Following the information published in the previous issued of GT News, we would like to inform you about the widening of tax relief that is part of the extraordinary government measures adopted in relation to the current COVID-19 pandemic. You will find an overview of all currently applicable measures in the tax area and in related areas below.

MEASURES FOR SELECTED FIELDS LIMITED BY GOVERNMENT DECREES

1. The Great Liberation Package – further extension

In the previous issued of GT News we informed about the adoption of the so-called Great Liberation Package, which brought tax relief for entities, whose income in the period between 1 June and 30 September 2020 came predominantly from activities banned or limited from 14 October as a result of government measures announced on 12 October, i.e. for example the operation of restaurant facilities, bars, clubs and discos, the organising of concerts and other performances, wedding celebrations, fairs, congresses, operation of indoor sports grounds, gyms and fitness centres, or the operation of museums and galleries etc.

By a decision of the finance minister from 26 October, this tax relief has also been extended to entities, whose income in the period of 1 June to 30 September 2020 came predominantly from retail and the provision of services in all premises subject to forced closure (i.e. with the exception of activities, which, according to the government decree, remain permitted in the period of 22 October 2020).  

For all of these entities, the following shall be waived with this decision:

• Late payment interest on value added tax payment for the months of September to November, or for the third quarter, if payment of the tax takes place by 31 December 2020 at the latest,
• Road tax prepayments due on 15 April 2020, 15 July 2020, 15 October 2020 and 15 December 2020 and
• Income tax prepayments due in the period of 15 October to 15 December 2020.

In case of using this tax relief, the taxpayer is obliged to announce this fact to his local financial office, and this announcement may also be sent by means of an email.     

Attention, in case of value added tax, the fine for late tax statement is not waived, moreover, i.e. tax declarations as well as control reports still need to be submitted within the statutory deadline.

2. COVID Rent II – an extended range of activities

The Czech government has approved a follow-up programme of rent compensation for small entrepreneurs, who operate retail business activities and provision of services to clients in their premises, which they are using based on a contract of lease, and who have been banned from or significantly restricted in operating these activities (the programme has gradually been extended to all activities limited by government measures from 14, 21 and 26 October 2020). Support will reach 50 % of the total rent for the period of July to September 2020 up to a total of CZK 10m per one applicant and unlike the previous programme, its granting will not be subject to the condition of agreed discount on the side of the lessor anymore.

It will be possible to submit requests from 21 October 2020 until 21 January 2021, and the applicant must prove that he has paid at least 50% of rent prior to submitting the request. The Ministry of Industry and Trade published the specific conditions on its website on 16 October 2020 and continues to update them.

3. Compensation bonus for self-employed persons, small limited companies and people working on agreements to complete a job or to perform work

The government has also approved a draft bill on a compensation bonus for entrepreneurs affected by the current emergency measures. The bonus is intended for self-employed persons, for partners of selected limited companies and for persons working based on agreement to complete a job or agreement to perform work, with a prevailing business activity in the directly limited areas of the economy. The bonus will pertain per every day of the limitation, for the time being for a maximum of 31 days if the bonus period from 5 October to 4 November 2020. At the same time, this activity must have been the dominant source of livelihood in the most recent four months. In addition to the directly affected businesses, entrepreneurs, who are at least 80% connected to the directly closed fields, either by means of a long-term supplier-customer relation or entrepreneurs whose activity is inseparably connected to the premises closed down, will also be able to request the bonus. The draft is currently subject to the legislative process.

4. Agrocovid Food Industry

Food producers, who supply goods to public catering premises, such as school canteens, whose total revenues will decrease by more than one quarter year on year, will be entitled to financial assistance from the Ministry of Agriculture. The maximum rate is up to CZK 200,000 per one company and up to CZK 20,000 per one employee. Support may reach up to 75 % of the total decrease in income compared to the year 2019, the subsidy may reach a maximum of up to EUR 800,000 (approximately CZK 21.6m) for food producers and EUR 100,000 (approximately CZK 2.7m) for farmers. Reception of requests may begin at the turn of this and the next year.

MEASURES FOR A WIDER RANGE OF TAXPAYERS

1. The Great Liberation Package – waiver of VAT

The second part of the liberation package is a waiver of the value added tax for payers for gratuitous supply of goods or provision of services in relation to the COVID-19 pandemic, for whom the duty to return tax arose in the period from 1 October to 31 December 2020. The waiver relates to the following categories of goods and services:

• Gratuitous supply of listed medical equipment and material, face coverings, gloves and other protective equipment,
• Gratuitous supply of disinfectants and similar preparations, or their supply to another payer for the purpose of production of these preparations,
• Gratuitous supply of goods or provision of services for the needs of providers of healthcare services, basic bodies of the integrated rescue system, the Army of the Czech Republic or social services facilities.

