The General Financial Directorate (hereinafter the "GFŘ") has issued an opinion on whether a foreign company may create a permanent establishment in the Czech Republic in connection with its employees working from home (home office). According to the GFŘ, simply employing workers in the Czech Republic or registering a foreign employer for payroll and social security purposes does not automatically trigger a corporate income tax registration obligation.
When assessing the situation, specific circumstances must be taken into account—in particular, the nature of the activities performed by employees and the scope of their authority. A permanent establishment may arise, for example, if employees negotiate contract terms or participate in the management of a part of the enterprise from the territory of the Czech Republic. Conversely, for administrative and support activities, its creation is generally not a risk.
The GFŘ thus confirms that the mere performance of work from home is not automatically a ground for establishing a permanent establishment. The decisive factors are primarily the specific activities of the employees and their position within the foreign company. Therefore, it is necessary to assess each case individually to determine whether other criteria are simultaneously met.
The full text of the GFŘ's response can be found via the link here.
If your company is currently dealing with this issue, please do not hesitate to contact us—we will be happy to discuss the situation with you and assess whether a permanent establishment arises in your case.
This text was translated by AI.
