Czech Republic

Tax residence

A company is resident in the Czech Republic for CIT purposes if it has:

• its registered seat or
• its place of management

located in the Czech Republic.

Permanent establishment (PE)

Under domestic law, the creation of a PE of a foreign tax resident in the Czech Republic is triggered by a fixed place available for carrying out business activities, long-term provision of services (for more than six months in any 12 consecutive months), or presence of a dependent agent, unless an applicable double taxation treaty (DTT) stipulates otherwise. For interpretation purposes, the Organisation for Economic Co-operation and Development (OECD) Model Tax Commentary is followed. The Czech Republic tends to have a 'service PE' clause (i.e. clause stipulating that a PE is created by provision of services in the territory of the Czech Republic even without the existence of a fixed place of business) included in its DTTs.

It is possible to request the tax authority for a legally binding ruling confirming a chosen method of determination of the CIT base of the PE.