Government proposal of 23 March 2020 contains the following reliefs. Amendments will be considered in the Parliament under the regime of legislative emergency on 24 March 2020.

Remission of June income tax prepayments

• The Ministry of Finance (MF) will issue a blanket decision on remission of personal and corporate income tax prepayments due on 15 June 2020. Please note, that the decision does not relate to prepayments due on 15 March 2020; however, there is an option to cancel these prepayments with retrospective effect.

Remission of other sanctions and fees

• In addition, the MF will apply a blanket remission of sanctions for late filing of tax returns on immovable property acquisition (also with retrospective effect) until 31 July 2020 and remission of other sanctions, such as those within the competence of the Customs Administration. The MF also promises to remit certain other administrative fees.

Possibility to apply a 2020 loss retrospectively 

• The MF should prepare a draft on a retrospective effect of a tax loss, i.e. that a tax loss for 2020 may be utilised against a tax liability for 2018 and 2019 (probably through an additional tax return). This is a forward-looking measure that may have an impact on taxpayers’ cash flows no sooner than in 2021.

Proposal to postpone electronic sales records

• The Government has approved the postponement of the obligation resulting from electronic sales records to three months after the end of the emergency situation.

Possible exemption from customs duty on the import of selected medical supplies

• The MF will ask the European Commission for an exception in order to exempt imports of medical supplies (exclusively intended for the COVID fight and measures) from the customs duty.

The Antivirus Programme (the so called kurzarbeit) – the existing regimes A and B were completed with regimes C, D and E

• Regime A – Quarantine ordered to employees. Wage or salary compensations will be paid to employees at 60% of their average assessment base. Employers will receive contributions in the full amount of the paid wage compensation.
• Regime B – Impossibility to assign work to employees due to the Government’s extraordinary crisis measures. Employer are required to close their operations based on the Government resolution on the adoption of crisis measures relating to the COVID-19 infection. Full wage or salary compensations are paid to employees. Employers will receive contributions at 80% of the wage paid.
• Regime C – Impossibility to assign work to employees due to a significant portion of employees being quarantined or taking care of a child. The significant portion means namely 30% of employees of firms, establishments or other organisational units depending on an employer’s operational situation. Full wage or salary compensations are paid to employees. Employers will receive contributions at 80% of the wage compensation paid.
• Regime D – Limited availability of inputs (raw materials, products, services) needed for an employer’s activities as a result of quarantine measures (or general production failures) on the part of a supplier, including abroad. This includes, for example, agreements proving the origin of inputs, bans of events or taking other measures having a demonstrable impact on supplies to employers. Wage or salary compensations will be paid to employees at 80%. Employers will receive contributions at 50% of the wage compensation paid.
• Regime E – Reduction of demand for services, products and other articles of an employer as a result of quarantine measures taken in the location of the employer’s supply (Czech Republic and abroad). Wage or salary compensation will be paid to employees at least at 60%. Employers will receive contributions at 50% of the wage compensation paid.

Proposal for remission of pension and health insurance payments for sole traders

• Up to the minimum payment amount and for six months (March to August). This relates to both primary and secondary activities. In total, this will account for about CZK 30,000 per self-employed person.

Proposed extension of a care-giver’s allowance

• To be paid to employees also after the statutory nine days, over the entire period when schools and other childcare facilities are closed. Parents with children of up to 13 years will be entitled to the allowance over the period of extraordinary measures. The adjustment will be considered in the Parliament under the legislative emergency regime on 24 March 2020.

Financial contribution to self-employed persons

• To be paid to self-employed persons who stayed at home at present due to childcare. The State will pay CZK 424 per day, i.e. nearly CZK 14,000 per month, to all sole traders taking care of children between 6 and 13 years if the caregiver’s allowance is not drawn by any other family member.

