The 2018 spring issue of WTS CEE Tax Bridge has been published. It summarizes the latest developments in permanent establishments in 10 countries of the Central and Eastern Europe Region.
We are happy to introduce our first Tax Bridge this year. In order to place stronger emphasis on regional tax problems in Central and Eastern Europe and to rise to the challenges of our era, we have renewed and refreshed not only the content but also the format of our publication.
From 2018 our Tax Bridge doubles up as our Central and Eastern European Newsletter. We still address a specific issue every quarter, just like before, but now the selected issue will also be examined from the viewpoint of different countries in the CEE region. We are proud to say that we were able to collect expertise from 10 different countries for our first regional Tax Bridge, focusing on the latest developments in permanent establishments in our region. This means you can read about the regulations in Austria, Belarus, the Czech Republic, Hungary, Poland, Russia, Serbia, Slovakia, Slovenia and in Ukraine.
Permanent establishments will become a very hot topic
BEPS Action 7 (Preventing the Artificial Avoidance of Establishment Status) on permanent establishments (PE) and the profit attributable to permanent establishments will sooner or later become a very hot topic in all CEE countries too, as it is now in Poland for example (where not only the corporate income tax but also the VAT aspects can be challenging). Keeping the tax base in the countries where the actual work or service is performed will be more and more important. At this stage we see that CEE tax authorities do not follow a uniform approach with respect to permanent establishments. Some countries apply only the minimum standards in the Multilateral Instrument (MLI), while others focus more closely on the topic and have strict rules to conclude that permanent establishments actually exist, and thus to tax the profit created in the given country.
If you are contemplating cross-border activities, it is good to know at least the basic tax rules in the country where the service or work will be performed. Nevertheless, we recommend contacting our colleagues directly before starting activities in these countries to avoid tax exposure and excess tax administration related to retrospective tax compliance for permanent establishments.
You can download WTS CEE Tax Bridge #1/2018 in PDF format here:
WTS CEE Tax Bridge #1/2018 (PDF)
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