cee legislation tracker: czech republic

16 September 2020 | newsletters

Status as of 16/09       

Table of Content

Note: recently updated content is highlighted in grey 

1 Financial Support Measures

1.1 Interest-free state loans and guarantees

  • Entrepreneurs will be entitled to COVID-Lease state support focusing on compensations of commercial leases. Those businesses affected by the COVID pandemic and by the adopted restrictive measures would be able to apply for the state support amounting to the half of the lease for their premises from 1 April to 30 June 2020 up to CZK 10m. However, the condition is that the landlord agrees to discount 30 % from the lease, i.e. 50 % of the lease will be paid for by the state, 30 % by the landlord and 20 % by the business. Where the state acts as the lessor, the lessees will obtain 80 % discount automatically.
  • Following the first three credit and guarantee initiatives COVID I, II and COVID Prague designed for the small and medium sized enterprises, the Ministry of Industry and Trade ("MoIT") and the Czech-Moravian Guarantee and Development Bank ("CMGDB") are now planning a COVID III guarantee.
  • COVID III guarantee is intended for the commercial working capital loans provided by certain banks entered into before 31/12. This time, it will be aimed at larger companies with up to 500 employees and up to CZK 50m of the loan principal (guarantee of up to 90 % of the principal for companies with less than 250 employees and 80 % of the principal for companies with 250 to 500 employees). The borrower must not be in arrears with the repayment of the debt to the lending bank for more than 30 days as at 31/03. The commercial loans with COVID III guarantees are planned to reach up to CZK 500bln and should be also available for entrepreneurs located in Prague. The COVID III program is expected to run continuously until the end of 2020. The cooperation agreements between the applicant banks and the CMGDB were signed on 29/05. Banks are expected to start providing commercial loans with a COVID III guarantee shortly after the conclusion of these cooperation agreements. We recommend starting with the negotiation of a loan with your bank as soon as possible even before the official launch of COVID III programme.
  • On 06/05, the MoIT communicated its intention to launch a new programme COVID-Lease focusing on compensations of commercial leases. Those businesses affected by the COVID pandemic and by the adopted restrictive measures would be able to apply for the state support amounting to the half of the lease for their premises from 1 April to 30 June 2020. However, the condition is that the landlord agrees to discount 30 % from the lease, i.e. 50 % of the lease will be paid for by the state, 30 % by the landlord and 20 % by the business. The government should decide on COVID-lease on 11/05.
  • Together with above-mentioned COVID related measures, businesses may also apply for a guarantee for a standard product offered by CMGDB.

1.2 Guarantees by the Export and Guarantee Insurance Company ("EGAP") COVID Plus – 05/04

  • Amendment to the Act on Insurance and Financing of Exports with State Support
  • EGAP provides extraordinary guarantee program COVID Plus for working capital and investment loans in support of negatively affected export-oriented companies. The total amount of provided guarantees should be CZK 142bln for 2020. The application for commercial banks has been launched 05/05 via EGAP online interface.
  • Commercial banks acting as lenders and EGAP providing guarantee up to 80 % of the principal of such loans. The guarantees are intended for companies with > 250 employees and at least one-fifth of sales for the year 2019 coming from exports, whereas production for another exporter can also be included in this fifth. The maximum amount of the loan is 25 % of the total annual revenue for 2019, between CZK 5m to CZK 2bln. It is not intended for companies whose predominant economic activities lie in transportation, accommodation, tourism or gambling.
  • The guarantee is available for a maximum of three years for working capital loans and five years for investment loans, whereas the interest rates of commercial loans is capped at 1.5 to 3.5% p.a. depending on the maturity period.

1.3 Significant decrease in interest rates by the Czech National Bank – 07/05

  • The Czech National Bank lowered the interest rates (repo rate) to  0.25 %, which is a significant decrease compared to 2.25 % effective  on 17/03 and to 1.00 % from 27/03.

1.4 Statutory moratorium on commercial loans – 24/04

  • The Czech National Bank published its Q&As containing details on the procedure, scope and other requirements for the use of the credit moratorium. The document is available in Czech language only under this link.
  • Individuals (both consumers and sole traders) and corporate debtors can defer their repayments (consumer and business loans, including mortgages that were concluded before 26/03 but drawn down after this date) for three or six months.
  • Each debtor can notify its creditor and testify to the negative economic impact of the coronavirus pandemic (no proof required).
  • The moratorium does not apply to credit cards, overdrafts, revolving loans, operating leases or loans related to capital market transactions.
  • No deferral is available for debtors whose loans are overdue more than 30 days as of 26/03 .
  • Should the debtor choose to defer the repayment, the maturity period would be proportionately extended in the future free of charge and with the instalments fixed at the same amount as paid previously.
  • Throughout the entire deferral period, consumers and sole traders can profit from the reduced interest rates (currently fixed at 8 % plus 1 % 2-week repo rate) and their postponement. In contrast, corporate entrepreneurs may not enjoy this benefit, which means that their interest rates remain the same as agreed in the respective loan documentation.

