The situation
A client’s new employees in a country where it has no entity
A Vienna payroll bureau runs payroll for a Graz medical-device maker. The client has hired two sales engineers who live in Brno and one in Bratislava, all working from home from January. It has no company in either country. The client asks the bureau what it must register, where, and whether the three can stay on the Austrian payroll.
The questions cut across three systems: income tax withholding, social security and health insurance, each with its own authority. A foreign employer without a local entity is treated differently in each, and the answers decide whether the bureau can run the payroll or needs a local partner.
What the research has to settle
The rules behind the answer
- Social security follows the place of work
- Under Regulation 883/2004, an employee who works only in the Czech Republic is subject to Czech legislation, wherever the employer is based. The Austrian employer takes on the employer’s obligations under Czech law.
- Contributions can be delegated by agreement
- The EU implementing regulation lets an employer with no place of business in the competent state agree with the employee that the employee pays the contributions on the employer’s behalf. The employer must notify the competent institution of the arrangement.
- Withholding depends on national law
- Whether a foreign employer without a permanent establishment must withhold wage tax is set by each country’s income tax law. The research must establish, for each country, whether the client becomes a withholding agent or the employees pay their own tax.
- Health insurance is its own registration
- In both the Czech Republic and Slovakia, health insurance is run by health insurance companies, separate from the social security institution. The employer registers with each employee’s insurer as well as with social security.
How it runs in azta
From the question to the document
The question, as you would type it
Austrian GmbH with no Czech entity employs two people who live in the Czech Republic and work from home there. Which registrations must it make with Czech social security, the health insurers and the tax office, and must it withhold Czech income tax?
You start with
A client’s new employees in a country where it has no entity
- 01
Describe the client and the employees
Give the employer’s country, the employees’ residence and where they work. azta searches the EU coordination regulations and the Czech and Slovak tax, social security and health insurance acts.
Cited research· Free - 02
Read the provisions
Open each cited provision in the reader, in the original language, with its in-force status.
Atlas statute reader - 03
Draft the client note
Ask for a note per country with each registration, the authority and what the bureau can do for the client. Edit it in Canvas.
Canvas · Ask azta· Pro - 04
Send it to the client
Export to Word and send it with your proposal for the first payroll.
Word export· Pro You send
A note on the employer’s registration, withholding and contribution duties there
What you get
A note on the employer’s registration, withholding and contribution duties there
Client note · draft
New employees in the Czech Republic and Slovakia: registrations before the first payroll
Social security. Czech legislation applies to the two Brno employees and Slovak legislation to the Bratislava employee, as each works only in the country where they live. Unless you agree with the employees that they pay the contributions themselves, register as an employer with Czech social security and the Slovak Social Insurance Agency before the first payroll.
Health insurance. Each employee’s health insurer is a separate registration. We will ask the employees which insurer they are with before the start date.
Income tax. Whether you must withhold Czech or Slovak tax without a permanent establishment, and how the employees otherwise pay, is set out in Annex 1 with the provisions relied on. Please also review with your tax advisor whether the employees’ activity could create a permanent establishment.
Outcomes on your numbers
What azta is worth on this task
Pro pays for itself after
18 minutes a month
At €95 an hour, that is all the time Pro (€27 a month) has to take off your desk to cover its price.
Example figures. Replace them with your own.
- Hours back a year
- 25
- Capacity at your rate
- €2,394
- More new-country payroll set-ups a quarter
- 0.8
- Return on Pro
- 7.4×
- Research
- Drafting
- Your review
A scenario you set, not a promise. The hours that come back go to another client, or deeper into this one.
Want these numbers on your team’s real workload?
Book a demoWhat stays with you
- The registrations themselves, and the client’s authority to make them.
- The permanent-establishment assessment, with the client’s tax advisor.
- The employment contracts under local law.
Frequently asked questions
- Can we run the Czech payroll from Austria?
- That is what the note establishes: which obligations apply and who can fulfil them. The payroll calculation itself stays in your payroll system.
- Does azta make the registrations?
- No. It sets out each registration with the provision behind it. The filings stay with you and the client.
- Can it read the Czech and Slovak law in the original?
- Yes. azta searches the legislation in the original language and answers in yours, with each citation opening the provision itself.
