Czech Republic

General Information     |     Tax measures – Direct and Indirect     |     Employment-related measures     |     Economic stimulus measures     |     Custom Measures     |     Measures to ease the lockdown     |     Other measures and sources

Return to homepage  |  Last updated: 20 May, 2020

The Government of the Czech Republic declared a state of emergency from 2pm on 12 March 2020 to 17 May 2020. They took measures to support people employed by corporations, deployed Tax-related support for businesses and individuals, and implemented a variety of additional measures to help the economy and inform the population.

Click here to see a comprehensive summary of jurisdictional tax measures and government reliefs in response to COVID-19.

Compensation of wage costs

Support for parents

• Caregiver allowances are paid by the state to employees (one parent/caregiver) who must take care of children under 13 years of age and older handicapped children not attending school during the COVID-19 emergency when schools and other child care facilities are closed. The allowance amount was temporarily raised from 60% to 80% of the average reduced income of the employee (the change applies retrospectively since 1 April 2020). For a self-employed person, the compensation was temporarily raised from CZK 424 to CZK 500 per day.

Support for employers

• Anti-virus Program - the program aims to protect jobs with employers directly affected by government restrictions connected with COVID-19. A wage allowance will be provided by the Labor Office of the Czech Republic based on an application submitted by the employer. The original proposal of five modes has been merged into two modes (Government order from 31/03/2020).
• Mode A:
  • In the case of quarantine, the employee receives compensation of 60 % calculated from his average reduced income (the cause of the problem is on the employee´s side);
  • In the case of business closure due to the Government´s order, the employee receives 100 % of his average salary (the cause of the problem is on the employer´s side);
• Mode B:
  • Limited available workforce on the side of employer caused by the order of quarantine or forced leave due to childcare (ošetřovné), which affects more than 30 % of employees – the employee receives compensation of 100 % of his average salary;
  • Limited available input (services, material, products) necessary for the business´ activity – the employee receives compensation of 80 % of his average salary;
  • Limited demand for the business´ services and products - the employee receives compensation of 60 % of his average salary;
• In the case of Mode A, the state substitutes 80 % of paid salary including taxes, up to 39 000 CZK.
• In the case of Mode B, the state substitutes 60 % of paid salary including taxes, up to 29 000 CZK.
• The maximal amount of compensation is derived from average super-gross salary including taxes (48 400 CZK), in Regime A – 80 %, and in Regime B – 60 %, of this amount.

Support for self-employed

• Compensation Bonus amounting to CZK 44,500 or a maximum of CZK 500 for each calendar day of the bonus period (12 March – 8 June 2020).
• The Ministry of Finance has modified the conditions of support for self-employed persons, they are now set as follows:
  • The activity performed is the main activity;
  • The activity performed may also be minor activity if the self-employed person is not simultaneously an employee;
  • The self-employed person was already carrying out the activity before 12 March 2020;
  • Alternatively, it may also be a self-employed person whose activity was interrupted at any time after 31 August 2019 (seasonal business);
  • A self-employed person declares that he/she was wholly or partially unable to perform its activity above the normal level due to the health threats related to the occurrence of coronavirus or government emergency measures;
  • The applicant must prove the fulfilment of these facts by an affidavit.
• It has to be proceed through the legislative process that could be completed this week, by 12 April at the latest

Start-ups:

• The state will pay 30-80% of wage, depending on the case.
• Caregiver allowances as mentioned on the Compensation of wage costs
• For Self-employed:  The state will pay 30-80% of wage, depending on the case.

Reduced penalties for employers, late payment of social security premiums

• The government approved a legislative proposal reducing penalties imposed on employers for late payment of social security premiums and contributions to the state employment fund—relief offered in reaction to the coronavirus (COVID-19) pandemic.
• The draft legislation concerns amounts paid by employers that are 24.8% of their employees’ wages (employer’s premiums) payable for the calendar months of May to July 2020. If the premium for these months is paid no later than by 20 October 2020, the employer would be required to pay only 20% of the standard penalty for late payment. The reduced penalty would correspond to an approximately 4% relief.
• Penalties for late payment of health insurance premiums for the period from March to August 2020 have already been waived, provided that the premiums are paid no later than by 21 September 2020. The waiver of penalties for health insurance premiums should apply to late payment of both the employer and employee shares of premiums.

Financing

• EGAP (Export Guarantee and Insurance Company) will provide guarantees to large companies with more than 250 employees
  • Companies will be able to apply for loans ranging from 5 MCZK  to 1,400 MCZK.
  • Companies must have at least 20 % of their yearly revenue coming from export to qualify and will be able to use loans up to a maximum of 25 percent of total annual revenue from products or services.
• Possibility of interest-free financing for self-employed people and small and medium-sized enterprises affected by COVID-19 - COVID loans in amount 500k up to 15M CZK, maturity up to 2years, and postponement of instalments up to 12 months.
• The initial COVID1 program has been replaced by the COVID2 program. as follows:
  • CZK 5bln of interest-free loans to be provided by Českomoravská Záruční a rozvojová banka, a.s.,
  • CZK 5bln to provide guarantees for company loans (up to 80% of the loan) from commercial banks. Some of that money will be used to pay a portion of the interest on those loans. The program will start on April 2.
• COVID credit loan for Prague - there will be a new programme similar to COVID II programme, which will be available for companies in Prague. Budget will be 4-5 billion CZK.

