How businesses and employees can benefit from the Czech government's financial support

From March 15 on, almost all businesses in the Czech Republic have been affected by the anti-coronavirus measures introduced by the government. While restrictions are slowly being lifted, the economic outlook for many of the businesses hit hardest by the coronavirus pandemic remains tentative.

In an effort to aid both employers and businesses, the Czech government is offering financial support to those affected by the pandemic. If you are one of those individuals or businesses who have experienced a loss of income or economic hardship during the state of emergency, you should be entitled to support.

At the end of April, this program was prolonged for another month, making it possible to now apply for the contribution for the period starting from March 12 until the end of May. In addition, in cases of related economic difficulties brought on by the COVID-19 outbreak, the contribution for the employer is 60% (up to a maximum of CZK 29,000 per month).

In addition, a “nursing allowance” benefit is intended to compensate employees who could not work because they were caring for a child under the age of 13, a child with a disability, or a person with a disability during the closure of the school and other facilities. The nursing allowance will be increased from the current 60% to 80% of the daily assessment base and also applies to employees doing contract work performed outside an employment agreement, according to the newest legislation.

Freelancers also have the option of applying for the nursing allowance, a subsidy in the amount of CZK 424 per day. The Czech government is currently working out an increase of the nursing allowance to the amount of CZK 500 per day.

Another benefit for freelancers is the forgiving of the minimum mandatory payments for pension insurance and health insurance. In the period from March 1, 2020, to August 31, 2020, an exemption from monthly payments of the minimum mandatory payments for social security insurance and health insurance is applicable (a total of CZK 29,376). The deadline for submitting the statement of income and expenses for 2019 (regarding social and health insurance) and payment of outstanding insurance premium calculated from this statement has been extended until August 3, 2020.

It is also possible to postpone both consumer and business loans. The debtors (entrepreneurs and non-entrepreneurs) may ask the bank or other creditors to postpone the installments of the loan for a period up to October 31, 2020. During this period, the creditor is entitled to receive the agreed interest (however, this would be paid once this period terminates) and, in the case of a debtor – a legal person, to other payments under the loan agreement.

The Czech government is also preparing a compensatory bonus for executive directors and associates of limited liability companies. It will be possible to apply for this bonus for the period from March 12, 2020, to June 8, 2020, and the amount of the compensatory bonus should be 500 CZK per day. 

There are other important measures that should be mentioned. A postponement of rent payments for commercial or housing lease has been adopted. The lessor cannot unilaterally terminate the lease until December 31, 2020, only due to the lessee’s delay in the payment of the rent, if the delay occurs in the relevant period from March 12, 2020, to June 30, 2020 (for business lease) or in the relevant period from March 12, 2020, to the day following the end of the emergency measures, but no later than July 31, 2020 (for housing lease). The delay must be due to the spread of COVID-19. The lessee will be then obliged to pay this rental debt by December 31, 2020.