Self-employed are one of the most vulnerable groups at the moment, more than 1 million of them operate in the Czech Republic. A large number of them had to close their premises or the clients cancelled their pre-agreed orders.
That is why the compensation bonus for the self-employed has been approved, which can bring up to 25 000 CZK for the self-employed businessmen for the period 12.3.20-30.4.20.
Who is entitled to the bonus? how it works and what to watch out for? Summarized by Šárka Pelikánová, owner of accounting and tax office Connect Economic Group s.r.o.
Compensation Bonus History
The original proposal was that the self-employed should draw 15 000 CZK per month, but this proposal was subsequently rejected. The Czech Government has come up with a new option requiring self-employed persons to prove that their income decreased by at least 10%, compared to the same period last year between January and March 2020. Even this variant was finally not approved. The final version, which has already passed through the Chamber of Deputies of the Czech Republic and the Senate of the Czech Republic and at the same time it has been signed by the President of the Czech Republic, is summarized below.
Who can benefit from the Compensation Bonus?
Every self-employed person doing business for the main activity. The self-employed can also receive bonuses for secondary activities, those who are not employed at the same time but are on parental or maternity leave, receive old-age or disability pension, take care of a disabled person, or are entrepreneurial students who are still preparing for future employment.
Those who already have their trade license active as of 12 March 2020 may apply. At the same time, those self-employed whose business is seasonal, and therefore anytime after 31 August 2019 have interrupted their trade, are also entitled to a compensation bonus.
At the same time, all applicants must declare on their honour that they have not been able to operate in whole or in part as a result of COVID-19 and current government measures.
The main reasons can be considered:
- The trader had to close or restrict his establishment
- A quarantine has been ordered by the trader or his employees
- The trader is limited in demand for his services or products
- The supply of services or products necessary for the trader's activity has been restricted or completely terminated
- The trader had to take care of a child.
How much can I claim?
The total amount of CZK 25,000 will be reimbursed to those who have met all the conditions in the period 12.3.20-30.4.20. This is a total of 50 days, and for each day there is a bonus of 500 CZK. If the conditions are met only on certain days, the self-employed person will be paid a bonus of CZK 500 / day for these days.
When can I apply for the Compensation Bonus?
Applications began to be received from 9.4.2020. The self-employed person can then apply for the compensation bonus until June 29, 2020. If he does not apply by this time, his claim for the bonus will expire.
After submitting the applications to the tax office, it is expected that the compensation bonus will be credited to the account within about 4 working days. However, this is not a guaranteed deadline, so it should be taken into account that the amount can be credited later.
How do I apply for the Compensation Bonus?
Download the simple form below to fill out and submit.
Please note that the form tends to display incorrectly on the Internet, and your browser may misspell in English. In this case it is necessary to download the form directly to your computer, then it will display in the correct form.
Download the form here: https://1url.cz/wzNqs
Here you can see how the form should be downloaded to your computer.
The trader sends the completed application to his / her tax office, where he / she also usually sends his / her tax return, etc.
- By email (need not be electronically signed)
- Data box
- Tax portal
- By post
- Physically and directly to the collection boxes located at the tax authorities
What would happen if the compensation bonus was drawn wrong?
Please note that the Compensation Bonus is intended for self-employed individuals who meet all of the above conditions. First of all, it is important to realize that the compensation bonus is intended for sole traders who are affected by the COVID-19 situation. It is still unclear how the tax authorities will assess in the future whether or not the entrepreneur was really entitled to the bonus and whether his business was affected by COVID-19. However, the Tax Administration informs on its website that if someone would abuse the bonus, they will be charged a tax equal to the bonus paid.
We therefore recommend that you retain all documentation and evidence that the business has actually been affected. It can also be email communication, where clients, for example, cancel orders or reduce workload. Those who had to close their premises should be able to substantiate that they have lost part of their income. At the same time, it is possible to prove the impossibility to carry out an activity by submitting a proof of closure of the school facility.
Will the compensation bonus be treated as income that will need to be taxed?
No. In addition, the compensation bonus is not only tax-exempt but also does not need to deduct social and health insurance.
If I apply for the Compensation Bonus, will it be reduced due to arrears at the Tax Office or distraint?
No, the compensation bonus will not be subject to enforcement and execution, and at the same time it cannot be used to settle the outstanding balance with the tax authority.
What if I interrupted my trade and applied to the Labour Office?
If the self-employed has already applied for a job at the Labour Office and has interrupted his / her trade, he / she has the possibility to resume his / her trade and draw the compensation bonus. If the self-employed has already started to receive the unemployment benefit, the compensation bonus will be reduced by this amount.
Can I benefit from the compensation bonus and the nursing allowance?
Yes, these two contributions are not mutually exclusive.
13. 04. 2020