Estonian Company Run from Czechia: Tax Residence

Many Czech entrepreneurs form or buy an Estonian private limited company (OÜ), often as e-residents, and run it from Czechia. That works, but Czech income tax does not look only at where a company is registered: a company whose seat or place of management is in Czechia is a Czech tax resident. Czechia's controlled foreign company rule, on the other hand, is written for Czech companies that control a foreign one. The tax treaty between Estonia and Czechia leaves a company resident in both countries to the two tax administrations. This guide sets out these rules with the official texts, and what we do on the Estonian side.

The guide is general information, not tax advice. How your company and you are taxed depends on the facts of your case; ask a Czech tax adviser (daňový poradce) before you form or buy the company. We read the Income Taxes Act (zákon č. 586/1992 Sb., o daních z příjmů) in its current version in force from 1 August 2026 in the official Collection of Laws e-Sbírka, and the treaty in its English text — the authentic text — in Riigi Teataja, on 21 October 2026; the English wording of the Czech act below is our translation.

In Estonia: an Estonian company is Estonian

A company established under Estonian law is resident in Estonia for tax purposes (Income Tax Act § 6). Its profit is taxed when it is distributed, not while it stays in the company — the guide how Estonia taxes company profit explains the rule. The company keeps its Estonian duties wherever its owners live: accounts, an annual report to the commercial register and, if its address is abroad, a contact person in Estonia.

In Czechia: seat or place of management

Czech tax residents. Taxpayers of the corporate income tax are Czech tax residents if they have their seat or their place of management in Czechia — the address of the place from which the taxpayer is managed (Income Taxes Act, section 17(3)).
Worldwide income. A Czech tax resident's tax liability covers income from sources in Czechia and income from sources abroad (section 17(3)).
Non-residents. Taxpayers without their seat in Czechia, or so classified by international treaties, are tax non-residents, liable only for income from Czech sources (section 17(4)).

In Czechia: the controlled foreign company rule

For a Czech company as owner. The controlling company is a corporate income taxpayer resident in Czechia that, alone or with associated persons, holds directly or indirectly more than 50 percent of the share capital or voting rights of the foreign company, or is entitled to more than 50 percent of its profit (Income Taxes Act, section 38fa(3) and (4)). An individual owner is not named.
When it applies. For a foreign company in a state that is not on the EU list of non-cooperative jurisdictions, the rule applies when the foreign company carries on no substantive economic activity and its corporate tax abroad is lower than half of the tax it would have paid as a Czech tax resident (section 38fa(1)); the income it reaches includes interest-type income, licence fees, profit shares and income from insurance, banking and other financial activities (section 38fa(6)).

An Estonian company pays corporate income tax only when it distributes profit, so in a year in which it keeps its profit its tax can be below half of the Czech tax. Whether the rule reaches you depends on who owns the Estonian company — you yourself or a Czech company of yours — and on what it does in Estonia; your Czech tax adviser answers that with your figures.

What the Estonia–Czechia tax treaty says

Resident in both countries. If a person other than an individual is resident in both states, the competent authorities endeavour to settle the question by mutual agreement and determine how the convention applies to it (convention signed in Tallinn on 24 October 1994, article 4(3); RT II 1995, 1, 1).
Permanent establishment. A permanent establishment is a fixed place of business through which the business of an enterprise is wholly or partly carried on; it includes especially a place of management, a branch and an office (article 5(1) and (2)). The profits attributable to it may be taxed in the state where it is (article 7(1)).
Directors' fees. Fees a Czech resident receives as a member of the board of directors or a similar organ of an Estonian company may be taxed in Estonia (article 16) — see board member fee or dividend from abroad.
Dividends. Dividends paid by an Estonian company to a Czech resident may be taxed in Czechia; if Estonia also taxes them at source, the treaty limits that tax to 5 percent of the gross amount for a company holding directly at least 25 percent of the capital, and 15 percent in all other cases (article 10(1) and (2)).

So the treaty does not settle a double residence by itself: a company whose place of management is in Czechia may need an agreement between the two tax administrations. The multilateral convention on tax treaty measures (MLI) can change the rules of tax treaties; how it applies to your company is a question for your Czech tax adviser — we do not give that ruling.

What to decide before you form or buy the company

From where the company is really managed. The address from which the company is managed is the fact the Czech rule looks at.
Who owns it. The controlled foreign company rule speaks of a Czech company as owner; owning the OÜ through a Czech company changes the analysis.
Where the work is done. An office or other fixed place of business in Czechia can be a permanent establishment.

What we do on the Estonian side

online formation for an e-resident — €950 Registered address and contact person service for one year are included., or formation by power of attorney — €1,250;
a ready-made company bought remotely — €1,200 Registered address and contact person service for one year are included.;
accounting — from €150 / month and the annual report — from €450;
the registered address and contact person after the first 12 months — €350 / year.

Our accounting covers the Estonian company's Estonian obligations. Czech tax returns and Czech tax advice are not included. Owners in other countries: Estonian company run from abroad compares the rules side by side.

Prices exclude VAT. All communication takes place by email.

Ready to start? A new Estonian company — online for e-residents or by power of attorney; Czech tax advice is not included. Order.

Official sources

The laws this article names, by the name of their official text, as read on 9 October 2026. For the Estonian acts we read the English translation in Riigi Teataja; the legally binding text is the Estonian one.

Income Tax Act — Riigi Teataja, English translation

Sources are named in the text, without links. To see which of our services your company needs, open the Business Navigator.

Frequently asked questions

Is my Estonian company taxed in Czechia if I run it from Czechia?

It can be. Taxpayers are Czech tax residents if their seat or place of management — the address from which they are managed — is in Czechia, and they are taxed on income from Czech and foreign sources (Income Taxes Act, section 17(3)). In Estonia the company stays resident because it was established under Estonian law (Income Tax Act § 6). Under the Estonia–Czechia tax treaty the competent authorities endeavour to settle such a double residence by mutual agreement (article 4(3)). Czechia's controlled foreign company rule names a Czech company as the controlling owner (section 38fa). Ask a Czech tax adviser before you form or buy the company; we handle the Estonian side.

Estonian company run from Czechia: where it is taxed