Important news for small business owners impacted by coronavirus closures in the Czech Republic

Shareholders of small limited liability company (společnost s ručením omezeným) will be able to apply for a compensation bonus, currently, a one-time assistance provided at request for the period from March 12, 2020 to June 8, 2020 in the amount of CZK 500 per day. A shareholder can thus receive support up to CZK 44,500. It is designated for companies with a maximum of two shareholders or companies with more shareholders who are members of one family. This benefit is meant to help recover economic damage caused by government measures. It basically copies the principles of the same benefit that is already provided to freelancers.

Shareholders must meet several conditions for obtaining the bonus, especially they cannot be employees in other corporation and the turnover of the company for the previous tax period (the year 2019) or the expected turnover for the year 2020 must exceed CZK 180,000. Furthermore, the company cannot be in bankruptcy or liquidation. A shareholder can apply for the compensation bonus for only one company. The shareholders will submit a simple application through the Financial Administration (finanční správa) containing a statutory declaration (affidavit) stating that the shareholder has met the conditions for this bonus.

The companies as employers will be able to pay social insurance premiums in the amount of 24.8 % of wages for May, June, and July 2020 until October 20, 2020. The employers are still obliged to pay employee health insurance premiums in the amount of 6.5 % of wages. However, there is an obligation to pay a lower penalty of 0,01 % of the debt per day (this is a reduced penalty from a regular amount of 0.05 % of debt per day). Employers do not have to pay a penalty that does not exceed 1,000 CZK. The law entered into force recently.

In connection with the payments of social security insurance there is an interesting bill that should be mentioned. The Czech government approved legislation that remits employers of up to 50 employees to pay insurance premiums in the amount of 24,8 % of wages for June, July and August. It is intended to preserve jobs and avoid an increase in unemployment. To obtain this benefit, employers are obliged not to dismiss more than 10 % of employees and maintain at least 90% of wages at the level of March 2020.

It consists of providing a bank guarantee to the loans of the cooperating banks. Businesses with up to 250 employees are able to apply for a bank guarantee to the amount up to 90% of the loan and businesses with more than 250 up to 500 employees are able to benefit from a bank guarantee to the amount up to 80% of the loan. The period shall not exceed three years. This aid will cover operating loans up to CZK 50 million (intended for payment of wages, rent, energy payments, or purchase of supplies and materials, etc.).

The Czech government discussed a new subsidy programme according to which the state shall pay a part of the rent for the second quarter of 2020. It is designated for businesses affected by the direct measures caused by the spread of COVID-19. Entrepreneurs will be able to use it if they could not provide goods and services in their premises because of state measures related to the coronavirus at least for a part of the period from March 13, 2020 to 30 June 30, 2020. Pursuant to this model the landlord shall provide a discount of 30% of the rent, the tenant shall pay 20% of the rent and the state shall contribute by 50% of the rent. The programme will be now forwarded to the European Commission for notification. More information will be published by the Ministry of Industry and Trade after the notification.