There are several ways how your employee can perform work on the territory of the CR. The decisive factor is whether the work should be performed temporarily. What are your options?
Business trip
The best option in case of short-term work in the CR. Following EU rules about free movement of workers, there are no special obstacles. Tax and other obligations follow Polish tax legislation.
Hiring of the employee
The Polish employee is rented out to the Czech company (related company of the Polish company). Work on the territory of the CR is usually longer (1-2 years).
- Tax obligations – The employee becomes taxable in the CR. The Czech company is obliged to calculate and withhold taxes from his/her income.
- Social and health insurance – The employee can continue to contribute to the Polish social security and health insurance (“SSHI”) system based on so called A1 certificate. In case of assignment up to 2 years, the A1 certificate is issued automatically.
Provision of services
The Polish employee will provide services on the territory of the CR (services may be provided to the Czech related company or to unrelated customers).
- Tax obligations – If services are provided on the territory of the CR longer than six months, the Polish company may create a permanent establishment (“PE”) in the CR. Then, the Polish company should register for corporate income tax purposes and pay corporate income taxes in the CR.
If the PE is created or an employee works on the territory of the CR longer than 183 days, he/she may become taxable in the CR. The employee may be obliged to file Czech personal income tax return.
- Social and health insurance – The employee can continue to contribute to the Polish SSHI system based on the A1 certificate. In case of assignment up to 5 years, the A1 certificate request is usually approved.
Local contract with the Czech entity
Recommended in case of a permanent need of the Polish employee on the territory of the CR. Tax and other obligations follow Czech legislation.
