Factsheet for case CZ-2020-13/378 – Updated – measures in Czechia
|Country||Czechia , applies nationwide|
|Time period||Temporary, 26 March 2020 – 31 October 2020|
|Type||Legislations or other statutory regulations|
Supporting businesses to stay afloat
– Deferral of payments or liabilities
|Author||Soňa Veverková (Research Institute for Labour and Social Affairs) and Eurofound|
|Case created||08 April 2020 (updated 27 October 2020)|
The Parliament of the Czech Republic (Parlament České republiky) has approved the Act Act 177/2020 Coll., on some measures in area of loan repayments related to COVID-19 pandemic which postpone loans and mortgages repayments for three (from 26 March 2020 to 31 July 2020) or six months (from 26 March 2020 to 31 Octobober 2020) for those who were affected by anti-coronavirus measures. The length of debt moratorium (three or six month period) depends on the borrower.
However, before this act was approved, many banks have introduced their own conditions under which the borrower can ask for the postponement of repayments. Now, the new law unifies these conditions.
Eligible are all borrowers who were negatively affected by coronavirus pandemic. Applicants have to ask for the payment postponement at the bank and declare that their situation is caused by anti-virus measures (unemployment, quarantine, decrease in business activity). Then both interest and principal payments would be interrupted.
The act applies to loans taken out before 26 March 2020. The debt moratorium does not apply to credit cards, overdrafts, revolving loans, operating leases or loans related to capital market transactions. Repayments cannot be deferred for loans where the debtor has been late in repayment for over 30 days as of 26 March 2020. The postponements also do not involve any fees and will not cause a negative entry in the bank register for the client, leading to a bad credit rating.
During the deferment period, individual borrowers will be fully relieved of debt service obligations whereas corporate borrowers will continue to pay interest and fees but enjoy a holiday on scheduled principal instalments for the duration of the deferment.
Although borrowers are able to defer their repayments and thus extend the repayment period by the time of deferral without any increase in the amount of repayments, interest continues to be charged during to the deferral period, thus resulting in the borrower paying a higher overall amount of interest.
According to [Czech National Bank (Česká národní banka, ČNB)] (http://www.cnb.cz), as of 16 October 2020, the number of:
|Applies to all workers||Applies to all businesses||Applies to all citizens|
Company / Companies
No special funding required
Social partners' role in designing the measure and form of involvement:
|Trade unions||Employers' organisations|
|Form||Consultation through tripartite or bipartite social dialogue bodies||Consultation through tripartite or bipartite social dialogue bodies|
Social partners' role in the implementation, monitoring and assessment phase:
Social partners, which are members of the tripartite body (Council of economic and social agreement, Rada hospodářské a sociální dohody, RHSD) were informed and consulted in both formal (requested by institutional settings) and informal ways. They are not involved into the management of the policy measures.
Eurofound (2020), Debt moratorium on loans and mortgages, case CZ-2020-13/378 (measures in Czechia), COVID-19 EU PolicyWatch, Dublin, http://eurofound.link/covid19eupolicywatch
Disclaimer: This information has not been subject to the full Eurofound evaluation, editorial and publication process. All information is preliminary and subject to change.