Coronavirus: Legislation changes and implications in the Czech Republic as of 25 March 2020
The Czech Parliament has adopted certain amendments to the laws in order to mitigate the economic impact of the coronavirus on the Czech entrepreneurs and citizens; at the same time the government and certain Ministries have launched their own initiatives within their powers. This articles aims to provide an overview of all the measures which entrepreneurs and citizens in the Czech Republic can take advantage of in these difficult times.
Self-employed persons – waiver of contributions
All self-employed in the Czech Republic (even foreigners) are exempt from paying the minimum advance payments for the social security and health insurance contributions from March until August (including these months). These advance contributions shall be deemed as duly paid at the end of the year up to the monthly minimal amount, if a self-employed pays more than minimum amount he shall pay the difference between minimum amount and the actual amount after the yearly overview is filed in 2021.
This means that each self-employed can save up to CZK 29,376, also in case an advance payment has been made for the month of March already such payment will count towards September. There is no need to apply or take any other action, this measure applies to all freelancers.
Extended deadline for tax returns filing and certain tax payments
Annual tax returns (applicable to both individuals and companies) can be filed on 1st of July 2020 (instead of 1st of April 2020), accordingly the income tax becomes payable on the same date.
Advance payment of income tax for 2020 (due in June) is completely waived, furthermore In case of a tax loss occurring in 2020 such tax loss can be applied retroactively against profits of 2019 and 2018, thereby applicants may receive a tax refund in case already-paid taxes are decreased by utilizing the 2020 tax loss.
Tax return related to acquisition of a real estate and the relevant tax can be filed and paid until the end of August without any additional penalties (applies to all returns and tax payments which are due from the end of March until the end of July).
The penalties for delayed filing of continuous tax reports (kontrolní hlášení) which originated between the beginning of March and end of July 2020 will be also waived. This does not apply to reports which were not filed at all, however penalties for these may be waived on an individual basis.
As for the other taxes the Ministry will be very lenient in cases of fines and default interests due to delayed payment, however this will be assessed on individual basis and such exemption must be applied for.
Cross-border workers (mainly Germany, Austria)
As of 26 March the changes related to the cross-border workers are effective which mandate the workers (working in Germany and Austria only) remain abroad for at least 21 days and then undergo a 14 days quarantine. This severely impacts all of the affected workers and we believe they may be entitled to receive government compensation as per the relevant provision of the Act on Crisis Management since the damages incurred are a direct result of the governmental restrictions.
Electronic registration of revenues
The Electronic registration of revenues (EET) has been suspended for the duration of the state of emergency and for the 3 months afterwards. Regardless of type of business.
Government-backed loans for affected small and mid-sized businesses
The government will be providing guarantees for loans and will co-finance the interests; this should support around 10,000 projects and around CZK 30 billion shall be used. The programme shall be launched within approximately two weeks and details should be disclosed in the following days.
Reimbursement of part of paid salaries
The Ministry of Labour and Social affairs has decided to reimburse employers between 50-80 percent of salaries paid, this requires the employer to be either closed down completely as a result of the governmental measures or that demand for employer’s services dropped dramatically as a result of the pandemic. Details shall be disclosed in the next week, applications will be processed by the Labour offices.
Caretaking changes
The caretaking compensation (absence at work due to having to take care of children) has been expanded in the following way – the caretaking compensation will no longer be limited by time (only 9-16 days until now) and will be in effect for the whole duration of the school closures; furthermore the caretaking shall include all children up to 13 years of age; parents can now switch when caretaking.
So far this does not affect freelancers who are not entitled for caretaking compensation, however the Ministry of Trade and Industry shall start taking steps in order to mitigate this issue.
For more information on this subject, please feel free to contact:
JUDr. Monika Rutland, partner
rutland & partners, law firm
tel: +420 226 226 026
email: monika.rutland@rutlands.cz
