For all sole proprietors who want to save on taxes, we offer a brief summary of the flat-rate (single, fixed) monthly payment system, effective from 2023. ⠀ The flat-rate tax regime applies to income up to 2 million CZK. ⠀
RESTRICTIONS. This regime cannot be used by VAT payers, partners in a public general partnership (veřejná obchodní společnost), or general partners in a limited partnership (komplementářem v komanditní společnosti), nor by debtors in insolvency proceedings. The flat-rate tax is also not beneficial for sole proprietors who wish to claim tax deductions (e.g., for private pension or life insurance) or who do not pay public health insurance contributions due to a long-term stay abroad. ⠀
1st Band:
- Income up to 1 million CZK, regardless of the type of activity or
- Income up to 1.5 million CZK, if at least 75% of the income is eligible for an 80% or 60% expense ratio;
- Up to 2 million CZK, if at least 75% of the income is eligible for an 80% expense ratio. ⠀
- Monthly payment: 6,208 CZK includes:
- Income tax – 100 CZK;
- Social security contributions – 3,386 CZK;
- Health insurance contributions – 2,722 CZK. ⠀
2nd Band:
- Income up to 1.5 million CZK, regardless of the type of activity or
- Up to 2 million CZK, if at least 75% of the income is eligible for an 80% or 60% expense ratio. ⠀
- Monthly payment: 16,000 CZK includes:
- Income tax – 4,963 CZK;
- Social security contributions – 7,446 CZK;
- Health insurance contributions – 3,591 CZK. ⠀
3rd Band
- Income up to 2 million CZK, regardless of the type of activity. ⠀
- Monthly payment: 26,000 CZK includes:
- Income tax – 9,320 CZK;
- Social security contributions – 11,388 CZK;
- Health insurance contributions – 5,292 CZK. ⠀
The conditions for entering a specific flat-rate tax band are determined by the income received in the previous tax period. To apply for the flat-rate tax regime, you must file a notice with the tax office by January 10th.