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State aid: Commission approves € 866 million Czech scheme to support businesses affected by coronavirus outbreak

The European Commission has approved a CZK 22.9 billion (approximately € 866 million) Czech wage subsidy scheme providing support to enterprises affected by the coronavirus outbreak. The scheme was approved under the State aid Temporary Framework.

Executive Vice-President Margrethe Vestager, in charge of competition policy, yesterday said: 

“This wage subsidy scheme, with an estimated budget of € 866 million, will further support businesses that are severely affected by the coronavirus outbreak. 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.

The Czech support measure

Czechia notified to the Commission under the Temporary Framework a wage subsidy scheme to support the economy and counteract the effects of the coronavirus outbreak. By contributing to their wage costs, this scheme supports undertakings that, due to the coronavirus outbreak, would otherwise lay off personnel.

The scheme 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 undertakings. The aid amounts to 80% 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% 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 (reduced demand, unavailability of supply).

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.

The Commission assessed the measure under EU State aid rules, and in particular Article 107(3)(b) of the Treaty on the Functioning of the European Union (TFEU), which enables the Commission to approve State aid measures implemented by Member States to remedy a serious disturbance in their economy.

The Commission found that the Czech scheme is in line with the conditions set out in the Temporary Framework. In particular, (i) the measure will finance part of the wage costs for employees who would otherwise have been laid off, (ii) the aid is proportional as it does not exceed 80% of the gross salaries, and (iii) the scheme respects the maximum duration of 12 months.

The Commission therefore concluded that this measure is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a Member State, in line with Article 107(3)(b) TFEU and the conditions set out in the Temporary Framework.

On this basis, the Commission approved the measures under EU State aid rules.

Click here for the full press release


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