Taxation of international executives
Are there special residency considerations for short-term assignments?
Are there special payroll considerations for short-term assignments?
What income will be taxed during short-term assignments?
The scope of taxation would depend on the residence status of the assignee.
If the assignee is a Czech tax non-resident, their employment income might be tax exempt, provided that the individual spends less than 183 days in any 12-month period (or as modified by the applicable double tax treaty) the Czech Republic, the salary would not be paid or recharged to the Czech entity and there would be no permanent establishment of the foreign entity in the Czech Republic. If at least one of these conditions is not met, the non- resident is liable for tax in the Czech Republic for the Czech-source income.
Should the assignee be considered a Czech tax resident (which is not likely), in the Czech Republic, their worldwide income earned during the period of Czech tax residence would be taxable.
Are there any additional considerations that should be considered before initiating a short-term assignment in the Czech Republic?
All information contained in this publication is summarized by KPMG Česká republika, s.r.o., the Czech Republic member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. The information contained in this publication is based on the Income Taxes Act No. 586/1992 Coll. as subsequently amended, Act 280/2009 Coll.onTax Administration and on the social and health security legislation (Act No. 592/1992 Coll., No. 589/1992 Coll., No. 48/1997 Coll. and No. 54/1956 Coll.).