A regional court of České Budejovice held that if an agent’s activities are a separate and essential part of a non-resident taxpayer’s business activity, these give rise to a permanent establishment of the taxpayer in the Czech Republic.
The court held the activities of the agent do not necessarily have to be carried out under a power of attorney, and that it is irrelevant whether the agent conducts the activity for multiple entities.
The taxpayer (a German company) claimed that:
The taxpayer thus asserted that it had no permanent establishment in the Czech Republic under either the Czech income tax law or the income tax between the Czech Republic and Germany.
The tax authority, however, contended that there was a permanent establishment because the agent’s activities formed a separate essential part of the taxpayer’s business and that it was irrelevant that the Czech agent did not have a power of attorney.
The regional court agreed with the tax authority and upheld a finding of a permanent establishment.
Read a May 2018 report prepared by the KPMG member firm in the Czech Republic
© 2020 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.