Authors: David Krch, Josef Žaloudek

Dear Clients and Business Friends,

We follow up on our previous article on the compensation bonus for self-employed persons (“SEPs”), in which we informed you about its rules in the form of questions and answers. We are now bringing you several updates, which are based on the already approved amendment to Act No. 159/2020 Sb., on the Compensation Bonus in Connection with Crisis Measures Associated with the Occurrence of Coronavirus SARS CoV-2:

• A second bonus period for which a compensation bonus can be applied, specifically for the period from 1 May 2020 to 8 June 2020, has been introduced;
• The bonus amount remains unchanged, i.e. CZK 500 per day;
• For both bonus periods, a self-employed person can apply for a total of up to CZK 44,500 (CZK 500 per day for the period from 12 March to 8 June 2020);
• The deadline for applying for the compensation bonus has been shifted to 7 August 2020 (the relative setting of this deadline of 60 days after the end of the bonus period still applies);
• It still remains that self-employed persons who have not been able to carry out their activities in whole or in part above the usual level may apply for such a bonus;
• It still remains that persons who are covered by sickness insurance as employees in a given month are excluded from entitlement to the compensation bonus;
• A self-employed person can apply for the compensation bonus by filing an application at his/her locally competent tax office, this application now also has an interactive form;
• The Act allows the government to introduce, by its regulation, if necessary, a third bonus period between 9 June and 31 August 2020, for days when crisis measures limiting self-employed activities would continue to exist; any approval and the length of such a period therefore depends on the further development of the situation.

The explanatory memorandum to the above amendment has then specified the intention of the legislators regarding some ambiguities of interpretation:

• The participation of a self-employed person as an employee in health insurance, resulting in the impossibility of applying for the compensation bonus, is tested for the entire calendar month;
• On the contrary, the status of self-employed persons is tested with an accuracy of days; this means that the SEPs may apply for the compensation bonus only for the days when the activity was carried out and not for the days when carrying out the activity was interrupted;
• The impossibility to carry out a self-employed activity above the usual level is assessed as per a calendar month; therefore, if there has been a partial or complete limitation of carrying out the activity, even if only for one or a few days in a month, the condition is considered to be fulfilled for all days falling within that month, it is also not decisive whether this limitation was caused by a one-off fact, i.e. a decline in orders, or an ongoing fact (closure of the establishment, taking care of a child, etc.), testing of this criterion in monthly cycles is also important in terms of possible checks.

In view of the above, we therefore recommend that you file all documentation proving entitlement to the compensation bonus, as this aid is administered as a tax under the Tax Procedure Code and may therefore be subject to a tax audit in the next three years. In tax proceedings, the taxpayer must then bear not only the burden of allegation, but mainly the burden of proof.