EC approves Czech aid to companies affected by coronavirus crisis

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The European Commission has approved the Czech government’s scheme to help companies affected by the coronavirus outbreak.The Commission on Monday validated a loan guarantee scheme of around CZK 500 billion (approximately € 18.5 billion) to support lending activities for businesses.

The scheme was approved under the state aid temporary framework adopted by the Commission on March 19, 2020.

“The measure aims at maintaining employment in Czechia and providing support for approximately 280 000 undertakings. We will continue working closely with the member states to ensure that national support measures can be put in place in a coordinated and effective way, in line with EU state aid rules,” said Margrethe Vestager, executive vice-president in charge of competition policy.

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The measure aims to give companies better access to external financing and thus enable the pursuit of their activities.

In addition, the European Commission has approved a Czech wage subsidy scheme amounting to CZK 22.9 billion (around 866 million euros).

By contributing to their wage costs, the scheme supports businesses that would otherwise have to lay off personnel due to the coronavirus outbreak.

The program is accessible to employers of all sizes and covers wages in the period between 12 March and 31 August 2020. It will support around 280 000 businesses.

The aid amounts to 80 percent of the wage costs (including social security and health insurance contributions), capped at CZK 39 000 (approximately € 1,475) per month, for employees who cannot work because of a quarantine or a closure/restriction ordered by the authorities.

Support is set at 60 percent of the wage cost, capped at CZK 29 000 (approximately € 1,100) per month, when the employer's business is affected in a different way by the coronavirus outbreak, such as reduced demand.

“The scheme aims at alleviating the employers' costs and avoiding lay-offs and at helping to ensure that employees can remain in continuous employment during the period for which the aid is granted,” states the European Commission press release.