RENT SUBSIDY

On 9 June 2020, the National Council of the Slovak Republic passed an act[1] laying down conditions for the provision of rent subsidies (hereinafter the “Act” and “Rent Subsidy”).

We are bringing you a summary of the most important information:

 

• Rent Subsidy

The purpose of the Rent Subsidy scheme is to alleviate the negative impacts on those who, due to the spread of the dangerous communicable human disease COVID-19, have been unable to use the leased premises, generate profits and pay rent.

The Rent Subsidy may only be provided to cover the rent due to the lessor[2] based on a lease contract or a similar agreement.

The conditions are:

a) the rent (or use) contractual relationship between the lessor and lessee has lasted since 1 February 2020 at the latest, and

b) the enjoyment of the subject of the lease for the agreed purpose has been – in connection with the measures taken by public authorities in the area of public health and education, by the founders of schools and school establishments, and by the Ministry of Education, Science, Research and Sports of the Slovak Republic – made impossible due to the mandatory closure of the leased premises or due to the interruption of teaching at schools and educational establishments, or it has been considerably limited due to the ban on the presence of the public within the leased premises (hereinafter “impaired enjoyment”).

 

• Subject of the lease

For the purposes of the Rent Subsidy scheme, the subject of the lease may include:

a) a room (or part thereof, or a set of rooms) intended for purposes other than dwelling, wherein the lessee sells goods or provides services to final customers, including the related ancillary and storage premises, or

b) a market stand.

 

• Amendments to contracts concluded after 12 March 2020

The amendments to lease contracts or similar rental agreements executed after 12 March 2020 are disregarded for the purposes of the Rent Subsidy scheme. Therefore, if the parties agreed to adjust the amount of rent after 12 March 2020, such a change will not affect the Rent Subsidy amount.

 

• Rent Subsidy Application

The Rent Subsidy Application is submitted by the lessor on behalf of the lessee and for the lessor’s own account. It is submitted electronically on an application form to be published by the Ministry of the Economy of the Slovak Republic (hereinafter the “Ministry”) on its website. The application does not have to be accompanied by a rent discount agreement since the dispatch of the electronic application form produces the same effects as the rent discount agreement, provided that the signatures of both the lessor and lessee have been authenticated according to the Act on e-Government[3].

If the lessor requests cooperation from the lessee, the lessee must provide it without delay.

The Act contains a separate provision on compliance with the conditions laid down in the Act on the Budgetary Rules of General Government[4]. They are divided into the conditions for which the presumption of compliance applies, and the conditions the compliance with which must be evidenced by a declaration. If the applied-for Rent Subsidy amount exceeds 100 000 EUR, the Rent Subsidy Application must identify the beneficial owner.

The Ministry will send the Rent Subsidy to the lessor based on a Notice of Subsidy Approval dispatched electronically both to the lessor and lessee.

 

• Rent Subsidy amount

The Rent Subsidy will be provided in an amount equal to the rent discount agreed between the lessor and lessee, subject to a ceiling of 50 % of the rent due for the period of impaired enjoyment. The rent amount may not include the cost of the services usually associated with the rent of premises (e.g., utility charges), nor may it include the turnover component if the rent is calculated based on turnover[5].

The lessee will thus repay to the lessor the rent unpaid for the period of impaired enjoyment, minus the rent discount granted and minus the Rent Subsidy amount paid to the lessor.

The lessee may pay the outstanding rent in a maximum of 48 equal monthly instalments, each payable as of the 15^th day of the respective calendar month[6], unless the lessor and lessee agree on a longer repayment period. During the repayment period, the lessor (or its legal successor) may not unilaterally increase the rent amount, unless the right to increase the rent amount was agreed before 1 February 2020.

 

• Provisions applicable to the rent already paid

The Act also covers the situations where the lessee has already paid the rent (or part thereof) to the lessor for the period of impaired enjoyment. In such cases, the Rent Subsidy Application may be filed on the basis of an agreement between the lessor and the lessee on a discount from rent for an equivalent period in the future.

Irrespective of whether the lessor and lessee have agreed on a discount from the rent amount, the Act entitles the lessee to pay the rent unpaid for the period of impaired enjoyment in a maximum of 48 equal monthly instalments (unless a longer repayment period has been agreed). If the lessee has already paid the rent, the lessee may avail itself of the right to repay the rent in instalments for an equivalent period in the future. However, also in this case, the lessor (or its legal successor) may not unilaterally increase the amount of rent during the repayment period, unless the right to unilaterally increase the rent amount was agreed before 1 February 2020.

The above provisions also apply, mutatis mutandis, to sub-lease/sublet arrangements.

We hope you will find this information useful. Do not hesitate to contact us should you need any assistance. 

 

Zuzana Judiaková