Permanent establishment

Permanent establishments are one of the most popular forms of commerce for international businesses that wish to dip their toes in the Czech market without having to establish a full-fledged subsidiary. The taxation of income generated by permanent establishments has therefore become a favourite with Czech tax authorities.

Our standard services in the area of tax advisory for permanent establishments include:

Assessment of any facts that would give rise to a permanent establishment in the Czech Republic
Registration of a permanent establishment for corporate income tax, personal income tax (including registration for any related health insurance and social security welfare) and if required, registration for value added tax
Allocation of expenses/revenues generated by the permanent establishment when using internationally accepted standards
Calculation of the tax base for corporate income tax and the tax due
Preparation of corporate income tax returns
Legal review of employment contracts

A permanent establishment is not created by virtue of a legal act. Instead, a permanent establishment is principally created upon fulfilment of all typical features of carrying out business in the Czech Republic by a foreign entity. A certain risk exists of a permanent establishment being created even if a foreign entity operates in the Czech Republic through their active sales representatives, offices or any other fixed place of business. The situation should be monitored closely to avoid any potential tax and legal repercussions.

Contact

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Ing. Štěpán Kuba

Tax Advisor (Czechia)

Senior Associate

+420 236 163 233

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Permanent establishment

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