In order to mitigate the negative impact of the Covid-19 epidemic on business, on 18 May 2020 the Czech government approved a support programme called “Covid-Rent”.
Although the Czech government has not released details on the programme pending approval by the European Commission, this is what is known about Covid-Rent so far.
Under the programme, retail businesses whose operations such as the sale of goods or provision of services in leased premises were banned due to coronavirus-related measures (between 13 March 2020 and 30 June 2020) are entitled to state rent subsidies under the following conditions:
- The landlord agrees to provide a 30% rent discount for the period from April to June 2020; and
- the tenant will pay at least 50% of the rent for the period from April to June 2020 prior to applying for the subsidy.
If the above conditions are met, the government will provide the tenant with 50% of the rent for the period from April to June 2020. The state will provide up to CZK 10 million per tenant. However, the total subsidy for the entire country is capped at approximately EUR 182 million and the subsidy will most likely be awarded on a first-come, first-served basis.
The rent applicable for the subsidy under this programme is the base rent under the lease agreement, excluding any turnover rent and VAT. The rent cannot be higher than the rent payable under the lease agreement prior to 12 March 2020.
The tenant’s application for the subsidy must include an affidavit that the tenant:
- has been restricted in its business in the leased premises;
- is not in liquidation or bankruptcy;
- waives any further rights it might have against the state as a result of the pandemic-related restrictions.
The tenant will also have to submit proof that the tenant has paid:
- the full rent for January and February 2020;
- at least 50% of the rent for April, May and June 2020;
- VAT for the rent payable before the submission of the application.
The tenant will further need to show an affidavit by the landlord:
- confirming the existence of the lease agreement with the tenant;
- confirming that the tenant and the landlord are not affiliated.
The tenant is not required to submit the lease agreement or its amendments together with the application, but it is obliged to archive these documents for a period of ten years from the date of the decision granting the subsidy and to allow relevant authorities to review these documents within this period.
A cap of EUR 800,000 for overall state support has been established per each entity. For example, if the tenant has already drawn EUR 600,000 from other pandemic-related subsidy programmes, it can only draw EUR 200,000 from the Covid-Rent programme.
For more information on the Covid-Rent programme, contact your regular CMS advisor or local CMS experts.