Measures taken by the government of the Czech Republic

Measures taken by the government of the Czech Republic to deal with the economic consequences of COVID-19.

I) General conditions:

• On 12 March, the government declared a state of emergency for 30 days
• With effect from 16 March 2020 to 24 March 2020, the free movement of persons throughout the Czech Republic is prohibited. There are exceptions, particularly travelling in order to work, running you business, visiting doctors, necessary visits of your family or other close persons, shopping of grocery, medical drugs, cleaning compounds, fuel, food for animals etc. You can visit banks, posts, insurance companies etc. but you are urgently asked to limit this to really necessary cases.
• The state borders are closed with exceptions mainly for truck drivers, pilots, ship crews…, people who are commuting to work abroad (up to 100km from the borders), rescue services and people important for the special interest of the country.
• The selected protective equipment must not be exported and can be sold only to the state (mostly PPF3 class).
• All the shops which are not urgently needed (with exceptions including above mentioned and in addition for example car services, ICT equipment repairs etc. are closed. Those excluded services like car repairs have limited number of persons on site to 30.
• In general events where people are gathering are prohibited – even in-house business meetings are limited to less than 30 persons. Commercial gatherings like theaters, sport events etc. are prohibited.
• Several villages and smaller towns are under strict quarantine – unfortunately influencing also several important companies there.

II) Financial aid and support (Government and state controlled financial institutions)

• On March 16, the Czech-Moravian Guarantee and Development Bank (CMZRB) have launched COVID credit applications. Target group are SMEs (and self-employed), whose economic activities are limited due to the outbreak of coronavirus infection and related preventive measures. It aims to facilitate access to operational financing for these businesses through interest-free loans. The range is 18 000 EUR to 540 000 EUR. Entrepreneurs will be eligible to use it for example, to pay employees' salaries, energy costs, rent, to finance supplies, to pay supplier-customer invoices, to pre-finance receivables, etc.
• CMZRB also provides Guarantee for commercial loans for small and medium-sized enterprises (for companies, not self-employed)
• There is an enormous demand (in first 2 days 2000 applications for CMZRB credit has been filed).
• In order to raise the capital at least 360 millions of EUR (approx.) will be transferred from the „Operational Program Enterprise and Innovation for Competitiveness“. Details and parameters are under development now.
• State Export Guarantee and Insurance Corporation (EGAP) reacts as well and provide a special package to ease the situation for exporters:

• Introduction of theFast Track, i.e. priority processing of insurance applications for exporters looking for new customers due to the global coronavirus pandemic.

• Significantly reduced fees for exporters seeking EGAP insurance products covering new risks.
• Shortening the period of time required to recognize claims (waiting time) for insured credits from 6 to 3 months and for insured guarantees from 3 months to 1 month in order to help resolve any cash flow problems of the exporter.

• Czech Export Bank (CEB) even during a viral pandemic provides its clients with full services and, in cooperation with the EGAP export insurance company, now offers financial products and services on advantageous terms. CEB is ready to help all exporters, regardless of company size, by providing products that will support the export of Czech goods abroad.
• The Czech Ministry of Foreign Affairs announces the Emergency Package for Czech exporters. Embassies of the Czech Republic and the Ministry of Foreign Affairs offer assistance to Czech entrepreneurs in case of problems with the realization of commercial supplies abroad, especially in the case of administrative barriers imposed on importers by local authorities. With respect to the restrictions of movement of persons, the Ministry offer assistance in finding new contacts and opportunities in the fields that will be part of national stimulus packages. These services are for free.

Emergency package contains mainly:
1) Practical information on conducting foreign operations in a coronavirus situation with a number of restrictions in the target country;
2) Assistance of embassies in problems with performing of the trade case;
3) Finding and analyzing opportunities, assisting in identifying and verifying suitable
partners.
4) Assistance and information sharing through a series of webinars and online
consultations.
5) Offer to use the services of local experts to assist the business on site during the

negotiating and implementing the business.

Synergy with commercial banks:

• According to the Czech Banking association, banks will be willing to postpone the repayment of consumer loans and mortgages for three months. In particular, they want to be helpful towards small businesses which are proving to be in difficulty in payment due to the coronavirus epidemic.

III) Tax measures of the Financial Administration of the Czech Republic

• Extension of the deadline for tax return of income taxes up to July 1. It means plus 3 months. There is also a flat waiver from any penalties for the late payment of personal and corporate income tax return and default interest up to 1 July 2020.
• Other penalties relating to late VAT declarations and certain administrative charges will also be waived.
• The possibility to request a deferred tax payment precisely because of the impact of COVID-19. (already existing general institute, but now COVID-19 impact is one of the reason) Filing this request is now for free (normally 15 EUR).
• The Financial Administration will be more tolerant to noncompliance during performing the next wave of Electronic Sales Records (EET) system implementation. Many businesses now could get in to troubles to full fill the deadlines.
• Same as other part of the state administration as well the Financial Administration is providing an emergency phone line help desk.

IV) Labor market

• Targeted employment support program (kurzarbeit)

This program is now under construction. The Confederation of Industry of the Czech Republic cooperates closely with the government. The aim is to reduce the impact of COVID-19 pandemic on Czech labor market.
The period of validity of the Program is provisionally fixed until 30 June 2020, with the possibility of eventual extension. The program can be used to pay a contribution to reimburse employers' eligible costs incurred after March 1, 2020.
The aim of the program is to compensate for wage costs, or part thereof, in the form of wage or salary reimbursement due to employees for periods of obstacles to work, caused by quarantine, emergency measures and crisis measures related to the spread of COVID-19 in the Czech Republic and abroad.

The Program is implemented by the Labor Office of the Czech Republic.

There are several regimes (A – E) depending on the kind of obstacle:
• Employees in ordered quarantine - wage or salary compensation.
• Inability to assign work to employees in connection with government crisis resolutions.
• Inability to assign work to employees with no ordered quarantine, due to the quarantine of significant portion of employees – 30%.
• If the employee must stay at home to take care of a child younger 13 years because of the schools shutdown. (was only up to 10 years before)
• Limited availability of inputs for continuing the company operations caused by the COVID-19 situation. Including missing inputs from foreign suppliers.

• Reduction in demand for employer's services, goods and other products as a result of quarantine measures at the employer's point of sale (Czech Republic and abroad) or otherwise causally related to COVID-19.

Some of the measures are still being refined or updated according the practical experience and need. Our team work hard closely with the government and companies and we will bring you updates. We are now performing second brief survey on COVID-19 impact among the members to get the relevant data.

In Prague, March 19
Confederation of Industry of the Czech Republic