Which type of entities should pay company (corporation) tax

This information will help you to determine which tax entities have a corporate income tax obligation.

You are a payer of corporate income tax if you are:

• a legal entity,
• an organisational unit of the state,
• a mutual fund,
• a sub-fund of an investment fund,
• a pension company fund managed by a pension company,
• a trust fund under the Civil Code,
• a unit that is a taxpayer under the law of the state under which it was founded or established,
• a fund administered by the Financial Market Guarantee System,

As a payer of corporate income tax, you must assess whether you have unlimited or limited tax liability in the Czech Republic, i.e. whether you are a tax resident or a tax non-resident of the Czech Republic. You can find the criteria for tax residency in the Czech Income Tax Act and also in the relevant international double taxation treaty, which is binding on the Czech Republic (where the double taxation treaty is a conflict-of-laws rule for the purposes of determining tax residence, i.e. it applies if the taxpayer is considered a tax resident of both contracting states under national legislation, however for corporate income tax payers the criteria are the same in both cases), whereby:

• you are a tax resident of the Czech Republic if you have your registered office or place of management, which is the place from which the taxpayer is managed, in the Czech Republic. As a Czech tax resident, you have an obligation to tax your worldwide income in the Czech Republic, i.e. both income from sources in the Czech Republic and income from sources abroad;

• you are a tax non-resident of the Czech Republic if you do not have your registered office in the Czech Republic or if you are defined as such by an international treaty. In such a case, you have an obligation to tax income only from sources in the Czech Republic (a complete list of which can be found in Section 22 of the Income Tax Act) and the taxation of which is in the Czech Republic also enabled by the relevant international double taxation treaty, which is binding and implemented in the Czech Republic.

If you are a tax resident of a state with which the Czech Republic has not concluded a double taxation treaty, which is implemented, then you will base your assessment of your tax obligations towards the Czech Republic only on the Czech Income Tax Act.

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