COVID-19, accounting for state aid

In connection with the pandemic caused by the spread of the dangerous contagious human disease COVID-19, several laws have been adopted to help overcome its negative consequences. They were preceded by the declaration of an emergency situation based on Resolution of the Government of the Slovak Republic No. 111 of 11 March 2020 (the emergency situation was declared on 12 March 2020) and the declaration of a state of distress based on Resolution of the Government of the Slovak Republic No. 114 of 15 March 2020 owing to the COVID-19 disease caused by coronavirus SARSCoV-2 in the territory of the Slovak Republic.

Many of the existing laws have been amended, for example:

  • the Labor Code,
  • Act No. 461/2003 Coll. on Social Insurance,
  • Act No. 5/2004 Coll. on Employment Services,
  • Act No. 448/2008 Coll. on Social Services,
  • Act No. 124/2006 Coll. on Occupational Safety and Health Protection,
  • Act No. 580/2004 Coll. on Health Insurance,
  • and several other laws.

Some new laws have also been adopted, for example, new Act No. 62/2020 Coll. of 25 March 2020 on certain extraordinary measures in relation to the spread of the dangerous contagious human disease COVID-19 and in the judiciary, which was subsequently amended by Act No. 92 /2020 of 22 April 2020. It aimed to create a legal framework for providing temporary protection to enterprises affected by the negative impacts of the spread of the COVID-19 disease. Temporary protection applies to cases where enterprises need such legislation primarily due to pressure exerted by their creditors.

Accounting legislation – refers to Act No. 431/2002 Coll. on Accounting (hereinafter referred to as the "Act on Accounting"), the chart of accounts and the accounting procedures for entrepreneurs (hereinafter referred to as the "Accounting Procedures") and the Decrees of the Finance Ministry of the Slovak Republic on financial statements micro-, small and large accounting entities and public interest entities - has not changed.

The following was apparently most important for the financial area:

  • the adoption of new Act No. 67/2020 Coll. of 2 April 2020 on certain extraordinary measures in the financial area in relation to the spread of the dangerous contagious human disease COVID-19 (also dubbed "Lex Corona", hereinafter referred to as
    the "Act on Extraordinary Measures in the Financial Area"); this Act has been amended twice in the meantime, namely by Act No. 75/2020 of 6 April 2020 and Act No. 96/2020 of 22 April 2020),
  • an amendment of 25 March 2020 to the existing Act No. 5/2004 Coll. on Employment Services, to which Article 54 on projects to support job retention has been added.

These laws regulate various aspects related to the pandemic, such as home office, the taking of leave, the organization of working time, protection of employees and prohibition of dismissal, extension of deadlines for filing tax returns and other documents, postponement of deadlines for payment of health and social insurance contributions and advance payments for tax, suspension of tax inspections, financial compensation to retain jobs, financial aid for maintaining business operations, deferral of loan installments, an increase in the spending limit for contactless card payments, facilitation of the per rollam voting for collective bodies of private legal entities, limitation to the requirement to hold court hearings and participation of the public in such hearings, temporary ban on exercising the right of lien and auction, restriction to the running of limitation and prescription periods in privatelaw based relations, and so forth.

The purpose of these News is to highlight the measures which, from the viewpoint of companies maintaining accounts according to the Accounting Procedures for Entrepreneurs, constitute state aid that should be recognized as subsidies from the state budget or the European Union's funds according to Article 52a of the Accounting Procedures. Therefore, most of the aforementioned legislative amendments are not discussed in these News, such as the extension of time limits, postponement of deadlines, deferral of installments etc.

The issues to be discussed will be divided as follows:

  • the Act on Extraordinary Measures in the Financial Area ("Lex Corona"),
  • the project to support job retention,
  • accounting for state aid as subsidies from the state budget or the European Union's funds.

As the situation is changing rapidly, with legislation being amended virtually on a daily basis, we recommend that you carefully monitor these changes. What applies today may not apply tomorrow.

Ivana Mazániková

Partner, Audit

KPMG na Slovensku