Support to businesses through advantage loans and subsidies

• Following the great demand for interest-free and free operating loans provided by ČMZRB (the COVID loan), the application collection of which has already been closed, the Government approved additional support to small and mid-sized business and sole traders in the form of guarantees for loans from commercial banks and contributions to interest payments. CZK 5 billion is allocated to the guarantee programme (COVID II), which anticipates CZK 30-35 billion of loans granted to businesses by commercial banks. A guaranteed loan could be used for the payment of operating expenses, such as wages, rental, energy, supplier-customer invoices, material, inventory, etc. Collection of applications is expected to be announced within two weeks (i.e. early April 2020). The minimum loan amount is expected to be CZK 10,000; a guarantee for a loan at 80% of the commercial loan over a three-year period is considered for loans from CZK 500,000 to CZK 15 million. Detailed terms and conditions of the guarantees will be published on ČMZRB’s sites.
• The Government made a new announcement on 23 March 2020 that it was going to prepare a programme for further guarantees to be provided by EGAP and intended also for ”larger” businesses. This anticipates additional CZK 330 billion of loans granted using the guarantees. Details will be published in the following days.
• The Government has already announced that it may allocate a direct support of up to CZK 100 billion and an additional volume of guarantees for loans in the amount allowing for granting loans of up to CZK 900 billion.
• At the same time, the Government has approved a CZK 200 million subsidy for investment projects intended for the production of medical supplies for the fight with the coronavirus and an additional CZK 300 million for projects focusing on the development of medical tools, technologies and equipment relating to the coronavirus.
• Last but not least, ministries and their agencies opened a number of subsidy programmes (both national and from the EU funds) before the coronavirus outbreak, which are focused on projects in research, development, IT, energy savings, marketing, waste management, etc. The subsidies are intended for both operating and investment costs in the amount of 25-70% depending on the programme type.

Please note that within package I, the Government has already approved the following:

• Blanket remission of fines for late filing of the personal and corporate income tax returns and default interest until 1 July 2020. Please note that the deadline as such was not postponed as it is sometimes interpreted, which may have an impact on various other areas.
• Remission of fines for delayed tax statement in all cases when the taxpayer individually requests remission of default interest or tax deferment and demonstrates reasons related in any way to the coronavirus, including remission of the sanctions in line with the Decree of the General Financial Directorate D-44.
• Blanket remission of fines for delayed filing of the local sales/purchases report of CZK 1,000 arising between 1 March and 31 July 2020 and individual remission of fines for failure to file the local sales/purchases report for periods from 1 March to 31 July if a connection to the coronavirus is demonstrated.
• Blanket remission of administrative fees (for the request for remission or deferment)
• Tolerance in the imposition of fines regarding the introduction of the third and fourth wave of electronic sales records from 1 May 2020

We also remind you of additional options that may contribute to an effective solution of current problems (as currently offered by the Tax Code):

• Decrease in tax liability prepayments, including complete cancellation (including with retrospective effect)
• Extension of the deadline for filing the tax return, thereby extending the tax due date (by as much as three months, or ten months from the end of the taxation period if the subject of the tax includes income taxed abroad)
• Tax deferment request, or deferment of due date or set-up of a payment schedule (with a positive impact on reduction of interest from 14% plus repo to 7% plus repo, which may additionally be remitted)
• The provisions regarding social security and health insurance also include certain options
• Possibilities of remission based on the current guidelines, whereby extraordinary reasons may usually lead to reduction of potential sanctions (including remission beyond the scope of the guidelines)

Tax authorities should proceed with maximum helpfulness and tolerance in situations when the decision depends on an administrative consideration.

Please note that for a successful remission, a number of conditions specified in remission terms must often be met for a successful remission (e.g. lack of arrears, good tax discipline in the past).

For the sake of completeness, we add that it is possible to ask for compensation of damage arising from the measures adopted. The request has to be filed within six months of the origination of the damage. In this respect, the damage and causes have to be demonstrated and it remains to be seen how the state or courts will approach such requests.

Given the current situation, we recommend looking for the most suitable solution for each situation individually. Do not hesitate to contact us should you have any questions related to this area.

COVID-19: How to effectively mitigate the impacts of the pandemic on your business?

Overview of key steps on Deloitte website

Our special website contains an overview of key steps that need to be taken in order to mitigate the impacts of the pandemic on the operation of your organisation. It also contains individual advisory with the contact details of our professionals who will help you respond to specific measures in accordance with the needs of your business. We update the website regularly and add more information.

Up-to-date information on the dreport.cz blog

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