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New compensation schemes for businesses in the Czech Republic

In response to the negative impact of the COVID-19 pandemic on the economy, the Ministry of Industry and Trade has conceived two new support programs which seek to prevent any further deterioration of the dire state in which businesses find themselves in the Czech Republic.

In connection with the negative impact of the COVID-19 pandemic on the economy, the Ministry of Industry and Trade has prepared two new support schemes: COVID - Uncovered expenses, and COVID 2021. Both seek to prevent a deterioration of the financial standing of eligible businesses across industries; they are designed as mutual alternatives so that it is upon the companies in question to decide which of these programs is more favorable to them.

The scheme which is named COVID – Uncovered expenses is made for businesses whose turnover dropped during the relevant period (i.e., between 1 January 2021 and 31 March 2021) by at least 50%, compared to the same period in 2019 or 2020, because of the coronavirus pandemic. The scheme seeks to compensate such businesses for at least a part of their losses, i.e., uncovered expenses. Within the meaning of the Invitation to this compensation scheme, "uncovered expenses" are understood to mean a business’s loss, minus subsidies from other compensatory bonuses which have already been received or which the business stands to receive in the foreseeable future. The government will assess the operating result based on a modified profit and loss statement, drawn up by the applicant for the above-mentioned relevant period. Aside from this profit and loss statement, the applicant must also submit a report on the drop in turnover, an overview of their subsidies, and an affidavit. The ministry has capped the support per applicant at CZK 40 million, whereas the amount of compensation represents 60% of the uncovered expenses during the relevant period. Support within the COVID – Uncovered expenses scheme may be sought both by natural persons in their capacity as entrepreneurs and legal entities (commercial businesses), which provide evidence of their drop in turnover and of their uncovered expenses (and the fulfillment of certain other conditions). Applications for support under the COVID – Uncovered expenses scheme may be filed between 19 April 2021 and 19 July 2021.

By contrast, COVID 2021 is made for natural and legal persons and for organizations co-funded by the state pursuing business under the Trade Licensing Act which, during the comparison period, experienced a drop in turnover of at least 50% compared to the reference period. The comparison period is the period between 1 January 2021 and 31 March 2021. The reference period may be chosen by the applicant, and lies between the same two dates, but in the year of 2019 or 2020. Support under COVID 2021 is tied to the size of staff of the applicant, who must have employed at least one full-time equivalent. The amount of support is the product of CZK 500 and the number of FTE and the number of days of the relevant period. For these purposes, collaborating family members and managing directors under contract also qualify as employees. If the applicant had fewer than three employees on 11 January 2021, then the subsidy is fixed at CZK 1,500 per day. In contrast to the COVID – Uncovered expenses scheme, the applicant who seeks support within COVID 2021 need not provide evidence of their declining earnings – it is sufficient to identify one’s employees along with an affidavit by the applicant. This particular type of support has been capped at EUR 1,800 thousand per applicant. COVID 2021 is thus the more beneficial scheme for businesses with a larger number of employees. Applications for support under the COVID 2021 scheme may be filed between 12 April 2021 and 31 May 2021.

The application for support under either scheme must be filed through the online system accessible on the website of the Ministry of Industry and Trade. Both support schemes are compatible with the Antivirus program, but COVID – Uncovered expenses cannot be combined with a compensatory bonus. COVID 2021, on the other hand, cannot be combined (for the duration of the relevant period) with the following schemes: AGRICOVID, COVID Culture, and COVID – SPORT III (Ski resorts). Also, Covid 2021 may be combined with COVID – Accommodation only on those days on which no support under both schemes would be drawn.

Source:
www.mpo.cz

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