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Questions and answers in connection with coronavirus no. 2

20. 3. 2020Ludmila Benešová

11. We have compiled the financial statement as at 31. 12 2019 and in April we are preparing to have it approved by our shareholders. Can the shareholders decide on a payment of dividends?

Yes, they can. At present, however, the Act on Business Corporations is more relevant than usually, as it has determined that business corporations must not pay out dividends or advance dividends if they could cause bankruptcy of the company. Based on an assessment of the economic impacts of the current coronavirus pandemic, every company has to evaluate whether it is possible to pay out dividends from profits 2019 or previous years. Assuming that it is assessed that the impacts on the company will be significant, it is then clear that the members of the managers performing the function with the diligence of a professional manager should not present the shareholders with a proposal for paying dividends, otherwise they risk being liable for damages. We recommend discussing this situation with a legal advisor.

The negative situation which has arisen could also have an influence on advance dividends paid. Also in this case it is necessary to consider whether dividends will be declared to shareholders or, whether the shareholders will be obliged to return the advance dividends.

12. At the annual general meeting, the shareholders decided on payment of dividends. I am the chairman and I fear that the company may thereby find itself in payment difficulties. Can I not pay out dividends?

The Act on Business Corporations contains an express prohibition of pay-outs of shares in profit if the company would thereby go bankrupt. In view of the fact that pay-out of shares in profit is decided by the statutory body, there is no doubt that its members are responsible for assessing the economic impacts of the pandemic on company activity.

The insolvency test is based on the fact that the statutory body members, with the diligence of professional managers, assess whether they would not bring about bankruptcy pursuant to the Insolvency Act by paying out shares in the business corporation profit. The statutory body can have the fulfilment of this test assessed by an external expert and thus substantiate its procedure. However, because the impacts of the coronavirus pandemic have not yet been quantified in numerous firms it is possible, by a decision of the statutory body, to defer pay-out of the share in profit.

13. We want to utilize the advantages of postponing filing of tax returns from legal entity income tax and payment thereof from 1. 4. 2020 to 1. 7. 2020. Can we be certain that the tax administrator will, in the event of need, issue a certificate no outstanding payments?

The Ruling of the MF does not extend the deadline for filing a return/payment, it “only” pardons penalties connected with late filing of the return and with late payment. Anyone who utilizes this will be in delay as regards fulfilling their obligations. Therefore, if you utilize this “penalty-free period”, you have to hope that the Financial Authority will proceed rationally and accommodatingly, i.e. in accordance with what the ministry is currently declaring. If you wish to be certain, we recommend postponing the deadline by giving a tax advisor power of attorney.

14. We paid advances for income tax on 15. 3. 2020; we do not request reduction of advances or the cancellation thereof. We have to file our tax return on 1. 4. 2020, but we are going to file it at the end of the tolerance deadline on 1. 7. 2020. Do we have to pay another advance on 15. 6. 2020, and how much will it be?

As to the advance amount, it is derived from the last tax obligation or its amount may be changed by a decision from the Financial Authority. If, by 15. 6. 2020, you do not have a decision from the Financial Authority that would change your advance amounts and you do not file a tax return for 2019, the June advance amount will correspond to the advance amount paid in March.

15. I will not manage to file a tax return on 1. 4. 2020, but I will have an overpayment. If I manage to file the return before 1. 7. 2020, will I get the overpayment immediately or 30 days after the 1. 7. 2020 term?

In view of the fact that the deadline has not been extended by the Ruling of the MF, the legal deadline remains 1. 4. 2020. You can therefore file the return without penalty anytime until 1. 7. 2020, the overpayment arises on the day on which the return is filed, and if you fill in and sign the section in the return concerning overpayments, it will be refunded to you within 30 days.

16. I did not pay the advance due on 15. 3. 2020. What do I face? Should I do something?

You face penalty interest for the period when the advance is not paid. The Financial Authority can, however, be asked to reduce the advance or for an exception from obligation to pay advance (advance amounts should reflect the expected tax obligations). This request could also concern advances which have already been paid or which should already have been paid.

17. Can intrastat be unfiled without penalty?

Until now, neither the Ministry of Finance, nor the Customs Administration nor the Czech Statistic Authority have made public any information according to which reliefs would concern intrastat. Obligations connected with intrastat have thus not changed in any way for the time being.

18. Have the terms for filing overviews and payments for social and health security for self-employed persons been extended?

Until now, no decision has been made taken which would concern extension of deadlines for filing overviews of insurance payments for social and health security (hereinafter to be referred to as “Overviews”), payments of these deductions or pardon of penalties for late filing and payment. However, the minister of finance announced that she will propose postponing social security payments for self-employed persons for 6 months. We will update you in next newsletters on this matter.

19. In 2019 I had exempt incomes exceeding CZK 5M which I was obliged to declare at the Financial Authority. For filing, I wish to use the possibility to file by 1. 7. 2020. Until when do I have to file a declaration on exempt incomes?

The declaration on exempt incomes has to be filed within the deadline for filing income tax returns. In view of the fact that the deadline for filing the return has not been postponed by the Ruling of the MF, the deadline for filing the declaration for 2019 by 1. 4. 2020 applies. This deadline can be postponed by giving a tax advisor power of attorney to process and file your return.

20. I have heard about interest free loans for entrepreneurs affected by coronavirus. Who provides them and what are the conditions?

From 16th March 2020, entrepreneurs affected by coronavirus can request an interest-free loans provided by Českomoravská záruční a rozvojová banka, a.s. (“ČMZRB”) The purpose of the “Úvěr COVID” (Loan COVID) program should be providing immediate cash to micro, small and medium entrepreneurs whose economic activity has been limited as a result of COVID-19. Entrepreneurs can use the loan for standard operational expenses, such as payment of business-contractual obligations, purchase and financing of supplies, payment of salaries to employees or purchase of small assets.

Credits amounting to CZK 500K – CZK 15M can be requested by filing a request via the ČMZRB electronic registry, with a maturity over a period of up to 24 months and the possibility to postpone repayments by up to 12 months. More information on the conditions for provision or eligible expenditure is stated on the ČMZRB webpages ( The government is negotiating the extension of these credits so that they may be provided also by commercial banks.

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