LGP Slovakia / News / Legal aspects of the coronavirus – second wave / Suspension of production or operation

Suspension of production or operation

Suspension of production or operation

Dated: 22.12.2020

Subsidies for renting real estate and market places.

2nd wave

The Government of the Slovak Republic, through the Ministry of Economy of the Slovak Republic, will provide subsidies for the lease of real estate and market places. The subsidy will be provided to such tenants who have been prevented from using the leased object as a result of extraordinary measures taken in connection with the spread of COVID-19 (by concluding the leased object, interrupting teaching in schools and school facilities) or substantially restricted by banning the public from being present or by restricting freedom of movement and residence on grounds of curfew (so-called "difficult use"). 

The landlord shall lodge an application for a subsidy on behalf of the tenant for the period of "difficult use" 

Period of difficult lease during 2nd wave 

The determining factors for determination the period of difficult use during the 2nd wave of a pandemic are the measures adopted by: 

  • government authorities in the field of public health care (measures of the Public Health Authority of the Slovak Republic, the decree of the Public Health Authority of the Slovak Republic); 
  • settlors of schools, school facilities, or the Ministry of Education, Science, Research and Sports of the Slovak Republic (decision of the Minister of Education, decision of the settlor of schools and others); 
  • Government of the Slovak Republic (resolution of the Government of the Slovak Republic and others).

The period of difficult use refers to the type of main activity in the subject of the lease, the location of the operation, the size of the operating area intended for customers, the district in which the tenant's operation is located. 

In practice, this means that the subsidy is calculated as a percentage of the rent amount that falls on the days of difficult use. The percentage of the rental amount is the same as the percentage discount from the landlord.

The amount of the subsidy can reach up to 50% of the rent. However, its amount directly depends on the discount provided to the tenant by the landlord. If the landlord provides the tenant with a 50% discount, the remaining 50% will be paid by the state and the tenant will not pay anything. If the landlord provides only a 20% discount, the state will contribute the same share and the remaining 60% can be paid by the tenant in installments spread over 48 months. If the landlord does not discount the tenant, the tenant can pay the rent spread over 48 months.

The motivation for landlords to provide a discount is the fact that the same amount will be paid to them sooner through a subsidy. Otherwise, they will have to accept the payment of rent spread over 48 months, during which time they will not be able to terminate the lease or increase the rent. Therefore, if the landlord provides a maximum 50% discount, he will receive the other 50% from the state, but will not be bound by the protection of the lease for another 48 months.

If the tenants have already paid the rent in the meantime, they will be able to draw the subsidy for exactly the same period as they paid the rent. For example, if tenants have paid rent for 6 weeks, they will be able to claim the subsidy for rent for 6 weeks after the law enters into force. The first installment of the repayment schedule shall take place on the 15th day of the relevant calendar month, starting on the 15th day of the calendar month following the calendar month in which the emergency situation ended (unless they agree on a different due date).

Rent-related payments (for energy supply and other services) will not be included in the rent subsidy. If the amount of rent depends on turnover, the turnover component cannot be included either. If the rent also includes payments for services related to the rent, the rental subsidy will be reduced by 5% of the amount of the rent. Value added tax payers cannot consider VAT as an eligible expenditure if they can claim a deduction of VAT. It will be possible to provide the subsidy not only for the interior of buildings, but also for related storage and service areas (parking places), as well as for market places.

Eligible applicants are lessors - natural and legal persons, entrepreneurs and non-entrepreneurs. The landlord must have an active electronic mailbox via slovensko.sk.

The lease agreement for the subject of the lease must be effective no later than 1th August 2020. Changes to the lease that occurred after 31 August 2020 are not taken into account.

Procedure for submitting a grant application

It shall be possible to apply for the subsidy only electronically, using an application created for that, which is available on the website of the Ministry of Economy. The application on the form will be submitted by the landlord on behalf of the tenant, but on his own account. Such a form containing the electronic signatures of the landlord and the tenant has the same effects as the agreement between the landlord and the tenant to provide a discount on rent and to waive the performance of the rent subsidy to the tenant in favor of the landlord. The landlord fills in the application and sends it to the tenant's electronic mailbox in slovensko.sk. After the form is signed by the tenant, the application goes to the system of the Ministry of Economy. The Lessee is obliged to provide the Lessor with the necessary cooperation for drawing the subsidy. 

If the required amount of the rental subsidy exceeds the value of EUR 100,000, the application must contain an indication of the ultimate beneficial owner.

Application for rental subsidies can be submitted from 16.12.2020 to 31.03.2021.

The conditions for the provision of the subsidy also apply to the sublease.

Author:

Mgr. Pavel Legát, advokát