COVID III guarantees 

• The Ministry of Finance has prepared a support programme in form of a portfolio guarantee provided by the ČMZRB (state owned bank). 
  Credit and risk assessment under the programme will be carried out directly by individual commercial banks which will provide loans. 
  Enterprises (up to 500 employees)  may qualify for the provision of guaranteed loan. 
• The maximum loan amount supported by the guarantee is CZK 50 million, and it must be used for operational financing.
• Calls were announced in cash grant programmes Czech Rise Up and The Country For the Future that are aimed at supporting the fight against COVID-19.
• Czech Rise Up
  • Supported activities - the costs incurred by companies to put new solutions into practice
  • Amount of support: min 500 TCZK - the maximum grant shall not exceed de minimis aid ceilings (TEUR 200 over the period of three years)
  • Level of support: 50–90 % of eligible costs
• Country For the Future (only for SMEs)
  • Supported activities - process innovation, organizational innovation
  • Amount of support – max 25 MCZK
  • Level of support: 50 % of eligible costs
• The Czech National Bank has decided to lower key interest rates (repo rate) to 0,25%.
• An increase in the state budget deficit from CZK 40 billion to CZK 200 billion was approved to finance the effects of the COVID-19 measures.
• An act postponing loan payments upon borrowers notification for until 31 October 2020 without any further fees and limited interest rate for customers is currently discussed in Parliament.
• Drafted new acts would enable tenants to postpone payment of a rent for 3 or 6 months.
• An act postponing loan payments upon borrower's notification for until 31 October 2020 without any further fees and limited interest rate for customers has been adopted under the number 177/2020.

Masks

• All persons are prohibited from selling all personal protective equipment according to the European Parliament and of the Council (EU) 2016/425, class FFP3 manufactured and placed on the market in accordance with standard EN 149: 2001 A1: 2009 to other persons than those specified in emergency provision.

Customs formalities

• Import of test kits for proof of disease by COVID-19 - Diagnostic devices that include coronavirus test kits, if they are not intended for self-testing and are not included in List A and B (Annex 2 to Government Regulation No. 56/2015 Coll.),do not need to be registered and the person who import such devices may not be registered according to the requirements of Act 268/2014 Coll. on medical devices.
• Information for entities - import, transport and use of alcohol for the production of disinfectants

Payment facilities

• Remission of an administrative fee for acceptance of an Application for tax refund related to imports or for remission of customs arrears
• With respect to spread of SARS-CoV-2 the Minister of Finance issued several Decisions to waive the tax penalties and the administrative fee due to an extraordinary event (i.e. remissions of VAT for free supply of specific goods,  remission of interest on late payment in specific situations etc.)

Export

• The Government prohibited re-export of drugs abroad during the emergency state. Information on exports of medicines not covered by the prohibition - medicines which has foreign-language label on the packaging are not subject to the export ban and also export of medicines with multilingual label will be assessed individually by the customs office (for both options, the customs office require affidavit of exporter to which market is export shipment intended.

• Four-stage plan started on 20 April with open-air markets and workshops and is supposed to end in the beginning of June. Czechs may now also travel abroad providing they undergo two-week quarantine on return or RT-PCR test for COVID 19. From April 20, all crafts facilities, car dealerships and farmers’ markets can reopen. From April 27, shops up to 2,500 square meters that are not located in large shopping centres are open as well as certain services, such as driving schools and fitness centres, although changing room and shower use in the latter will be forbidden. From May 11 shops larger than 2,500 square meters also got the green light to re-open. Sporting activities, castles, theatres and other cultural activities and weddings are allowed if attended by up to 100 individuals. Outdoor services in restaurants and cafes, as well as hairdressers, pedicures and various similar cosmetic services are also allowed from May 11. This lifting of restrictions also counts for museums, galleries and zoos, the latter with closed pavilions. On May 25 – depending on how things develop – indoor restaurant spaces will be allowed to open too, as well as hotels. Non-licensed taxi services and tattoo parlours will be allowed to operate from this date again. 
• School activities will be reinstated ahead of the summer holidays, but only partly. Final year lessons may now take place in groups no larger than 15. First level elementary school students could begin attending classroom hours from May 25, again in groups no larger than 15.

• No entry to the territory of the Czech Republic for foreigners (except for specific categories of foreigners such as holders of Czech residence visas/permits over 90 days, family members of EU citizens residing in the CR and others specified in Government decree n°511).
• Internal border controls with Germany and Austria and airspace border controls have been restored; 
• Entrance possible only with certificate on negative PCR test,
• Acceptance of visa applications, temporary and permanent stays; procedures for applications for short-stay visas, procedures for applications for residence permits over 90 days have been suspended until further notice unless the applicant is enrolled into government program or classified as specific case.
• International passenger transport (road, rail, water) by means of transport with a capacity of over nine persons has been banned.

Important websites

• Government of the Czech Republic
• Ministry of Interior
• Ministry of Foreign Affairs
• Ministry of Health
• Ministry of Finance
• Financial Administration
• The Czech Social Security Administration
• Ministry of Industry and Trade
• Ministry of  Labor and Social Affairs
• Czech Government
  
• Czech Republic: Additional tax, economic measures (COVID-19)
• Czech Republic: Tax relief in response to coronavirus (COVID-19)
• Czech Republic: Tax relief including loss carryback measure (COVID-19)
• Czech Republic: Tax relief measures (COVID-19)
• Czech Republic: Reduced penalties for employers, late payment of social security premiums (COVID-19)

Tax: Patrick Leonard – pleonard@kpmg.cz
Legal: Viktor Dušek - vdusek@kpmg.cz, Barbora Cvinerová - bcvinerova@kpmg.cz