Member Article

(continuation from Part I - separate article)

Part II - "Antivirus Programme" - Financial Assistance to Czech Employers

The Ministry of Labour and Social Affairs was mandated by the Government to further prepare a compensation program for entrepreneurs who continue to operate but whose production has decreased due to measures (category C of the Antivirus Programme).

How do I need to proceed?

Itis advisable to start by compiling an overview of employeesand their hours worked by place of operations , specifying on which days employees worked and which days they did not, and for what reason. We also recommend adding the amount of wage compensation provided. For employees who potentially meet the requirements, it is recommended to indicate under which compensation scheme they would fall and calculate the amount of compensation provided by the employer and compare this with the maximum contribution that the state should provide.

How to pay advances for income tax on employment and contributions to insurance?

When paying wage compensation to employees in the above cases, it is important to distinguish what constitutes a limitation in the employer's activity. In the case ofan A-category wage reimbursementwhere the employee has been ordered to quarantine, the employer pays the wage reimbursement to the employee for up to 14 calendar days according to the above information. Then the wage compensation is paid by the Czech Social Security Administration. However, this compensation paid by the employer is specific because it is exempt from income tax on employment and is not subject to insurance contributions.The other remuneration referred to aboveis paid by the employer to the employee as long as the obstacle to employment persists and is subject to both income tax and dependent contributions. Therefore, mandatory deductions should be considered in these cases. From the employer's point of view, the compensation of wage substitution and possible contributions provided to employers is tax neutral.