Because freelancers are not Solar Staff's employees and we don't pay taxes on their payouts, they must declare any income received via Solar Staff by themselves.
To carry on tax accounting in the Czech Republic for your Solar Staff income, you need to:
Be a tax resident
Have a taxpayer ID number
Register as an entrepreneur (živnostník, OSVČ)
Tax residence
The Czech Republic taxes its residents on their worldwide income, while non-residents are taxed on their Czech-source income only, unless staying in the Czech Republic for less than 183 days in any 12-month period and working for a foreign employer. The latter are not subject to Czech income tax on income from employment in the Czech Republic (income from a Czech source).
Having a long-term visa does not in itself make an individual a tax resident of the Czech Republic.
An individual is considered a tax resident of the Czech Republic if either of the following conditions is met:
The individual has a permanent place of residence in the Czech Republic (in their own or rented accommodation)
The individual is present in the Czech Republic for 183 or more days in a calendar year (this includes the days of arrival and departure)
The Czech Republic has double taxation agreements with a number of countries (full list), the provisions of which may override the applicable tax residence rules and other provisions of national legislation.
Taxpayer ID number
The taxpayer identification number in the Czech Republic (rodné číslo) is the same as the identification number for individuals; it can be found on the back of the identification card or residence permit, as well as in the Czech citizen's passport. This number consists of 9–10 digits.
Additionally, it is necessary to obtain a VAT identification number (daňové identifikační číslo (DIČ) přidělené skupině plátců pro účely DPH), which is mandatory for VAT payers. It consists of the country code CZ and a numeric identifier.
Taxes and contributions payable by freelancers
Freelancers in the Czech Republic are required to register as entrepreneurs (živnostník, OSVČ) in order to earn income and fulfill their tax obligations.
The first step is to determine the type of activity and ascertain whether a license is required:
Free trades (živnosti volné) do not require obtaining any additional documents/permits
Skilled trades (živnosti řemeslné) require a diploma or any other form of qualification confirmation
Licensed trades (živnosti koncesované) require a license
Next, it is necessary to contact the trade office at the place of residence or registered address (information for the city of Brno can be found here) and fill out a unified registration form (jednotný registrační formulář, JRF). One can also choose to register online.
In addition to the unified registration form (JRF), the following documents will be required for registration:
Certificate of no criminal record in the Czech language, notarized by a certified court translator
Confirmation of the business address
Valid visa, identification card, or passport
Registration is completed within one week from the date of application submission. Upon successful registration, the entrepreneur will receive a certificate containing a registration number, which will be required for monthly payments.
After registering as an entrepreneur, it is necessary to:
Within 8 days, notify the Social Security Administration of the Czech Republic (Česká správa sociálního zabezpečení) and the General Health Insurance Company of the Czech Republic (Všeobecná zdravotní pojišťovna České republiky) of the registration (learn more here)
Within 30 days, register as an entrepreneur with the Tax Office at the place of residence or registered address
IMPORTANT! Solar Staff does not have the option to choose a tax status for freelancers based in the Czech Republic, but you can fill in your tax ID in your account.
Entrepreneurs in the Czech Republic can pay tax on income received from Solar Staff using one of two available taxation systems:
General taxation
The general taxation system is automatically applied to entrepreneurs upon registration, unless the freelancer has notified the tax authorities otherwise. This taxation system entails the payment of the following taxes:
Income tax (daň z příjmů) at a rate of 15%, which increases to 23% if the annual income exceeds 48 times the average wage (as of January 1, 2024, it is 2,110,416 Czech crowns, CZK).
Deductions and expenses. Entrepreneurs in the Czech Republic have the opportunity to reduce their taxable income by deducting eligible expenses and claiming deductions (these may include mortgage interest, pension contributions, and contributions to social and health insurance funds).
An entrepreneur may deduct the actual and documented expenses incurred or apply standard deductible expense amounts based on the type of activity:
80% of income from agricultural production, forestry, and water management and income from trade and skilled trades (up to a maximum of CZK 1,600,000)
60% of income from trading businesses (up to a maximum of CZK 1,200,000)
30% of rental income from commercial real estate (up to a maximum of CZK 600,000)
40% of other entrepreneurial income, excluding income as a public company participant or general partner in a limited liability partnership (up to a maximum of CZK 800,000)
Accounting. Entrepreneurs are required to maintain records of income and expenses arising from their business activities at all times.
Tax returns and payment. The deadline for filing a tax return and making tax payments is April 2 of the year following the reporting year. If the tax return is filed online, the deadline is extended until May 2. However, if the tax return is filed with the assistance of a tax consultant, the deadline may be extended until July 3. A paper tax return form can be obtained from the tax office, filled out, signed, and returned to the tax office. It is also possible to fill out the tax return online. If the income tax for the previous tax period does not exceed CZK 30,000, there is no obligation to make advance (semi-annual) income tax payments. If the income tax amount exceeds CZK 150,000, quarterly advance payments are required.
VAT (dan z pridane hodnoty, DPH) is payable if the turnover exceeds CZK 2 million over 12 calendar months. The VAT rate is 21% (reduced rate is 12%).
VAT returns and payment. The tax period is a calendar quarter if the taxpayer's turnover in the previous calendar year was below CZK 10 million and a calendar month if the taxpayer's turnover in the previous calendar year exceeded CZK 10 million or if the entrepreneur is a newly registered taxpayer. The VAT return must be filed and the tax paid within 25 days after the end of the tax period. In addition to the VAT return, all VAT taxpayers are required to submit a VAT control statement (kontrolní hlášení). The deadline for submitting the control statement is no later than 25 days after the end of the tax period. All VAT returns are submitted to the Czech tax authorities electronically.
