Posting of workers
A typical example of cross-border provision of services are e.g. construction activities, software provision or consultancy; reversely, services tied to one place (restaurant, hotel, hairdresser´s) are inadmissible.
The posted workers are subject to a certain part of Czech labour law, which regulates all relevant issues such as working hours, minimum wages, the security of work or the extent of leave according to article 3 of the Posting of Workers Directive 96/71/EC. The workers nevertheless remain contracted to the posting employer.
The posted workers and their employer need to comply with the specific rules concerning the posting of workers, in particular the rules pertaining to the notification of posting. Detailed information is available on the single official national website for posted workers: http://www.suip.cz/vysilani-pracovniku/
Moreover, if the service that is to be provided is regulated in the host country, it is necessary to notify the qualification of the company to the relevant authority of the host state. To find out which services/professions are regulated in the Czech Republic, please visit the Database of regulated professions and professional activities. More information about this prior notification. The respective form.
Registration, Taxation and Social and Health Insurance
Posted workers staying in the host country more than 30 days have to register at the local police. For details see: https://www.mvcr.cz/mvcren/article/entering-the-czech-republic.aspx
The posted workers usually do not pay social and health insurance in the host Member State because if posting lasts up to a 24 month period they remain affiliated to the system of their country of origin. To prove this fact they should always have the A1 form and the European Health Insurance Card issued in their country of origin with them.
Concerning income taxes, it is necessary to act in line with the respective treaty avoiding double taxation and a respective income tax acts. In case of collision of the particular treaty avoiding double taxation and the particular income tax act, the treaty has priority.
If a permanent establishment arises for the posting company in the Czech Republic (article 5 of the respective treaty), the posting company has the obligation to register for income tax in the Czech Republic and to pay the relevant taxes there. Permanent establishment can arise, for instance, in case of a construction project running longer than 12 moths or in case of cross-border provision of services longer than 6 months during 12 consecutive months.
The posted employees are obliged to pay their income tax only in the Member State of origin if all of the following conditions are met:
1. The posting period is shorter than 183 days in 12 consecutive months (or in the calendar year).
2. The costs are not borne by the permanent establishment of the posting company.
3. The remuneration is paid by the employer who is not a resident of the Czech Republic.
If the income tax obligations arise, they start from the beginning of the activities in the Czech Republic.
The registration should be done in the tax office, nevertheless the Points of Single Contact (list and contact details) can assist foreign companies with the registration or with other administrative procedures connected to the posting of workers to the Czech Republic.