The treaty for the avoidance of double taxation
between Czech Republic and Canada
was signed for the first time in August 1990. Since then, the document was updated once, in May 2001, and it became applicable to legal entities and natural persons, tax residents
of the two states, starting with 28th of May 2002. The stipulations of the treaty
prescribe the taxes which are imposed by the two contracting states and the conditions in which such taxes
are applied. Our team of Czech company incorporation specialists
can provide assistance on the main stipulations applicable to Canadian businessmen
operating in Czech Republic
Taxes under the Czech – Canadian double tax agreement
who want to invest on the Czech market
can benefit from the stipulations of the treaty
under several conditions.
According to the Article 2.3, the Canadian authorities will impose to Czech tax residents the income tax (referred to as the Canadian tax), while the Czech authorities will apply the following taxes:
• the tax on income of individuals;
• the tax on income of legal persons.
Taxation of immovable property and business profits in Czech Republic
Income from immovable property (which also includes income obtained from agriculture and forestry activities) obtained by a Canadian investor in Czech Republic can be taxed in this country.
The term includes livestock and equipment from the above mentioned activities, as well as the usufruct of the immovable property. Operations which refer to shipping and aircraft are not included in this category.
The business profits
obtained by a Canadian company
with activities in Czech Republic
are taxed only in Canada
. The rule is no longer applicable if the Canadian company
is operating on the Czech market
through a permanent establishment
. If so, the company
will be taxed in Czech Republic
, but only in respect with the profits
According to Article 5, the permanent establishment
refers to any type of fixed place of business, such as an office, a branch
, a place of management or to a business activity which refers to the exploitation of natural resources.
The term also includes a construction site, but only in the situation in which the operations are carried on for an on-going period longer than twelve months.