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Czech Republic: Provisions similar to income tax treaty with Taiwan

Czech Republic: Provisions similar tax treaty, Taiwan

The government of the Czech Republic is taking steps for legislation that would correspond to an income tax treaty—such legislation being necessary because the Czech Republic does not recognize Taiwan as an independent state and thus cannot enter into an income tax treaty with Taiwan.


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Taiwan would be expected to implement similar measures.

The contents of the Czech legislation are based on the OECD and UN model conventions. There are measures that would allow for the right to collect income tax between the two jurisdictions when income originates in the territory of one state but is generated by a tax resident of the other state. Other measures in the legislation concern:

  • Permanent establishment: The time test for a permanent establishment would be more than 12 months for a construction project in the territory of one state and nine (9) months in any 12-month period for services provided in the territory of one state.
  • Dividends and interest: Paid-out dividends and interest could be taxed in the source state up to a maximum of 10%.
  • Royalties: A maximum 5% rate would apply to royalties at the source state relating to the right to use industrial, business or scientific equipment, and a maximum 10% rate would apply to royalties relating to all other instances. 
  • Profits from the alienation of assets: Profits from the alienation of shares and other interests could be taxed in the source state if more than 50% of the asset value is generated, directly or indirectly, from the real property located in the territory of this state.
  • Elimination of double taxation: The Czech Republic would generally apply the simple credit method in respect of Taiwanese tax. In addition, it would also be possible to apply the exclusion method in connection with income from employment under the Czech income tax law.


Read a November 2018 report prepared by the KPMG member firm in the Czech Republic

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