Self employment tax
As a freelancer in Czech Republic you are not obliged to double entry bookkeeping system. You will need to keep the evidence of your income, based on payment received date. You will need to watch out for VAT treshold (currently 1.000.000 CZK, roughly 40.000 EUR). For the expenses, you can choose from 3 different modes. You can read through some of the basic information below but we would strongly advise you to get in touch with us to find out the best match for you.
Real expenses
You will need to keep the evidence of your real expenses based on the payment date. This would be kept in cash book (in Czech "Penezni denik"). A simple table with payment date, amount (net, gross) and some identification of transaction would be sufficient. This mode would be suitable for a freelancer working with low margin (e.g. resale or high input costs).
Flat % rate expenses
In case of flat rate expenses, you only need to watch your income. Expenses are calculated by percentage rate from the income. The rate is dependant on type of your business licence and currently there are 3 rates of Czech flat rate expenses: 40%, 60% and 80%.
Sample: IT consultant can use flat rate expenses of 60%. His income is 100.000 CZK so his flat rate expenses would be 60.000 CZK, his taxable income would be 40.000 CZK.
Flat tax including health and social security
Since 2020 freelancers can also apply for one single payment of flat tax rate that includes health and social security. Basic idea is to simplify the administration to a minimum. However as this has been set up as one sigle payment, it is only optimal for freelancers with turnover somewhere between 700.000 and 999.999 CZK. With lower turnover, it would usually be much better to use real expenses or flat rate. Quite often, this mode would be inappropriate as you cannot claim other tax benefits. The best thing about it would be the fact, that you are no longer obliged to do a bookkeeping (! but you still need to be able to prove that your turnover does not exceed the maximum treshold of 1.000.000 CZK). This mode is currently undergoing changes and is likely to be changed from 2023.
Your right tax partner
Leave your taxes to professionals that can save you a lot of money and hassle. We will make sure that you will take the advantage of all tax advantages. Choose the right partner from the beginning. Together we will set everything up in the most favourable way.
FREELANCE TAX AND ACCOUNTING BRNO
Our colleagues work across the entire Czech Republic. Our main accounting office in Brno supports our partners. In our accounting shared service centre we process and archive all of your documents. Please, come and visit us. We look forward to meeting you!
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