There is also a concept of "unreliable taxpayer," and being designated as such can complicate business operations (learn more here).
Social security contributions are divided into the following types:
28% – pension insurance contribution (důchodové pojištění)
1.2% – state employment policy contribution (na státní politiku zaměstnanosti)
2.7% – voluntary health insurance contribution (nemocenského pojištění)
The amount of contributions is calculated as a percentage of income for the previous tax period at the applicable rate. There are legally established minimum contribution amounts for different categories of entrepreneurs (depending on how much of an individual’s entire income comes from entrepreneurial activities). Learn more about contributions
Reporting and payment. Entrepreneurs are required to make monthly social security contributions (by the end of the current month) using data provided to them by social security and health insurance authorities.
Flat-rate taxation
The flat-rate tax regime (paušální daň) is a special tax regime with a flat tax rate and a lump sum payment, which replaces both income tax and contributions. This regime is valid for one year and is automatically renewed, although it is possible to opt out of it once the year expires.
Application. When an entrepreneur commences their business activities, they have the option to choose the flat-rate tax regime by submitting a notification simultaneously with their business commencement notice to the tax authority. In the event of non-compliance with the terms of applying the tax regime, a notification must be sent to the tax authority within 15 days from the date of the violation. Learn more here.
In other cases, entrepreneurs willing to opt for the flat-rate tax regime can do so by submitting a notification to the tax authority by January 10.
Restrictions and requirements. Entrepreneurs in the Czech Republic are eligible to apply the flat-rate tax regime if they meet the following conditions:
Their taxable income for the previous tax period does not exceed CZK 2 million
They are not a VAT payer
They are not concurrently employed elsewhere
They pay social security contributions
They pay health insurance contributions (those who are exempt from paying health insurance contributions due to prolonged stay abroad are not eligible to apply the flat-rate tax regime)
They are not partners in a public company or general partners in a limited liability partnership
They are not involved in bankruptcy proceedings as a debtor
They do not earn income from fixed assets, rent, or other sources that in total exceed CZK 50,000 per year. This does not include income that is tax-exempt or subject to a special tax rate at the source (such as interest on personal accounts, interest on securities, etc.).
Amount of tax payments. Tax payments depend on the category to which the entrepreneur's activity belongs. In the Czech Republic, there are three tax rate bands based on the amount of the taxpayer’s income and deductible flat-rate expenses:
Band 1:
Taxpayers with income in the previous tax period of up to CZK 1 million, regardless of the type of income-generating activity (i.e., regardless of the type of activity and the amount of deductible flat-rate expenses stipulated in the general taxation system)
Taxpayers with income in the previous tax period of up to CZK 1.5 million, if at least 75% of that income qualifies for an 80% or 60% flat-rate expenditure deduction
Taxpayers with income in the previous tax period of up to CZK 2 million, if at least 75% of that income qualifies for an 80% flat-rate expenditure deduction, as per the Income Tax Act
Band 2:
Taxpayers with income in the previous tax period of up to CZK 2 million, regardless of the type of income-generating activity and the amount of deductible flat-rate expenses
Taxpayers with income in the previous tax period of up to CZK 2 million, if at least 75% of that income qualifies for an 80% or 60% flat-rate expenditure deduction
Band 3:
Taxpayers with income in the previous tax period of up to CZK 2 million, regardless of the type of income-generating activity and the amount of deductible flat-rate expenses
The amount of monthly payment under the flat-rate taxation regime is as follows:
| Payment | Income tax | Social security | Health insurance |
Band 1 | CZK 7,498 | CZK 100 | CZK 4,430 | CZK 2,968 |
Band 2 | CZK 16,745 | CZK 4,963 | CZK 8,191 | CZK 3,591 |
Band 3 | CZK 27,139 | CZK 9,320 | CZK 12,527 | CZK 5,292 |
Band 1: CZK 7,498. The monthly advance payment includes income tax of CZK 100, a social security payment of CZK 4,430 (calculated as 29.2% of 30% of the average wage, which is the minimum advance payment towards social security, plus 15%), and a health insurance payment of CZK 2,968 (calculated as 13.5% of 50% of the average wage, which is the minimum advance payment towards health insurance).
Band 2: CZK 16,745. The monthly advance payment includes income tax of CZK 4,963, a social security payment of CZK 8,191 (calculated as 29.2% of CZK 28,050), and a health insurance payment of CZK 3,591 (calculated as 13.5% of CZK 26,600).
Band 3: CZK 27,139. The monthly advance payment includes income tax of CZK 9,320, a social security payment of CZK 12,527 (calculated as 29.2% of CZK 42,900), and a health insurance payment of CZK 5,292 (calculated as 13.5% of CZK 39,200).
Flat-rate tax returns and payment. Entrepreneurs are required to file a flat-rate tax return only if they fail to meet the conditions for applying this special tax regime. Learn more about the tax return and applicable instructions here. Tax payments must be made by the 20th day of each month.
Additional information
Financial Administration of the Czech Republic (Finanční správa)
Social Security Administration of the Czech Republic (Česká správa sociálního zabezpečení)
General Health Insurance Company of the Czech Republic (Všeobecná zdravotní pojišťovna České republiky)
Income received via Solar Staff is declared using certificates and invoices, and in accordance with the offer agreement
If you have any questions, get in touch via the chat in your Solar Staff account or email us at [email protected].