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News 3/2020

Supporting measures related to Covid-19

Dear readers,

We would like to inform you about the current supporting measures implemented by the Czech Republic in order to mitigate the negative economic impact of the COVID-19 pandemic on entrepreneurs and employers.

Credit instruments

The first instrument, implemented by the Czech Republic through the Ministry of Industry and Trade (MIT) and the Českomoravská záruční a rozvojová banka (ČMZRB) on 16 March 2020, is the COVID I Credit. This is an interest-free credit intended to support small and medium-sized enterprises if they are in default in, have suspended or cancelled payments or supplies under commercial contracts owing to measures to prevent the spread of coronavirus disease.

The funds allocated to COVID I Credit with ČMZRB have been gradually increased up to CZK 5 billion. Then, the lodging of applications for COVID I Credit with ČMZRB was suspended on 20 March 2020.

ČMZRB, in collaboration with MIT, are preparing a continuation of COVID I Credit in order to make it possible to support a greater number of entities and projects. ČMZRB intends to provide guarantees of up to 80 % for commercial bank credits from CZK 10 thousand to 15 million, contributing to the payment of interest with up to CZK 1 million. Guarantee credits are to support projects with a total value of approximately CZK 30 billion. The program shall be called COVID II.

The COVID II Program is expected to be launched on 30. 03. 2020.

Employment allowance – Antivirus Program

The Government has approved the Antivirus Program prepared by the Ministry of Labour and Social Affairs (MLSA). It is to support employers whose economic activity has been adversely affected by Covid-19.

The allowance is to allow employers to pay remunerations to employees who cannot perform their job, either on the ground of quarantine imposed on the employee in question, on the ground of a closure of the employer’s establishment under the relevant crisis measure implemented by the Government (such as hotels, restaurants, hairdressers, etc.) or in the case of limited availability of inputs (raw materials, products, services) as well as limited demand for the employer’s services and products.

The amount of the allowance and the period of granting will depend on the reason for the obstacle to work to be examined on a case-by-case basis.

Mode A – where quarantine was imposed

Employees receive remuneration amounting to 60 % of average earnings. Under this mode, the Government shall grant the employer an allowance equal to the entire amount of such remuneration.

Mode B – where the employer’s establishment was closed under a crisis measure taken by the Government as a result of which the employer is not able to assign work

According to MLSA, remuneration amounting to 100 % shall be paid. The Government shall grant the employer an allowance in the amount of 80 % of such remuneration, however, its amount is limited to a maximum of 24 800 CZK per month per one employee.

Mode C – where the employer is not able to assign work to a significant number of employees who are in quarantine or care for children (30 % and more employees)

Employees receive remuneration amounting to 100 %. The Government shall grant the employer an allowance amounting to 80 % of the remuneration paid, however, its amount is limited to a maximum of 24 800 CZK per month per one employee.

Mode D – in the case of limited inputs (raw materials, products, services) necessary for the employer’s activity due to quarantine measures (or production stoppage in general) on the supplier’s part, including foreign suppliers

Employees receive remuneration amounting to 80 %. The Government shall grant the employer an allowance amounting to 50 % of the remuneration paid, however, its amount is limited to a maximum of 12 400 CZK per month per one employee.

Mode E – in the case of limited demand for the employer’s services, articles and other products due to quarantine measures at the final destination of the products (both in the Czech Republic and abroad)

Employees receive remuneration amounting to 60 %. The Government shall grant the employer an allowance amounting to 50 % of the remuneration paid, however, its amount is limited to a maximum of 9 300 CZK per month per one employee.

In all the above cases, the allowances will be paid by the Employment Office of the Czech Republic where the relevant applications shall be lodged.

Further details (methodology) shall be published by the MLSA without delay.

Subsidy schemes

The state seeks to alleviate the situation using its “common“ subsidy schemes. According to MIT, subsidies under the Operational Programme Enterprise and Innovation for Competitiveness (OP EIC) may be applied within an extended deadline. Also, deadlines for lodging applications have been extended by 30 days in all calls that were not closed on or before 17 March 2020 and do not exceed the date 30 April 2020. Updated information is published on the website of MIT and the Business and Innovation Agency.

Further measures are expected

Apart from the above described instruments and measures, the Government also approved in its meeting on 19 March 2020 a significant extension of applicability of the care allowance, both for employees, and, recently, for self-employed persons who may lodge an application for care allowance with trade offices.

Remission of the minimum advance payments of social and health insurance contributions to be paid by self-employed persons has been approved for half a year from March to August 2020. Also, self-employed may use immediate emergency aid. The remissions shall be effective from March 2020.

It remains to closely monitor the further legislative developments which we continue to do for you.

We will be happy to assist you in preparing the requests and other submissions.

If you have any further questions or require further clarification, please feel free to contact us anytime. We hope that together we will overcome the current adverse situation.

Your WTS Alfery Team