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News 13/2020

“Covid-Rent” support for businesses

The Ministry of Industry and Trade (MIT) has recently published a call from the program “COVID – Rent” (hereinafter the “program”), which is based on Czech Government Resolution No. 550 of 18 May 2020, together with the provisions of the Budgetary Rules.

We would like to familiarise you with the main points of this support in a concise, simplified text.

1) Purpose of the program

The aim of the Call is to provide support to businesses which operate retail business activity or provide services at establishments, which were closed in accordance with the Czech government measures, meaning that the businesses could not generate an adequate profit.

The support consists in the partial payment of rent in the decision period, that being stipulated as 1 April to 30 June 2020, whereas the decisive rent refers to the total sum of rent (before discount) stipulated by a lease contract concluded and effective before 13 March 2020.

2) Sum

The total amount associated with this call is CZK 5 billion and the MIT reserves the right not the distribute all of these funds.

3) Authorised applicant

An authorised applicant is a business (natural person or legal entity) performing a business activity pursuant to the Trades Act (o. 455/1991 Coll.) or in a similar manner, who does not own the establishment. The program does not apply to business which only lease the establishment. Another condition is that the establishment was prohibited from selling goods or providing services due to the extraordinary measures imposed by the Czech government, minimally in the period between 13 March and 30 June 2020. The lessor and lessee must not be related entities. i.e. they are not relatives, controlled or controlling entities or parties acting in concert. Furthermore, they must not be entities exerting substantial influence or entities which are part of a consolidation group (concern). They must not be in default with the payment of their liabilities to selected institutions or EU projects. Furthermore, the call does not apply to applicants who have drawn the maximum value of support on the basis of the EU commission.

4) Form of support

Support is provided in the form of a subsidy for decisive rent.

5) Conditions and value of support for establishments in non-state and state owned buildings

The first condition is that the lessor must provide the lessee with a discount of minimally 30% pursuant to the lease contract or amendment thereto, which must have been concluded even before submitting the application for support. Another condition is the payment of 50% of the decisive rent, or if rent was deferred then the first part of this sentence is fulfilled. The value of support for decisive rent is maximally 50% of the decisive rent.

For establishments in a state-owned building, the lessor does not provide a 30% discount. The lessee must pay at least 80% of the decisive rent. The value of support is 80% of the decisive rent.

6) Other conditions

Eligible costs must not exceed the value of the original rent before 13 March 2020. If rent was stipulated in a different currency, the CNB exchange rate valid as at the date of issuing the tax document will be used to determine the value in CZK. The recipient of support is obliged to archive all the documentation for 10 years from the issuing of the decision and submit this documentation to the relevant inspection authorities at ay time during this period. The provider may change the conditions and will publish such changes on its website. Support is provided from declaration of the Call at latest until 31 December 2020. There is no legal claim to the provision of support and no legal recourse against the a negative decision. The applicant risks criminal prosecution if they provided false information.

7) The deadline for submitting applications is from 26 June to 30 September 2020.

Mandatory attachments: affidavits, confirmation of payment of rent for January and February 2020.

8) Manner of submitting applications

The application is submitted via the System available at: www.mpo.cz. It is necessary to register for the System. To complete registration, the applicant will need a functional e-mail address and eIdentity (NIA). Registration of intermediaries is conducted indirectly via an already registered applicant.

9) Proceedings on provision of support

The MIT proceeds pursuant to Section 14 et seq. of the Budgetary Rules and only the applicant is a party to the proceedings.

10) Defects in the application

Applicants will be invited to eliminate defects, but this does not concerns irremovable defects. Defects may be removed only twice. The deadline for removing defects is 14 days from delivering the request for its removal. If the defect is not removed, the MIT will suspend the proceedings. The MIT may invite the applicant to supplement the application and provide a sufficient deadline at any time during the proceedings.

11) The legal successor cannot enter into the proceedings in lieu of the applicant.

12) Control of use of support

The MIT will perform inspections pursuant to the Act on performance of public inspection, whereas the recipient of support is obliged to submit the respective documents.

The provision of support is divided into the following steps (simplified):

  1. You are a business that was prohibited from providing services at the establishment based on government measures (if YES)
  2. You are leasing this establishment (if YES)
  3. The lease contract was concluded before 13 March 2020 (if YES)
  4. You are in a non-state building /state-owned buildings have different rules/ (if YES)
  5. You are entitled to a subsidy of 50% of the rent, but you must meet the following conditions:
  6. You are not a related entity with the lessor and the lessor is a non-state entity
  7. The lessor must provide a 30% discount from rent, you must pay at least 50% of the original value of rent.

In specific cases, do not hesitate to contact us, we are always at your disposal.

WTS Alfery Team