2 Capital Markets

2.1 Amendment to the Act on the Czech National Bank – 24/04

  • The CNB will be now allowed to trade on the financial market without restrictions in terms of possible instruments, maturity and counterparties.
  • The current wording of the Act only allowed the CNB to conduct money market operations in securities with maturities of up to one year, while the transactions concerning securities with longer maturities were limited only to certain counterparties such as banks, foreign bank branches and credit unions.
  • The use of new operations by the CNB introduced by the amendment should become effectively utilized on Monday, 18/05.

2.2 Amendment to the Consumer Credit Act – 24/04

  • Maximum penalties for late repayments of loans of self-employed individuals were introduced.
  • In case of delay longer than 90 days, the amount of the contractual penalty must not exceed 0.1 % of the amount due per day.
  • The sum of all contractual penalties must not exceed half of the total capital.

2.3 Voluntary suspension of loan instalments by the banks

Several banks already introduced loan freeze programs up to six months for their clients (also including mortgages and leases) in cases where the debtor's inability to pay is in direct correlation to COVID-19 pandemic. This measure comes in response to the recommendation of the Czech Banking Association and to the press release of the Czech National Bank (both non-binding).

3 Employment

  • Employment Protection Program "Antivirus": Compensation of employers through the Labour Office in the form of a contribution for partial wage compensation. The contribution will be provided in two regimes:
    • Regime A: closure or restraints of business operation as a result of emergency measures or quarantine ordered by the relevant public authority;
    • Regime B: obstacles to work on the employer´s side in relation with COVID-19 outbreak.

Applications for reimbursement can be submitted electronically from 06/04. More details on Program "Antivirus" (in Czech) are published on: 
https://www.mpsv.cz/documents/20142/1443715/Manual_Program_Antivirus_v4.pdf/

The duration of the Program “Antivirus” was originally determined for a period from 12/3 till 30/4. The Czech Government repeatedly decided to prolong the Program, currently the Program is extended till the end of Ocotber 2020.

4 Real Estate

4.2 Prohibition of Commercial Lease Termination

  • The Czech Parliament has passed a new act prohibiting landlords from terminating commercial leases if tenants fail to pay rent.
  • The act deals with rent falling due between 12/03 and 30/06.
  • Landlords would not be able to terminate any commercial leases until 31/12 solely on the grounds of the tenant's delay in payment of rent becoming due in the above period.
  • The obligation of tenants to pay the rent and service charges remains unaffected. If the rent or service charges are not paid when they become due, the tenant may still be obliged to pay the landlord default interest, contractual penalties and damages.
  • See more details here

4.2 Prohibition of Residential Lease Termination

  • The Czech Parliament has also passed a similar act prohibiting landlords from terminating residential leases if tenants fail to pay rent.
  • The act deals with rent falling due between 12/03 and 31/07.
  • Landlords would not be able to terminate any commercial leases up to 31/12 solely on the grounds of the tenant's delay in payment of rent becoming due in the above period
     

4.3 Governmental support to tenants (operational programme "COVID – rent")

  • Tenants of commercial premises may ask the state to pay 50 % of the rent provided that they agree with the landlord on a 30 % rent discount. The tenant would, therefore, be obliged to pay only 20 % of the rent.
  • To draw the support the respective tenant must have been banned from selling goods and services in the establishment by extraordinary measures of the government against the spread of COVID-19.
  • The tenant must also have a lease agreement that was concluded before 12 March 2020, when the state of emergency was declared, and provide proof of payment of rent for January and February 2020.
  • This support will apply only to base (fix) rents and not to turnover rents.
  • Before the tenants get 50% refunded, they will have to pay to landlords first 100% of the rents for January and February and some other payments.
  • The "COVID – rent" support programme will not be available to tenants affiliated with the landlord, such as entities with the same beneficial owner and intragroup leases.
  • Tenants will not be able to simultaneously draw other support for rental expenses. Tenants will be able to draw the support for rent payable in April, May and June 2020 up to a maximum of CZK 10m (approx. EUR 365,000).
  • The total amount of approved support for all tenants is CZK 5bln (approx. EUR 182m).
  • The applications may be submitted electronically via www.mpo.cz starting from 26 June 2020.

