CORONAVIRUS: Legal implications for businesses in the Czech Republic

Tax returns for personal and corporate income tax can be filed without a penalty until 18 August 2020. Likewise, the income tax calculated under such returns will be payable until 18 August 2020. However, this option does not apply to entities which report to the Specialized Tax Authority. Natural persons can file a notification of exempt income in excess of CZK 5 million until 18 August 2020. The deadline for filing employment income tax statements was prolonged to 31 May 2020.

On 2 June 2020 an amendment to the Compensation Bonus Act was published in the collection of laws, thanks to which, in addition to self-employed persons, some shareholder/members in limited liability companies will also receive this support. Financial offices should commence paying out the bonus to shareholders on the basis of submitted applications no later than 3 June 2020, i.e. the date of effectiveness of the legislative amendment. The amendment was approved in its original wording, as the Chamber of Deputies overruled the changes suggested by the Senate.  

Category B has been extended until the end of August 2020 and the government has approved a new form of support – Category C!

On 19 May 2020, Act No. 247/2020 Coll., On certain measures to mitigate the effects of the coronavirus epidemic known as SARS CoV-2 on cultural events (the “Act”), entered into force. Not only for the field of tourism, but also for the field of culture, the possibility of the organizer to issue a voucher for a cultural event instead of refunding the entrance ticket fee was introduced.

The state contribution for commercial rents to entrepreneurs with forcibly closed establishments is gaining more concrete outlines. If an entrepreneur negotiates a 30% discount on rent from his landlord, he will be able to apply for state support in the amount of 50% up to a ceiling of CZK 10 million for the period from April to June. However, the program has yet to be notified to the European Commission before it can be launched.

At its meeting on 18 May 2020, the Government approved by Resolution No. 553 the Covid III guarantee program for self-employed persons and companies employing up to 500 employees. Immediately afterwards, the websites of Českomoravská záruční a rozvojová banka, a.s. ("ČMZRB") published the conditions of the program. Entrepreneurs can already start loan negotiations with a commercial bank involved in the program. According to the experience of previous Covid programs, it is necessary to act quickly.

The Chamber of Deputies approved an amendment to the Compensation Bonus Act, thanks to which, in addition to self-employed persons, some shareholder/members in limited liability companies will also receive this support. As both the Chamber of Deputies and the Senate discussed the amendment in an abridged procedure, its approval was expected at the beginning of the Senate meeting on 13 May 2020. However, due to their formal designation of the compensation bonus payments, with respect to the budget, the Senate returned the amendment to the Chamber of Deputies with an amendment.

On May 7, 2020, an amendment the Act on Compensation Bonus for self-employed persons, the so-called Twenty-five, was published in the Collection of Laws, this act aims to support self-employed persons whose business has been negatively affected in connection with the spread of infection by coronavirus. The amendment referenced extends the possibilities to apply for a bonus of CZK 500 per day also for an additional period from 1 May to 8 June 2020. The Financial Administration has for this purpose issued a new interactive online application form.

On May 7, 2020, the Government approved under bill no. 234/2000 the amendment of the Compensation Bonus Act, which introduced another instrument of support for self-employed persons whose business was negatively affected in connection with coronavirus. This extends the period for which the self-employed will be able to claim a bonus. Applications for bonuses for the period from March 12 to April 30 can be submitted by the self-employed already from 10 April 2020. In the event that self employed persons are interested in extending the compensation bonus support for the additional time period from May 1, 2020 to June 8, 2020 they will have to submit a new application. For those who have not yet applied for the first bonus period, then from May 7, 2020 onwards it is possible to submit both applications (for bonus periods one and two) on the one single interactive formula which the Financial Administration has published.

The government has started to announce the dismantling of certain Covid19 measures and from Monday, April 27, 2020, it now allows business trips for foreigners to the Czech Republic, in respect of which business people were mounting pressure therefore. However, it set out a number of conditions and rules, which are further modified.

The original Government Crisis Measure No. 443 was repealed on 1 May 2020 and replaced by Government Crisis Measure No. 495. However, this crisis measure is valid only until 10 May 2020, as it will be replaced by Government Crisis Measure No. 511 with effect from 11 May 2020. This article takes into account measures effective until 10.5.2020, with the proviso that changes effective from 11.5.2020 are pointed out in italics.

At its meeting on April 30, 2020, the government approved the abolition of the 4% real estate acquisition tax and related changes in the Income Tax Act. The content of the proposal of the Ministry of Finance is described below. However, there are likely to be some adjustments to this wording as a result of the coalition agreement. According to the media, the change should concern the maintenance of the tax deduction of interest on real estate acquired until the end of 2021. The time test for the exemption of income from the sale of real estate should be extended to 10 years (compared to the originally proposed 15 years).

On Monday, 4 May 2020, the government submitted an amendment to the Compensation Bonus Act to the Chamber of Deputies. The amendment should support, in addition to self-employed individuals (sole proprietors), certain shareholders in limited liability companies. This article provides details on the requirements, forms of application, and the amount of compensation.

At its meeting on April 30, 2020, the government approved a proposal by the Ministry of Finance to abolish the 4% tax on the acquisition of real estate. Compared to the original wording, certain adjustments have been made in order to reach a coalition agreement.

On 24 April 2020, a moratorium on rental prices of apartments, issued by the Ministry of Finance (“MF”) came into force, which was adopted in the form of Government Decree No. 202/2020 Coll. This is a protective measure for tenants, which stipulates that the rent for an apartment cannot be increased for a limited period of time. This price moratorium is related also to Act No. 209/2020 Coll., which protects tenants from termination.

In the first half of April, the European Commission issued guidelines on mobile applications supporting the fight against the COVID-19 pandemic in relation to data protection.