Following the steps taken by the respective ministries, I have summarized below the main meassures that have been already approved or are under discussion in the area of taxation and social security and health insurance with respect to the current state of emergency.
The Ministry of Finance and the Financial Administration are gradually responding to the current situation.
On 16 March 2020, the Government approved the so-called Liberation Package, which includes in particular the following measures:
• Flat waiver of late filing penalty of personal and corporate income tax return and late payment interest until 1 July 2020, i.e. taxpayers are effectively allowed to file their income tax returns at the latest 3 months after the statutory deadline without the need to prove coronavirus-related reasons.
• Waiver of tax return late filing penalty in all cases where interest for late payment, tax repayment or penalty for failure to file a VAT control report is individually waived by the tax office.
• General waiver of fines for the late submission of a VAT control report of CZK 1,000 incurred between 1 March and 31 July 2020.
• Possibility of individual waiver of a fine for failure to submit a VAT control report for the period from 1 March to 31 July 2020 if coronavirus-related reasons are proved.
• General waiver of the administrative fee for filing an application for delaying or repayment of tax, the application for remission of a fine for failure to submit a VAT control report (for applications submitted by 31 July 2020).
On 22 March 2020, the Ministry of Finance, within the framework of the Liberation Package II, proposed further measures:
• General waiver of the June advance tax payments for personal and corporate income tax. This means that the June advance payment (otherwise due by 15 June 2020) would not be paid at all.
• General waiver of a fine for late filing of a real estate property acquisition tax return or for a late payment of a real estate property acquisition tax or an advance payment. The waiver would apply to all late tax returns with a deadline from 31 March to 31 July 2020. It should be possible to file a real estate acquisition tax return by 31 August 2020 at the latest without the risk of a penalty, interest on late payment would also be remitted. Effectively, all taxpayers would automatically be allowed to file the real estate property tax return up to five months later.
• Introduction of Loss carryback for both personal and corporate income tax for 2020. It should be possible to apply it in the 2019 and 2018 tax returns.
• Suspension of the obligation for electronical record of sales („EET“) for entities in all phases of the EET for the period of state emergency and the following three months.
Social security and health insurance measures
The Ministry of Labor and Social Affairs responds similarly to the situation. On 19 March 2020, the so-called Antivirus program, which aims to protect employment, was approved by the Government. The state will compensate firms for the costs of incapacity for work under the quarantine order and, in part, for compensation for wages if there are obstacles on the side of the employer if it is shown that the obstacle to work is due to COVID-19.
The compensation will be provided by the Labor Office of the Czech Republic, the amount and duration of the support will depend on the reason of the obstacle at work.
• Mode A – Quarantine employees
Scheme A is intended to contribute to employers’ paid wage compensation in the event of incapacity for work for employees who are subject to quarantine. The employer pays compensation for incapacity for work for the first 14 calendar days, the amount of compensation is 60% of the average assessment base. The employer will be provided with the full compensation of wage compensation paid.
• Mode B – Inability to assign work to employees due to the government emergency measures
Scheme B concerns situations where an employer cannot allocate work to employees because of government emergency measures, i.e. the employer is ordered to close down operations following a government resolution. In such a situation, employees are entitled to wage compensation equal to their average earnings. The compensation to the employer should be 80% of the compensation paid.
On 23 March 2020, the government approved further measures proposed by the Ministry of Labor and Social Affairs, which should support other companies and extend the Antivirus program by three additional regimes:
• Mode C – Inability to assign work to employees due to quarantine or childcare for a significant proportion of employees.
It should be considered a significant part if it is 30% of employees of companies, establishments or other organizational part according to the operating situation of the employer. Compensation of wages or salaries should be paid to the employee at 100% and the employer should be provided a compensation of 80% of the compensation paid.
• Mode D – Restricting the availability of inputs (raw materials, products, services) necessary for the employer’s activity as a result of quarantine measures (or generally production failures) at the supplier, including abroad.
For example, there is an agreement proving the origin of inputs, bans on actions or other measures demonstrably affecting supplies to the employer. Compensation of wages or salaries should be paid to the employee of 80% and the employer should be provided a compensation of 50% of the compensation paid.
• Scheme E – Reduced demand for employer’s services and products as a result of quarantine measures at the employer’s point of sale (CR and abroad).
Compensation of wages or salaries should be paid to the employee in the amount of at least 60% and the employer should be provided a compensation equal to 50% of the compensation paid.
On 20 March 2020, the Ministry of Labor and Social Affairs sent a draft law to the interdepartmental comment procedure for the waiver of compulsory pension insurance payments for self-employed individuals for a period of 6 months. If approved, the measure should be effective as of March. The proposal has so far been approved by the government on 23 March 2020, including a waiver also of the compulsory health insurance payments.
The area of paid nursing is also discussed. It is still true that if an employee has to take care of a child under 10 years after the end of 9 days of nursing (16 for single parents), he / she can stay at home, but only on an unpaid leave. The employee will receive wage compensation only on the basis of an agreement with the employer, but there is no obligation.
Today, the Parliament shall approve an amendment to the law that will ensure that nursing allowance could be drawn for the entire period of school closures (also retroactively). Thus, if the law is passed, employees will be reimbursed for the entire period they were at home taking care of their small children.