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CORONAVIRUS TASKFORCE UP-DATE - Dotation for Rent Compensation – 11 June 2020, 10 am

Information stated below is of general nature and does not necessarily consider specific conditions of your case. For legal assistance in your specific case, please, do not hesitate to contact us.

Please note that the content below is current as at 11 June 2020, 10 am. The conditions for provision of dotation for the rent compensation may change. In the case of any changes, this content will be amended.

The Parliament adopted the amendment of the Act no. 71/2013 Coll. on provision of dotation within the scope of Ministry of Economy of the Slovak Republic as amended, on basis of which, all operations which were obligatory closed due to coronavirus pandemic or their operation was restricted ,can apply for state aid in the form of rent compensation.

A. To whom and for what period shall the dotation for rent compensation be provided?

Dotation for rent compensation is provided in order to pay rent for the subject of the lease, the use of which was based on the measures of state authorities or school founders:

prevented by the closing,
prevented by the interruption of teaching in schools and school facilities,
substantially limited by the prohibition of public presence,

In other words, if the use of the subject of the lease was made more difficult due to one of these reasons.

The time during which the operations have had a Restricted Use is generally referred to by law as the Restricted Use Period, and may be different for different types of operations. It will correspond to the period of validity of the restrictive measures.

B. What is the subject of the lease?

The subject of the lease may be non-residential premises that the tenant uses for sale of goods or provision of services to final consumers, or a market place. Non-residential premises also include service spaces (facilities, warehouses, etc.). Hence, office premises are excluded from subsidies. The subsidies apply to leases that incurred no later than 1 February 2020.

C. Discount amount = amount of compensation

Dotation for rent compensation is provided in the same amount as the landlord waives part of the rent and agrees with the tenant on a discount. The highest possible compensation is 50% when a 50% discount on rent is provided. This case is preferred by law as it completely exempts the tenant from paying rent for the Restricted Use Period. The agreement under which the landlord waives a part of the rent for the Restricted Use Period is the main precondition for the provision of the compensation.

D. What happens in the case the landlord provides a discount lower than 50%?

In the event that the landlord provides the tenant with a discount of less than 50%, or does not provide any discount, the tenant may pay the remaining rent (after deduction of the discount and the compensation) for the Restricted Use Period to the landlord in 48 equal monthly instalments. If the tenant has already paid the rent, it may pay the rent for another period of the same length (such as the Restricted Use Period) again in 48 equal instalments.

In addition, during payment in above instalments, the landlord (or his legal successor) is not entitled to unilaterally increase the rent, if such increase has not been agreed before 1 February 2020. Indexations agreed before this date are not affected by such ban on unilateral rent increase.

E. Who shall submit the application?

The application for the dotation for the rent compensation shall be submitted by the landlord on behalf of the tenant and on the account of the former one. It does not matter to the landlord whether it is a natural person or legal entity, entrepreneur or non-entrepreneur. However, by the nature of the matter, the tenant must be an entrepreneur (natural person or legal entity) and provide the landlord with the necessary cooperation.

The application is submitted electronically via the form. If this form is signed jointly by guaranteed electronic signature of the landlord and the tenant, it replaces the agreement on discount and forgiveness of rent. If the form is signed only by the landlord, the agreement must be attached to the form. Both parties must also indicate the persons who are authorized to access their electronic mailboxes.

The compensation shall be remitted directly to the landlord. The tenant's account is not even mentioned in the application.

F. Amendments without impact on the compensation

The proposal also envisages cases when the landlord and the tenant have already agreed to reduce the rent or waive it. Any rent adjustments or other changes made by the parties after 12 March 2020 shall not affect the compensation and the amount of rent prior to such adjustment shall be taken into account.

G. Rent already paid

If the tenant has already paid the rent for the Restricted Use Period (or part thereof), the compensation may be provided for an equivalent period in the future, again in the amount of the provided discount.

H. Fees, VAT and turnover rent

The compensation is provided only for rent, it does not apply to common operating costs, own operating costs, turnover rent, or VAT, if the tenant is a VAT payer. In the event that the rent and the costs are paid together without distinguishing between individual items, the law assumes that the Fees together represent 5% of the rent.

I. Additional Terms of Application

Satisfaction of part of other legal conditions (settlement of financial relations with the state budget, tenant without execution, without violation of the prohibition of illegal employment, without arrears on social and health insurance) is automatically presumed without further, while others (bankruptcy, no ban on receiving grants and subsidies from public budgets and EU funds) are to be evidenced by an affidavit. A specific requirement is to evidence the ultimate beneficial owner of the tenant if the amount of the compensation exceeds EUR 100,000.

J. Rent already paid

K. Sublease

For the sublease, all the above conditions and criteria apply equally.

L. Limitation on termination of lease

The limitation of termination applies only to the non-payment of rent for the Restricted Use Period, as this rent will be payable only during the next 48 months (unless the tenant and the landlord agree on another maturity). Other grounds for termination are not affected by the new law, this also applies to any withdrawal. Termination due to non-payment of the Fees or rent for another period is possible. However, the previously adopted restriction on termination of rent and the Fees due from 1 April 2020 to 30 June 2020 is still in force.