected by the negative effects of the state of emergency, .i.e has suffered financial loss as a result of closing school or other childcare facilities and therefore could not do business. The purpose of the subsidy, therefore, is to compensate for the loss of the self-employed income because of the impossibility to conduct a business who takes care of:
- a child under the age of 13 attending school and other childcare facilities closed due to the spread of COVID-19 infection, unless no other person receives this grant or other compensatory allowance for the same child;
- a dependent child up to 26 years of age, who is dependent on the assistance of another person, at least grade I (light dependence) under the Social Services Act, and cannot attend school because of its closure due to an emergency measure against the spread of COVID-19;
- a person with a disability at least in grade I (slight dependence) under the Social Services Act.
In the case of several children in the same household, it is not possible for one parent to receive support for one child and the other parent for another child (s). The beneficiary of the aid must be at the time of submitting the application and also for the whole period of drawing the subsidy of the self-employed for the main activity. The applicant must also be registered as a taxpayer for income tax at the tax office. The applicant must meet the definition of an SME under the EU Block Exemption Regulation as well as the condition of no indebtedness - that is, it must not have arrears to the Tax Office, Czech Social Security Administration, health insurance company and other listed institutions (such as Land Fund, State Housing Development Fund, Customs Administration of the Czech Republic, the State Culture Fund, the State Environmental Fund, the State Agricultural Intervention Fund, regions, municipalities and others), but also towards providers of other support (specifically from projects co-financed from the EU budget). The applicant/beneficiary shall prove all these facts by affidavit. But that's not all.
A self-employed person cannot be a beneficiary if, at the date of the application, the court declared bankruptcy of his/her property, allowed settlement or rejected the petition for bankruptcy due to lack of assets, was bankrupt, the court issued a decision ordering enforcement of her assets or ordered the execution , is in liquidation, the self-employed business fulfills the conditions of the insolvency law for the opening of collective insolvency proceedings or is an undertaking in difficulty within the meaning of the Community Guidelines on State aid for rescuing and restructuring firms in difficulty.
Some of the conditions set, are at least questionable in view of the specific purpose of the aid and deserve re-evaluation. For example, self-employed persons in disputes with aid providers or self-employed persons in insolvency are undoubtedly affected by the closure of schools at least in the same way as self-employed persons who are not in such a situation. Such conditions are not imposed on employees applying for carer allowance.
Applicants will be able to apply for support through a form published HERE.
The application, including all required attachments, shall be filed with any trade licensing office via a data box, by e-mail with electronic signature, by post or, if necessary, by personal delivery (by prior arrangement) to any local trade licensing office. The trade licensing office with which the application was submitted shall be immediately submitted to the MIT. This will evaluate the application and, if necessary, request additional documentation. If the aid is approved, it will issue a decision, which will include binding conditions for the provision of the subsidy, including sanctions for non-compliance.
The support will then be provided in the form of a subsidy of CZK 424 / day. The subsidy is requested for each calendar month and will be paid ex post to the self-employed person’s bank account specified in the application. Entitlements to this support arise only during the period of application of emergency measures in an epidemic concerning the prohibition of the personal presence of children, pupils and students in institutions and schools, the closure of which is the reason for entitlement to carer allowance. Each applicant may submit only one application per specified period under this program.
With regard to the form of granting this support, it is important to mention that there is no legal entitlement to the subsidy from the “Carer allowance for Self-Employed” program (in comparison with employees who are entitled to the carer allowance if the conditions are met). A specific feature of the subsidy character of the support is also that if the applicant is successful and receives the subsidy, he/she will be obliged to keep the relevant documentation for a period of 10 years from the date of the grant decision within 2 years from the granting of the grant to allow the provider, respectively other inspection bodies to check the relevant documentation. Other obligations for the beneficiaries of the subsidy may be stipulated in the binding terms and conditions of the subsidy.
Under the Income Tax Act, the "carer allowance" received is the taxable income of the self-employed due to the chosen form. This is because the "carer allowance" for the self-employed has the form of a subsidy and not a social insurance benefit, as is the case with employees. However, part of Act No. 159/2020 Coll., On Compensation Bonus, is a special provision that exempts income from a subsidy under the subsidy program of the Ministry of Industry and Trade of the Czech Republic for the self-employed person from income tax.