COVID-19: Stabilisation package for taxpayers
We would like to inform you about the stabilisation and liberation package that has been approved by the Czech Government in relation to mitigating the impacts of the COVID-19 pandemic.
According to the approved version, the following relief will be included:
- Blanket remission of fines for late filing of the personal and corporate income tax returns and default interest until 1 July 2020
- Remission of fines for delayed tax statement in all cases when the taxpayer individually requests remission of default interest, tax deferment or a payment schedule and demonstrates reasons related in any way to the coronavirus
- Blanket remission of fines for delayed filing of the local sales/purchases report of CZK 1,000 arising between 1 March and 31 July 2020
- Individual remission of fines for failure to file the local sales/purchases report for periods from 1 March to 31 July if a connection to the coronavirus is demonstrated
- Blanket remission of administrative fees (for the request for remission or deferment)
- Tolerance in the imposition of fines regarding the introduction of the third and fourth wave of electronic sales records from 1 May 2020
- Remission of default interest and interest on the deferred amount in line with the Decree of the General Financial Directorate D-44.
The Ministry of Finance has already published the documents in Financial Newsletter no. 4/2020.
Tax authorities should be as accommodating and tolerant as possible in a situation where the decision depends on administrative discretion.
We would also like to point out that for successful remission, it is often necessary to meet a variety of remission conditions (e.g. non-existence of arrears, good tax payment discipline in the past), which are not always met in practice. However, there are also other ways to effectively resolve the situation (e.g. using existing institutes of the Tax Code).
Options currently offered by the Tax Code:
- Decrease in tax liability prepayments, including complete cancellation
- Extension of the deadline for filing the tax return, thereby extending the tax due date (by as much as three months, or ten months from the end of the taxation period if the subject of the tax includes income taxed abroad)
- Tax deferment request, or deferment of due date or set-up of a payment schedule (with a positive impact on reduction of interest from 14% plus repo to 7% plus repo, which may additionally be remitted)
- The provisions regarding social security and health insurance also include certain options
- Possibilities of remission based on the current guidelines, whereby extraordinary reasons may usually lead to reduction of potential sanctions (including remission beyond the scope of the guidelines)
The government approved options of zero–interest loans as part of a ČMZRB programme – COVID loan
Along with the above, the Czech Government approved the possibilities of drawing zero-interest loans as part of a new programme of the Czech–Moravian Guarantee and Development Bank (ČMZRB) – the COVID loan. The zero–interest loans are intended primarily for self–employed people and small and medium sized enterprises whose economic activities are limited as a result of the coronavirus infection and related preventative measures. The loan is intended primarily for the acquisition of low–value tangible or intangible assets, acquisition and financing of inventory and other operating expenses.
The basic parameters of the loans are as follows:
- Acceptance of applications from 16 March 2020
- No interest and no fees
- Loan up to CZK 15 million
- Up to 90% of eligible costs of the project
- Maturity up to 2 years
- Deferment of instalments by up to 12 months
At the same time, it is possible to use additional ČMZRB instruments such as the Expansion programme, where a zero-interest loan of up to CZK 45 million may be obtained, or to obtain guarantees from ČMZRB for operation and investments in the Guarantee programme. In addition, the Czech Government is considering transferring additional funds from operational programmes to help businesses affected by the current coronavirus infection.
For the sake of completeness, we add that it is possible to ask for compensation of damage arising from the measures adopted. The request has to be filed within six months of the origination of the damage. In this respect, the damage and causes have to be demonstrated and it remains to be seen how the state or courts will approach such requests.
Given the current situation, we recommend looking for the most suitable solution for each situation individually. Do not hesitate to contact us should you have any questions related to this area.