2. Previously adopted tax measures

We would like to remind you that in addition to the relief introduced by the most recent liberation package, it is also possible to use the existing tax measures intended for reducing the negative impact of the current extraordinary situation on taxpayers:

• The option of requesting, based on an individual request, a different determination of tax prepayments, or cancellation of tax prepayments on grounds of lower expected tax liability for the current taxable period compared to the data for the previous taxable period, based on which the prepayments were determined.
• The option of requesting, based on an individual request, a permission to defer tax payment or to divide its payment into instalments for reasons related to the COVID-19 pandemic. In such a case, the related late-payment interest and the interest on the deferred sum incurred until 31 December 2020 will also be waived.
• The option of requesting, based on an individual request, waiver of late-payment interests for reasons related to the COVID-19 pandemic.  
• The option of requesting, based on an individual request, prolongation of deadlines for fulfilment of tax obligations or their return into the previous state in cases, when the law does not forbid it,
• Retroactive use of tax loss enabling taxpayers to use tax loss for the year 2020 against the tax obligation for the year 2018 and 2019 by means of an additional tax declaration.
• Waiver of administrative fees for submitting selected types of requests (e.g. requests for waiver of late-payment interests and requests for permitting deferral of tax payment or its division into instalments) submitted by 31 December 2020.

3. Prolongation of the Antivirus A and B Programme

The government of the Czech Republic has decided on prolongation of the Antivirus targeted programme of employment support in regime A (newly called Antivirus Plus) until the end of this year. We would like to remind you that regime A impacts cases of quarantine of an employee or forced closure of premises of the employer due to a government decree. In case of forced closure of premises, from 1 October, employers will newly be entitled to the entire sum of paid compensation up to CZK 50,000 per one employee compared to the current entitlement to 80 % of paid compensation up to a maximum of CZK 39,000 per employee. In case of an employee in quarantine, compensation remains at 80 percent per employee.

Programme Antivirus B (for entrepreneurs, whose employees have had to be subject to obstacles in work, either due to the fact that quarantine and care for children has reduced the number of employees below a bearable rate, or because the employers have had to stop their operation due to a lack of available raw materials or other inputs, or due to limitation of demand for products or services due to the crisis brought about by the coronavirus pandemic) has also been prolonged until the end of the year.

4. Postponement of the obligation of electronic record of sales

At its extraordinary meeting on 16 October 2020, the government also proposed postponement of the obligation of electronic record of sales for all entrepreneurs until the end of the year 2022. With this measure, the government wants to prolong cancellation of the duty for entrepreneurs to record sales according to the e-sales act from 31 December 2020 until 31 December 2022. The cancellation would apply to all stages of e-sales (EET).

5. Emergency caregiver allowance for employees and the self-employed

The government has also approved a draft bill on caregiver allowance for employees in connection with the extraordinary measures during the epidemic. According to the draft, an employee (including persons working based on agreement to complete a job or to perform work, if social insurance is being paid for them) should be entitled to caregiver allowance, if he cannot perform work due to looking after a minor under the age of 10 years, there should also be entitlement for dependent children (up to the age of 26 year at maximum, though) attending school depending on care from another person (from the 1st degree already), persons above the age of 10 years dependent on the care of another person who use the services of daily or weekly care centres and other similar facilities, or children, who cannot attend school due to imposed quarantine in the family. The period of support will last for the entire duration of the extraordinary measure (closed school or care centre, duration of quarantine) and the caregiver allowance reaches 70 % of the daily base of assessment (a minimum of CZK 400 a day). The draft bill needs to pass through the legislative process, though – it is expected in the course of this week.

Self-employed persons will now only be able to request a subsidy, in case they lost earnings due to the fact that because of closed down schools or quarantine they had to look after children or a person dependent, at least in the 1st degree, on help from another person due to an unfavourable health situation, who has been prevented from using some social services by the adopted measures, or a dependent child up to the age of 26 years at maximum, who is dependent on assistance from another person in at least the 1st degree (moderate dependence). It will reach CZK 400 per day.

6. Covid III guarantee programme

The Covid III guarantee programme for entrepreneurs with a maximum of 500 employees will also continue. The government has decided to prolong the national guarantee programme until 31 December 2021. In addition to operating loans, entrepreneurs will newly also be able to request guarantee from the Czech-Moravian Guarantee and Development Bank for investment loans as well. The period, when performance from the state guarantee can be applied, is also being prolonged, until 30 April 2026, instead of the original date of 30 June 2024.

7. Temporary cancellation of periodic medical checks and replacement of the pre-employment medical check of new employees with a statutory declaration

The government has further decided about a temporary cancellation of periodic medical checks and replacement of the pre-employment medical check of new employees with a statutory declaration. The validity of current medical assessments has also been prolonged. The measures apply until the end of the state of emergency.

8. Foreign employees will not have to meet the conditions for change of employment

Foreigners with an Employee Card or Blue Card will newly not have to fulfil the statutory conditions for change of employment, for example the period of six months of previous employment in the Czech Republic. It will also suffice to announce the change at the Ministry of Interior, on the day of commencing work in the new job, at the latest.

In case you are interested in more information or in applying any of the above-mentioned measures, please, do not hesitate to contact us. We will continue to inform you regularly about any further measures adopted in relation to the current extraordinary situation.