The COVID rent subsidy program
On 19.6.2020, the Ministry of Industry and Trade made public the rules for provision of subsidies for rent payments to tenants who, due to passed special measures, were forbidden to sell goods or provide services on their premises.
We have prepared from this material the most important rules for filing requests.
Time, when it is possible to request
Requests can be submitted from 26th June 2020 to 30th September 2020. There is no legal entitlement to the subsidy; approval thereof is subject to the decision of the Ministry of Industry and Trade and will be provided by 31.12.2020.
Who can apply
Applicants have to fulfil these conditions:
- They are individuals – entrepreneurs or corporations.
- They perform entrepreneurial activity on the basis of the Trade Act or on the basis of another legal regulation.
- They use an operational facility on the basis of a lease agreement entered into with a landlord prior to 13th March 2020.
- Due to passed special measures, they were forbidden to sell goods or services at least in a part of the period from 13th March to 30th June 2020.
- They were not in delay with any payments of their liabilities towards selected institutions, payable by 12th March 2020, especially towards the Financial Authority, the Czech Social Insurance Administration, health insurance companies and others. Late payments of tax/deductions on the basis of liberation packages are not considered to be arrears.
- They (tenants) are not related party with the landlord.
Conditions for providing aid
Among the conditions which have to be fulfilled:
- The tenant has paid the rent agreed to in the leasing agreement for the months of January and February 2020.
- The tenant has arranged with the landlord a discount amounting to 30 % of the original rent, and this for the months of April, May and June 2020.
- The tenant has paid at least 50 % of the original rent amount to the landlord, and in a manner and in the term that is standard pursuant to the lease agreement. If the tenant has utilized the possibility to postpone payment of rent pursuant to Act No. 210/2020 Coll. or has contractually arranged this with the landlord, it has to be at least 50 % of the monthly rent for April, May and June, paid by the latest on the day prior to filing the request for provision of the subsidy.
This all has to be substantiated with a declaration of honour by the landlord, which the tenant is to include in the subsidy request.
And what about VAT on rent?
If the landlord charges VAT on the rent and the tenant is a VAT payer, a subsidy cannot be drawn on VAT. The subsidy amount is always calculated from the rent excluding VAT.
To illustrate the conditions, we assume the following data: monthly rent amounts to CZK 100,000 + 21 % VAT, invoicing takes place quarterly as at the 15th day of the first month of the quarter. The invoice maturity is 14 days from the date of issue.
On 15th April 2020, the landlord issued an invoice for rent from the second quarter of 2020 (thus the months April, May and June) for the rent sum at the amount of CZK 300,000 plus CZK 63,000 VAT. The tenant did not pay the invoice on the fixed maturity date.
The landlord subsequently agreed with the lessee a discount amounting to 30% of the rent for the period of April, May and June amounting in total to CZK 108,900. The landlord issued a credit note amounting to a CZK 90,000 reduction of the tax base and a CZK 18,900 reduction of VAT.
The tenant files a request for a subsidy on 30th June 2020. By the latest on the day before this date it has to pay a sum amounting to 50 % of the rent, therefore the sum of CZK 181,500.
Further important regards
- The beneficiary is obliged to retain documentation connected with acceptance of the subsidy over a period of 10 years from the date of issue of the decision to recognize the subsidy. During this time the beneficiary is also obliged to enable the provider and other auditing bodies to conduct audits on this documentation.
- The request can be filed until 26th June via an online information system accessible on the web mpo.cz. The deadline for filing requests for subsidies ends on 30th September 2020.
- Verification of the applicant’s identity will take place via NIA – electronic identity. You can find details on eidentita.cz. We recommend taking immediate steps to acquire an electronic identity.
- All necessary certificates and forms will be prepared for applicants in an information system, where they will be completed or into which they will be entered.
- The maximum aid amount for an applicant is CZK 10 million.
In the event of further questions, do not hesitate to contact us.