State Assistance in Paying Rent (2nd round)

On 1 December 2020 Parliament approved an amendment to Act No. 71/2013 Coll. on granting subsidies within the competence of the Ministry of Economy of the Slovak Republic, as amended, which renews the state financial assistance scheme in paying rent for rented premises. The first round of state financial assistance was terminated on 30 November 2020.

Lessors may apply for subsidies on behalf of lessees (recipients of financial assistance) again and submit their applications for assistance. Similarly, as it was in the first round, the lessor does not have to be an entrepreneur, it may be a natural person or a legal entity, including non-entrepreneurs.

The recipients of assistance are lessees / entrepreneurs that due to the measures adopted by public health authorities, the Slovak government, school administrators or the Ministry of Education in order to prevent the consequences of spreading the dangerous contagious human disease COVID-19:

  • were unable to use rented premises for the agreed purpose because their business operations had to be closed,
  • were unable to use rented premises for the agreed purpose due to interruption of teaching in schools,
  • whose use of the rented premises was substantially restricted by a ban on public entry into the indoor premises of an establishment or curfew imposed by regulation of the Slovak government (so-called “difficulty of use”).

The recipient- a lessee must meet also other legal requirements to be granted the subsidy, among others the recipient must not be subject to legally valid prohibition of receiving subsidies or subvention or to legally valid prohibition of receiving aid and support from European Union funds. The recipients do not have to prove to have a clean criminal record. If the requested amount of the subsidy exceeds 100,000 euros, it is mandatory to identify the ultimate beneficial owner of the recipient in the application.

It is also required that a lessee had the right to use the subject matter of the lease as of 1 August 2020 at the latest. A lease agreement between a lessor and a lessee can be governed by Slovak law or other than Slovak law. In case there were any amendments to the lease agreement made after 31 August 2020 they are not taken into consideration for the purpose of granting the subsidy. This also means that if any adjustment to the amount of rent was agreed after that date, this change should not influence the amount of the subsidy.

The subject matter of the lease is defined identically as in the 1st round. Premises designed for human habitation are not eligible for the subsidy. The subsidy is provided for the business premises where the lessee sells goods or provides services to end consumers, including related service spaces, storage rooms, car parks.

The granting of the subsidy is conditional upon the conclusion of an agreement between the lessor and the lessee on a reduction of rent. An application for granting the subsidy with the qualified electronic signatures of both the lessor and the lessee is considered such an agreement, which is why it is not necessary to enter into a separate agreement for the purpose of obtaining assistance. If a lessee has already paid rent fully or partially for the period of difficulty of use of the subject matter of the lease, it is possible to apply for the subsidy/discount for an equivalent period in the future.

Applications for the subsidy are only received electronically via the public administration electronic portal after it was electronically signed by the lessor and the lessee. The Ministry will inform on the approval of the subsidy also only electronically by sending the notification on subsidy approval to the electronic mailboxes of the lessor and the lessee.

The subsidy will be paid to the account of the lessor.

The amount of the subsidy is determined by the amount of the lessor’s discount from the rent, meaning that the state will provide the subsidy in the same amount. The lessee is required to pay the remaining rent, i.e. the amount that is neither covered by the discount of the lessor nor by the subsidy provided by the Ministry. At the same time, it applies that the amount of the subsidy may not exceed the amount corresponding to 50% of rent for the period of difficulty of use of the subject matter of the lease. If the lessor is an administrator of state assets, rent is “automatically” reduced by law to one-half, i.e. the contribution amounts to 50% of the rent. It is not possible to include payments for services and supplies associated with the lease (e.g. payments for utilities) in the amount of rent for this purpose, the lessee is still required to make payments for utilities associated with the lease. If these payments form part of the rent and their amount cannot be separated from the amount of the rent, it applies that the amount of payment for services and supplies associated with the lease is 5% of the amount of the rent by which the rent will be reduced for the purpose of obtaining the subsidy. If the amount of rent depends on turnover, the turnover item cannot be included in the calculation of the amount of the rent for the purpose of the subsidy.

With regard to payments of the remaining rent for the period of difficulty, the lessee may make those payments in instalments, namely up to a maximum of 48 equal monthly instalments (i.e. payable during the following 4 years). Nevertheless, the amendment approved in December 2020 renewing the 2nd round of financial assistance provides for a legal fiction requiring that the remaining due rent starts to be paid as of 1 April 2021 at the latest, even if the emergency situation would continue. All lessees have a right to pay the remaining rent for the period of difficulty of use in instalments, even if they did not agree with the lessor on any discount from their rent.