Certain extraordinary measures have been cancelled by the court. What will be the practical impacts?

The Municipal Court in Prague cancelled four measures of the Ministry of Health with effect from 27 April. At the same time, the Government started to gradually loosen the current restrictions. The court decision will thus probably have the most serious practical impact in the area of the State’s liability for damage as the judgement indirectly increased the State’s exposure to potential claims of entrepreneurs demanding compensation for damage incurred as a result of the adopted extraordinary measures.

The issue of validity of “forced” settlement with the State

From the beginning of April, employers may apply for a contribution towards wage compensations from the Antivirus programme guaranteed by the Ministry of Labour and Social Affairs. The Ministry of Labour and Social Affairs grants the contribution on the basis of an agreement on the provision of a contribution from the Antivirus programme concluded between the applicant-employer and the State. The terms of the agreement also include provisions on settlement. But is such a general provision on settlement automatically valid?

Certain issues concerning postponement of loan repayment

A new Act specifying certain measures related to repayment of loans during the COVID-19 pandemic came into effect on 17 April 2020. However, the possibility of postponing the repayment of certain loans entails some interpretation ambiguities as well as relatively unknown limitations for the borrowers.

Relaxing the rules for short-term business trips and employment of EU citizens

With the decreasing numbers of patients infected by the COVID-19 disease, certain measures imposed by the Government and affecting Czech employers and the entry of foreigners – EU citizens and third-country nationals – to the Czech Republic have gradually been loosened since April 27. In many cases, these measures effectively prevented employment in the Czech Republic. The most important changes are summarised below.

Postponement of advance payments on income tax on dependent activities and of withholding tax

The General Financial Directorate (GFD) has published a guideline allowing payers of personal income tax on dependent activities to apply for postponement of advance payments or for payment of the tax in instalments. Postponement (or payment in instalments, as the case may be) is also possible for certain types of withholding tax – e.g. on income of taxpayers who are not Czech tax residents from the provision of services, commercial, technical and other consultancy activities, etc., in the territory of the Czech Republic.

Waiver of VAT on the grounds of an extraordinary event

Value added tax on free delivery of goods and provision of services to selected entities is waived until the end of the state of emergency declared to fight the spread of the SARS-CoV-2 coronavirus provided that the goods and services serve to stop the spread of the virus.

Impact of governmental measures on the application of double taxation treaties

In response to the extraordinary governmental measures adopted in the context of the COVID-19 pandemic (e.g. restriction of travel, quarantine), the OECD has released a recommendation to address certain tax implications of a temporary change of the place of work or residence. Indeed, the measures might affect the State’s taxation rights under international tax treaties.

COVID Plus guarantees and postponement of the deadline for applications for subsidies

The anticipated Government regulation specifying detailed conditions for the provision of guarantees under the COVID Plus programme has been published in the Collection of Laws. Guarantees for loans granted within this programme will be provided by the Export Guarantee and Insurance Corporation (EGAP).