 

5 Tax Duties

 

5.1 Income tax return

  • The income tax return of individuals and legal persons can be submitted until 01/06, i.e. three months later.
  • Penalties for late tax return of all taxes can be individually waived in cases where coronavirus-related reasons are proven.
  • Due to the difficult social or economic situation (caused, among others, by the COVID19 epidemic), the taxpayer may ask the tax administrator for a push back in payment or for a payment in instalments, without the risk of an administrative fee.

5.2 Electronic registration of sales (EET)

  • Suspension of the obligation to electronically register sales for a period of emergency and following three months.

5.3 Social and health insurance

  • Waiver of minimum deposits for social and health insurance to sole traders for six months (March to August).

5.4 Direct financial support for self-employed individuals (in Czech "OSVČ")

  • The Ministry of Finance and the Tax Authority introduced a direct support program for those self-employed who are economically affected by the spread of coronavirus. The program will be administered by the Tax Authority aiming to distribute the available funds already in April. Self-employed individuals will be entitled to a nominal amount of CZK 25,000 after fulfilling certain conditions, such as 10% drop of turnover for the past three months compared to the same period last year.

6 Corporate

During the COVID-19 pandemic, i.e. until 31/12 at the most, the following shall apply.

 

6.1 Decisions of corporate bodies / meetings

  • Any corporate body may adopt a decision in writing outside the meeting (i.e. per rollam) or by using technical means even if this is not set out in the company's constitutional document.

6.2 Automatic extension of member of elected corporate body

  • The term of office of any member of an elected corporate body will be automatically extended upon its expiry by three additional months (starting on the day after the end of the extraordinary pandemic measures), unless the office holder disagrees. This extension will apply even if the term of office expires one month after the end of the extraordinary pandemic measures.
  • Furthermore, the term of office of a member of an elected corporate body which expired between the adoption of the extraordinary pandemic measures (i.e. 12/03) and the effectiveness of LEX COVID will be restored and automatically extended until the lapse of three months following the end of the extraordinary pandemic measures if the member delivers their consent to the restoration of their office to the respective company and no new member has been elected instead.

6.3 Co-optation of substitute members of elected corporate body

  • A co-optation of substitute members (i.e. election of substitute members by other members of the same corporate body) will be allowed if the number of members of the respective corporate body does not decrease below half, even if not set out in a constitutional document of the respective company.

6.4 Deadline for decision on annual financial statements 

  • A deadline for a decision on the annual financial statements of a limited liability company, a joint-stock company or a cooperative, ending less than three months after the end of the extraordinary pandemic measures, will be automatically extended in order to end three months after the end of the extraordinary pandemic measures, but in any case no later than 31/12.

7 Competition

(see also our Competition Law CEE overview)

7.1 Access to file, hearings and meetings

  • 17/06: The Authority informed that it is returning to normal business after the COVID-19 measures have been lifted to a broad extent.

7.2 State aid

The European Commission approved:

  • 03/09: aid in the form of direct grants to enterprises which were not able to offer accommodation services during the state of emergency on the territory of the Czech Republic. The aid comes in the form of a fixed financial amount per room and day for the period during which the accommodation facility had to be closed (13 March – 24 May 2020). The estimated budged amounts to CZK 3.31 billion (approx. EUR 130 million).
  • employment aid in the form of direct grants with an estimated budget of CZK 260 million (approx. EUR 97 million) to all enterprises. The aim of the measure is to provide support to projects relating to (i) employee training, (ii) childcare facilities, rent for childcare facilities and upskilling of caregivers and (iii) wage subventions for jobs created for disadvantaged people and for employers who employ unemployed people in line with the objectives of the “Operational Programme Employment 2014-2020” (OPE 2014-2020).
  • aid to the cultural sector in the form of direct grants with a total estimated budget of CZK 900 million (approx. EUR 34.2 million). The beneficiaries are organizers of cultural events who had to cancel or postpone planned cultural events as a result of the COVID pandemic and related measures. The support will cover up to 50% of the costs incurred by the organizer in connection with the organization of the unrealized event. Another condition is that the costs were incurred between 1 October 2019 and 17 May 2020 and the cultural event was to take place between 10 March and 31 August 2020. The aid will be granted until no later than 31 December 2020.
  • aid to health and rehabilitation spas (irrespective of their size) with a total budget of  CZK 1 billion (approx. EUR 36.3 million). The aid comes in the form of direct payments to cover discounts of CZK 4000 (approx. EUR 157) offered to clients. The aid will be granted until no later than 31 December 2020.
  • 17/06: Aid in the form of direct grants with a total estimated budget CZK 1 billion (approx. EUR 36.3 million) for SMEs active in agricultural primary production in Czechia. The estimated number of beneficiaries is 5000. The aid will be granted until no later than 30 September 2020.
  • 17/06: Aid in the form of direct grants, which will amount to 50% of the original rent or lease due for the months of April, May and June 2020. They are conditional on the lessee and the lessor agreeing, before the application for aid, on a 30% reduction of the original monthly rent or lease for the respective period and on the lessee having paid 50% of the original rent for the same period. Grants will be allowed up to a maximum of CZK 10 million (approx. EUR 368 6634) per beneficiary. The budget of the measure is CZK 5 billion (approx. EUR 184.3 million). The aid will be granted until no later than 31 December 2020.
  • a guarantee program of approximately EUR 18.5 billion (CZK 500 billion) to support the provision of loans to companies with up to 500 employees affected by the COVID-19 outbreak. For details, please see above in Section 1.
  • an aid scheme is based on direct grants to support research and development (R&D) activities related to the coronavirus outbreak, making available a total of CZK 200 million (approx. EUR 7.7 million). The grants will be accessible to all Czech companies from all sectors, which are capable of carrying out relevant R&D projects.
  • a CZK 142 bln (approx. EUR 5.2 bln) guarantee scheme for large companies with export activities affected by the COVID-19 outbreak. For details, please see Section 1 above.
  • COVID Technology measure, aimed at containing COVID-19 through the acquisition of new technological equipment and business activities focused on the production of medical devices, making available a total of CZK 300m (approx. EUR 11.5m) from the Operational Program Enterprise and Innovation for Competitiveness (OPPIK) in subsidies for SMEs available. The budget may be increased to up to CZK 1bln (approx. EUR 37m).

