New system of COVID-19 compensations

The new concept of compensations launched in April 2021 should significantly clarify the situation in the field of compensation and thus perhaps also simplify the submission of applications. Let´s have a closer look at the new system presented in our today´s article.  

The support of businesses (individuals or legal entities) doing business on the basis of the Trade Licensing Act or in a similar way, will be provided by two new subsidy programs administered by the Ministry of Industry and Trade - namely COVID-2021 and COVID-Uncovered Costs, which will replace existing specific programs.

The first major change is the scope of new support which is not limited to certain sectors of the economy as was the case with the previously announced programs. If the conditions for drawing a subsidy for both programs are met the applicant will be able to decide which one to apply for (concurrence of both subsidies is not possible).

Besides the two mentioned programs, the Antivirus program, which can be combined with both of these subsidies, and the compensation bonus for the self-employed persons, which, however, cannot be used in parallel with the new subsidies, will continue to run.

And now let's take a closer look at the individual programs:

COVID-2021

The COVID-2021 program is intended for entrepreneurs who have had their business restricted as a result of measures announced in the fight against the Covid-19 pandemic and who recorded a 50% drop in sales during the relevant period (in the first call it is January and February 2021) compared to the comparison period (in the first call compared to the period of January and February 2019, or 2020). The aim of this subsidy is to provide the financial support to ensure liquidity.

The subsidy is provided for the costs of operating and maintaining business activities, such as personnel costs, costs of materials, services (incl. leasing), depreciation, taxes and fees, loan repayments, overheads, etc.

The amount of support is CZK 500/day for each employee who was employed at a time when the company's operations were limited due to the situation. Assuming that the subsidy applicant employs less than 3 employees, the amount of subsidy is set at CZK 1,500/day. The amount of maximum support is reduced according to applicable scope of working hours. Employees are considered to be employees registered for the payment of insurance premiums to the Czech Social Insurance Administration, including cooperating persons and executives with a contract for the performance of the function.

The entity can receive subsidy up to a total of 1.8 million euros in the sum of all subsidies received so far from other subsidy programs.

The period for which the applicant may request subsidy in the first call is valid from 11 January 2021 to 31 March 2021. However, it is necessary to pay attention to the concurrence with the subsidy of COVID-Accommodation II, for which the decisive period is till 22 January 2021, and therefore, when using this subsidy, it is possible to apply for COVID-2021 only since 23 January 2021.

Applications in the first call can be sent online via this link from 12 April to 31 May 2021.

COVID-Uncovered costs

The COVID-Uncovered Costs program is used for entrepreneurs in loss position realized due to the pandemic. It is a program for companies regardless of the specific sector, form of ownership or number of employees, with the aim to prevent the deterioration of the capital situation of business entities, increase their liquidity and maintain their business activities.

Under the program, it is possible to apply for reimbursement of part of costs/expenses that are not covered by revenues/incomes, i.e., for compensation of loss, while subsidy can be obtained in the amount of 60% of uncovered costs (40% in the case of business entities with state participation) for decisive period.

The specific conditions for obtaining subsidy are set so that the entrepreneur's turnover decreased by at least 50% during the decisive period (in the first call it is from January to March 2021) in comparison with the comparative period (in the first call compared to period from January to March 2019, or 2020) and further that the entrepreneur is in a loss position in the relevant period (i.e., the entity has uncovered costs).

This accounting loss has to be verifiable, therefore in the case of corporate entities it is necessary to prepare interim financial statements for the relevant period. In the case of entities or individuals not running the book-keeping it is sufficient to present an overview of actual business income and expenses for the relevant period.

The calculation of this subsidy is more administratively demanding than in the case of the COVID - 2021 subsidy. The accounting aspects of the COVID - Uncovered Costs program are presented in more detail in our article.

The maximum amount of subsidy is set at CZK 40 million per applicant within one call, regardless of other subsidies.

Applications can be submitted online via this link from 19 April to 19 July 2021.

Perhaps today's article brought you a better orientation in the currently running subsidy programs. If you have any questions when preparing the application, do not hesitate to contact us.

If you are interested in this topic we would like to invite you to our next webinar held on 12 May 2021 which will focus on the new system of compensations.  More information on the webinar including registration can be found here.