Dear Clients and Partners,
Please, let us inform you of the third call for applications for participation in the COVID – Rent support scheme announced by the Ministry of Industry and Trade. Businesses will again be allowed to draw financial support to cover part of the rent paid for the lease of their business premises. However, this time, support will be distributed under less stringent terms and an increased number of businesses will therefore be eligible for support. Our newsletter will help you identify whether your business qualifies as eligible.
1. ELIGIBLE SUBJECTS
The main terms for submission of applications for participation in the scheme remain unchanged. The scheme is open for applicants who carry out their business activities in an establishment, as defined in the Trade Licensing Act, provided that these activities do not consist solely in leasing the establishment to third parties. The establishment must therefore be indeed used for sale of goods or services. This is no different from the terms applicable in the previous rounds.
One difference from the previous calls is the time requirement for the lease (or usufruct) agreements concerned. These agreements must be valid and effective at the latest as of 30 September 2020. The scheme does not apply to agreements of a later date.
COVID: Rent III defines eligible applicants as
– Lessees whose business activities, which consist in the sale of goods or services in an establishment, were restricted by Governmental Decree No. 1376 from 23 December 2020; and also
– Lessees whose business activities, which consist in the sale of goods or services in an establishment, were not restricted by Governmental Decree No. 1376 from 23 December 2020 since they were covered by an exception listed in Section I. 1. a) to I. 1. f) of the Decree, but whose sales of goods or services during the applicable reference period fell by 66 % or more compared to the same period of 2019.
Possible affiliation between the lessor and the lessee is no longer relevant. Therefore, the fact that the lessee and the lessor are affiliated persons, control or are controlled by each other does not prevent the lessee from applying for support. However, the lessor and lessee may not be the same natural person.
The requirement that the applicant must be completely free of any debts to state authorities (Czech Social Security Administration, financial offices etc.), unless such debts are permissible under tax liberation programmes announced by the Ministry of Finance or the Ministry of Labour and Social Affairs, also remains unaffected.
Lessees must also consider the amount of support already drawn under various support schemes, which shall not exceed the limit set forth by Article 3.1. of the Temporary Framework of the European Commission. Should the sum exceed EUR 800,000, the applicant is not eligible for any further support.
2. SUBSIDISED RENT AND FINANCIAL SUPPORT
Financial support under COVID: Rent III is aimed only at rent payable for the period between 1 October 2020 and 31 December 2020. If the respective lease agreement expired prior to 31 December 2020, the reference period shall instead be between 1 October 2020 until the last day of the lease („Reference Period“).
Rent which qualifies for financial support is defined as the total sum of fixed rent paid for all months of the Reference Period under a lease agreement effective at the latest as of 30 September 2020. Neither VAT nor any flexible rent component (such as turnover rent) are covered by the support scheme.
The amount of support amounts to 50 % of rent payable for the Reference Period per one establishment. The total limit of support received by one applicant is CZK 10 million.
3. CONDITIONS FOR PAYMENT OF SUPPORT
Prior to filing an application, a lessee must pay at least 50 % of rent due for the Reference Period.
Mutual set-off between the lessor and the lessee qualifies as payment of rent for these purposes. It must however be proved beyond all reasonable doubt that the set-off relates to the rent payable for the Reference Period.
Applications are open from 22 January 2021 until 22 March 2021 via an online system AIS MPO, available at the Ministry of Industry and Trade’s website. Only one application may be filed per one establishment. However, one application may cover all establishments of the same applicant.
Following documents must be attached to the application:
– applicant’s statutory declaration of eligibility to apply for support, which will be automatically generated and uploaded by the AIS MPO system;
– lessor’s statutory declaration of the existence of the lease, which will also be generated by the system;
– documents attesting to the payment of regular rent for any two consecutive months between 1 July 2019 and 30 September 2020 and, in case the lease agreement was entered into only after 31 July 2020, a document attesting to rent having been paid for the period between the start date of the lease and 30 September 2020 (e.g. a bank account statement);
– documents attesting to payment of 50 % rent for the Reference Period.
Lessees who apply for support due to decrease in sales and not due to the fact that their establishment was closed by the Governmental Decree must attach evidence that the sales indeed dropped in the given establishment during the Reference Period as compared to the same period of 2019. This evidence must be verified by a certified accountant, a certified tax advisor or an auditor.
We hope that our newsletter provided you with useful information and we are ready to help you find the right solution in any situation.
Your LTA team