 

8 Courts and Authorities

8.1 Criminal Courts

Procedural law / deadlines

  • Pending deadlines are not stopped automatically but may be extended upon request, but deadlines may be restored within three days after the termination of the relevant extraordinary measure.

8.2 Court hearings

  • Some oral hearings may be postponed on the court's initiative or at the request.
  • Necessary court hearing (e.g. custodial hearing) must take place and it is not possible to postpone them.

8.3 Civil Courts

Procedural law / deadlines

  • If the deadline was missed due to measures taken in relation to the COVID-19 pandemic, it could be postponed by the court under certain conditions.
  • Enforcements by sale of movable/immovable assets – suspended until 30/06 (with certain exceptions);
  • Enforcements by deductions from a bank account of a debtor – up to the amount of 4x the debtor's life minimum are suspended until the end of 2020;
  • Auctions of a real property – minimum amount of debt increased from CZK 30,000 to CZK 100,000;
  • Pending deadlines are not stopped automatically at all but may be extended at the request.

Court hearings

  • Most oral hearings were postponed either based on the court's initiative or at the request of parties.

8.4 Administrative Courts

Procedural rules /deadlines

  • If the deadline was missed due to measures taken in relation to the COVID-19 pandemic, it could be postponed by the court under certain conditions.
  • Pending deadlines are not stopped automatically but may be postponed upon request.

Hearings

  • Some oral hearings may be postponed on the authority’s initiative or at the request.

9 Healthcare

9.1 Healthcare

update 16/09:

  • Mandatory wearing of facemask: in al public buildings (except home) and in public transport. 

update 03/09:

  • Museums, galleries and similar establishments may be opened if certain conditions are met, such as maximum 1000 visitors. Theatrical, musical, film and other artistic performances, sports, culture, religious gatherings, traditional dances and similar gatherings, exhibitions, celebrations, vernissages, circuses, tastings, markets, educational gatherings, celebrations and other large gatherings in outside and inside spaces, both public and private, also with at most 1000 attendees.

update 01/07:

  • Restaurants may open inside and their gardens without a time limit under certain conditions, such as minimum distance 2 meters between customers, hand sanitizer provided at the entrance, chairs are cleaned and disinfected before each new group of customers, take out window must be cleaned and sterilized every two hours etc.  

update 08/06:

  • Restaurants may open inside and their gardens and outside eating spaces until 11 pm under certain conditions, such as  minimum distance 1.5  meters between customers, hand sanitizer provided at the entrance, chairs are cleaned and disinfected before each new group of customers, take out window must be cleaned and sterilized every two hours etc.  
  • Museums galleries and similar establishments may be opened if certain conditions are met, such as maximum 500 visitors, at most one visitor per 10m2 of customer accessible area, hand sanitizer available at the entrance etc.
  • Theatrical, musical, film and other artistic performances, sports, culture, religious gatherings, traditional dances and similar gatherings, exhibitions, celebrations, vernissages, circuses, tastings, markets, educational gatherings, celebrations and other large gatherings in outside and inside spaces, both public and private, with at most 500 attendees are allowed under certain conditions.
  • Weddings are allowed with a max of 500 people if certain conditions are met.
  • Religious services with 500 attendees at most are allowed under certain conditions are met.
  • Fitness centers are open, however it is necessary to keep distance of at least two meters and disinfection of the equipment.

