Accounting of subsidies from the COVID rent III program

Filing requests in this program was closed on 8 April 2021 and numerous accounting entities have posed the question as to how to account these subsidies.

Especially confusing for accounting entities is the fact that the months of October, November and December 2020 constitute the applicable period for which support has been provided, and are therefore months from an already finished accounting period.

Numerous clients have thus posed to us the question as to whether an accounting entity has to account for and report the proceeds from an accepted subsidy to compensate rent for the 2020 calendar year or for 2021.

For this purpose we would like to use the argumentation from Czech accounting regulations which were endorsed from the Interpretation of the National Accounting Board Nos. I-14, “The moment for reporting a claim for accepting or returning a subsidy”, where the moment to account for a receivable and connected proceeds is stated as being the condition for the rise of an indubitable claim for a subsidy. Although the applicable period for providing support is 2020, this program was announced by the Ministry of Industry and Trade in 2021. For this reason, an indubitable claim for an accounting entity could not have arisen in 2020.

Thus if the accounting entity fulfils all conditions for providing this support and at the same time files a request prior to compiling the financial statement for 2020 (or has already received the subsidy on its bank account), it is apposite to state this information in a supplement to the financial statement if this information can be considered significant. In the accounting, the accounting entity recognizes the receivable and operational proceeds in the 2020 calendar year.