What is the flat tax (paušální daň)
The paušální daň is a special tax scheme that self-employed persons may choose voluntarily. This scheme provides for the payment of a fixed monthly amount, which includes the payment of income tax and mandatory social and health insurance contributions. Self-employed persons who invoice up to CZK 2,000,000 in a 12-month period can join this scheme. If this limit is met, self-employed persons are exempt from filing tax returns. However, it is important to note that no flat-rate expenses or tax rebates are possible under this scheme.
Who can benefit from the flat tax (paušální daň)?
The flat tax (paušální daň) is an advantageous tax regime applicable to self-employed persons who meet certain requirements. To be eligible for it, you must have an annual income below CZK 2 million. In addition, the applicant must not be subject to VAT and must have no other sources of income exceeding CZK 50,000 per year, including fixed capital income such as bond interest, rents and other income. Finally, a person wishing to access this scheme must not be a partner in a public company or a general partner in a limited partnership. Meeting these requirements allows one to benefit from a simplified and facilitated tax regime.
Registration by 10 January
If you meet the requirements described in the previous paragraph, you can join this scheme. To do so, it is sufficient to notify the tax office in a timely manner of your intention to join this scheme. The quickest way to do this is to use the Mojedane.cz portal, specifically in the Personal Income Tax section, where you can find the lump-sum entry notification form.
The deadline for applying for the flat-rate scheme is always 10 January of the year in which you intend to join. For example, if you register before 10 January 2024, you will become a flat-rate taxpayer as of 2024. There is an exception for newly started entrepreneurs, who can file until the day they start their self-employed activity (by that time, they must also register with the IRPEF).
After registration, payments must be made monthly to the account of the local tax authority. The account numbers of the regional office can be found in the guide on how to pay taxes. Amounts are always due by the 20th of the month for which the flat rate is being paid.
Amounts 2024 flat tax
The amounts of the monthly payments depend on the relevant income bracket:
I. Band:
- Taxpayers whose self-employment income in the previous tax period did not exceed CZK 1 million, irrespective of the type of self-employment activity that generated such income (i.e., without taking into account the percentage of expenses that they could be charged under the Income Tax Act arising from such income).
II. Band:
- Taxpayers whose self-employment income did not exceed CZK 1.5 million in the previous tax period, regardless of the type of self-employment activity that generated this income (i.e., without taking into account the percentage of expenses that could be charged to them according to the Law on Income Tax derived from such income).
III. Band:
- Taxpayers whose self-employment income did not exceed CZK 2 million in the previous tax period, regardless of the type of self-employment activity that generated this income (i.e., without considering what percentage of expenses they could be charged according to the Income Tax Act as a percentage of income).
Here are the new amounts of monthly payments as of 2024:
| The amount of the monthly advance payment for the flat-rate tax | |||||
| Total lump sum payment | Income tax | Pension insurance premiums | Health insurance premiums | ||
| I. band | 7,498 CZK | 100 CZK | CZK 4,430 | 2,968 CZK | |
| II. band | 16,745 CZK | 4,963 CZK | CZK 8,191 | 3,591 CZK | |
| III. band | CZK 27,139 | 9,320 CZK | 12,527 CZK | 5,292 CZK | |
Sources: https://www.financnisprava.cz/; https://www.jake-james.cz/
Image source: https://www.forbes.com/
Graphic source: https://storyset.com/
