New Merciful Summer to Benefit Municipalities in the Czech Republic

In a recent development, lawmakers in the Czech Republic have approved two laws that allow debtors to eliminate their debts under favorable conditions. This initiative applies to debts owed to the Czech Social Security Administration, Financial Administration, and Customs Administration. Municipalities can also participate in this repeat of the so-called “merciful summer.”

Under these laws, debtors must only repay the principal debt, while the interest and penalties will be forgiven. However, this relief applies to administrative executions carried out by the respective authorities rather than through the involvement of bailiffs.

Marek Výborný, a member of parliament for municipalities, has encouraged all municipalities with a significant number of debtors to join this initiative. This includes outstanding debts related to dog fees, waste collection, and similar charges.

To benefit from this opportunity, municipal councils must approve the relevant decree before the deadline of September 30. By doing so, debtors can take advantage of favorable repayment terms for social security contributions and contributions to the state employment policy incurred before September 30 of the previous year. Once the debts are settled, individuals and companies will waive their penalties.

It’s worth noting that this program encompasses over 700,000 individuals and more than 260,000 legal entities, as stated by Marian Jurečka, the Minister of Labor and Social Affairs. Debtors can pay the necessary amount in installments, providing further flexibility in debt repayment.

In addition to social security, the merciful summer initiative extends to the customs and financial administration, allowing for the forgiveness of interest and penalties on taxes and duties accrued until the end of September of the previous year. However, debtors will still be required to pay the principal debt, and installment options will be available.

This initiative aims to alleviate the burden of long-standing debts, providing relief to debtors and streamlining the enforcement process for the authorities. By implementing this merciful summer program, the government hopes to provide a tax amnesty opportunity to tens of thousands of debtors, benefiting both the individuals and the state.

While these laws still need to be approved by the Senate and signed by the president, the positive impact of this initiative on debtors and creditors is expected to be significant. The Ministry of Health is also working on a similar regulation to address debts in public health insurance, which is anticipated to take effect in January, primarily benefiting individuals rather than companies.