update 05/06:

  • Mandatory two-week quarantine for every person returning from abroad to Czech Republic (except Germany, Austria, Hungary and Slovakia) or negative COVID19 test.

update 25/05:

  • All shops can be opened under certain conditions, such as customers sanitizing their hands before trying any clothes on (if the shop sells clothes), minimum distance of at least 2 meters between customers etc.
  • Massages studios, hair, manicure, pedicure and cosmetic salons could be opened under certain conditions, such as hair stylist must wear double face protection ( i.e. a facemask as well as a face shield), a minimum distance of 2 meters between the customers etc.
  • Restaurants may open inside and their gardens and outside eating spaces under certain conditions, such as  minimum distance 1.5  meters between customers, hand sanitizer provided at the entrance, chairs are cleaned and disinfected before each new group of customers, take out window must be cleaned and sterilized every two hours etc.  
  • Museums galleries and similar establishments may be opened if certain conditions are met, such as maximum 300 visitors, at most one visitor per 10m2 of customer accessible area, hand sanitizer available at the entrance etc.
  • Theatrical, musical, film and other artistic performances, sports, culture, religious gatherings, traditional dances and similar gatherings, exhibitions, celebrations, vernissages, circuses, tastings, markets, educational gatherings, celebrations and other large gatherings in outside and inside spaces, both public and private, with at most 300 attendees are allowed under certain conditions.
  • Mandatory wearing of facemask everywhere in a public place except for children younger than 2 years and drivers who are alone in the vehicle​ in all buildings, in public transport or in a public place where the distance between people is less then 2 meters.
  • Weddings are allowed with a max of 300 people if certain conditions are met.
  • Religious services with 300 attendees at most are allowed under certain conditions are met.
  • Fitness centres are open, however it is necessary to keep distance of at least two meters, wearing of facemasks and disinfection of the equipment. Dressing rooms and showers in fitness centres are closed.
  • Movement at public places possible maximal 10 persons,  keeping a safe distance of at least 2 meters (does not apply to families, work teams or similar activity).
  • Universities are opened with a maximum of 15 people in the class.
  • Primary and secondary schools are open for students of last years with at most 15 people in the class and only if they prepare for final / admittance exams.
  • Consumption of food and drinks in public places is possible only in necessary cases. This applies to foodstuffs intended for immediate consumption and the consumer must be at least 10 meters away from the shop or take-out window.
  • Strict regulation in retirement homes, homes for disabled people and similar facilities including ban on visits, mandatory testing of new clients, mandatory two-week quarantine of new clients in a separate room.

9.2 Medicinal products / Medicaments

  • Regulation of prescriptions of the pharmaceutical Plaquenil.
  • Export of all medicines abroad is forbidden.

10 Insolvency

10.1 Support measures

  • Increasing the framework for guarantees for individual companies and increasing the guarantee framework.

10.2 Insolvency

  • The obligatory deadline to file for bankruptcy has not been extended, but if the deadline was missed due to measures taken in relation to the COVID-19 pandemic, it could be postponed by the court under certain conditions.
  • A legal entity or individuals as debtors are excluded from their duty to submit the insolvency motion on themselves without undue delay after they find themselves in bankruptcy; this duty will be excluded six months after the termination of the state of emergency, but not later than 31/12.
  • Motions of creditors submitted before 31/08 are disregarded.
  • A reorganisation plan which has been approved by 12/03 and has not been fulfilled yet may be temporarily interrupted by the court upon the debtor's request. During this interruption, the reorganisation cannot be transformed into bankruptcy.

11 Insurance

n/a

12 Intellectual Property

n/a

13 Telecom & Data Protection

  • Telecoms providers notify of mass alert (e.g. restrictions on the free movement of persons or quarantine to persons returning from risk countries to the Czech Republic) via SMS.
  • Obligations to telecoms providers to provide traffic and location data to public authorities for evaluation whether people comply with quarantine orders.

14 Other

n/a

 

 


Kindly note that the summaries on this page are for information purposes only and do not take into account the specifics of a certain situation. The information is not designed to substitute and cannot substitute legal advice tailored to your needs. It is made available strictly on a non-reliance basis. Also, some of the addressed topics might be subject to short-term changes. 
 

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