Covid Amendment to the Act on Investment Incentives

SUMMARY. An Amendment to Act No. 72/200 Coll. on Investment Incentives (the “Act”) opens the possibility for recipients of investment incentives to request an extension of the deadline for fulfilling the general grant conditions, subject to proper submission of a request. The extension is for up to two years, i.e. the period for fulfilment can be extended from the original three years to a total of five years from the time the grant decision was first issued.

Under the recently passed Act. No. 450/2020 Sb., effective as of 3 November 2020 (the “Amendment”), recipients of investment incentives wishing to extend this deadline must submit a duly substantiated request to the Ministry of Industry and Trade (the “Ministry”) at least 30 days before the lapse of the statutory three-year term for fulfilment of the general conditions (which commenced on upon issuance of the grant decision). The recipient is obliged to substantiate that, for reasons related to the Covid-19 pandemic, it was not possible to fulfil the general conditions by the deadline. The Ministry will then evaluate the requests on a case-by-case basis.

We would like to emphasize that for many recipients of investment incentives, this term elapses around the end of the year (depending on when the grant decision was issued); therefore, time is of the essence. It is critical to react promptly should you want to take advantage of the Amendment. PRK Partners is ready to draft the request – advising you on an appropriate substantiation for extending the deadline – and to liaise with the relevant authorities.

When considering that failure to fulfil the general conditions for the investment incentives legally invalidates the grant decision, meaning the recipient must repay any state aid already provided, the Amendment presents a welcomed option for affected entities. As we all hope the Covid-19 crisis is temporary, this measure will, in our opinion, provide for a more rapid post-crisis recovery of affected business sectors.

The Amendment reacts promptly to the needs of recipients of the investment incentives negatively affected by the global SARS-CoV-2 (Covid-19) pandemic and applies to all recipients of investment incentives that have been issued a grant decision, even before the effective date of the Amendment, and that are currently working on fulfilment of the general conditions.

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