Flat-rate tax for self-employed: 5 situations where you need to file a tax return

You pay one amount each month, which includes social security, health insurance and income tax. The flat-rate tax has relieved you of annoying paperwork so you don't have to worry about tax returns. But don't rejoice prematurely - it doesn't always apply! Find out which exemptions to look out for.

Flat-rate tax and tax returns - when to file?

"You don't file a tax return with a flat rate tax." - You've probably heard that one too many times. But as it happens with taxes, there are a few "buts". In these situations, you have to file a return even though you're on a flat-rate system:

  • You have income other than business income of more than CZK 50,000 per year. To avoid having to deal with the paperwork associated with taxes, your total income from capital assets, rent and other (§ 8-10 on your tax return) must not exceed this limit. Keep an eye on it if you earn extra income from, for example, renting, selling securities or cryptocurrencies.
  • You have income from employment that was not subject to withholding tax. Withholding tax is only deducted from your wages if you work under a work arrangement, you have not signed a taxpayer's declaration and your remuneration was less than CZK 10,000 per month. Are you working under another type of employment contract where wages are taxed in advance? Then you won't miss out on filing a tax return.
  • Your business income exceeded CZK 2,000,000 per year. Only sole traders whose income from self-employment does not exceed this amount can benefit from the flat-rate tax from 2023. Did you earn more? Great - but you have to file a regular tax return the following year.
  • You have become a VAT payer. You are obliged to register for VAT when your income exceeds CZK 2,000,000 in 12 consecutive months. It may happen that you do not reach the 2 million income threshold in one calendar year (and therefore meet the previous condition), but you still do not have to file a return. The flat-rate scheme is not intended for VAT payers.
  • You have become a partner in a publicly traded company or a general partner in a limited partnership. You may not use the self-employed flat rate tax when you perform these functions.

Neither of these points apply to you? Great - then you'll really appreciate the benefits of the flat-rate scheme and you won't have to deal with the paperwork.

How to file a flat-rate tax return?

If you don't meet the conditions for a flat-rate tax, you'll have to file a tax return. How to do it?

  1. You work out your tax under the general rules as if you were not in the flat-rate scheme. You list all your income, including income from your business.
  2. On line 86 of the tax return, you fill in the amount of the flat-rate tax paid in advance. In 2021-2023, always include CZK 100 per month for income tax, making a total of CZK 1,200 per year.
  3. If you were employed, you will also enter the advance payments of employment tax on line 84.
  4. Any overpayment will be refunded by the tax authority or you will pay the underpayment.

Do the same for social security and health insurance. You send the statements to the Social Security and Health Insurance Institutions, with the premiums paid under the flat-rate tax serving as a deposit.

What next - can you stay in the flat-rate scheme?

If you breach certain conditions, you must leave the flat-rate scheme, start paying the normal social security and health insurance contributions and submit your tax return in the following year. This will be the case if:

  • Your business income was more than CZK 2,000,000 per year.
  • You became a VAT payer.
  • You became a partner in a publicly traded company or a general partner in a limited partnership.

In the following situations, on the other hand, there is no reason to end the flat-rate scheme:

  • Your other income exceeds CZK 50,000 per year.
  • You had income from employment not subject to withholding tax.

You submit a return to the tax office and continue to pay the flat-rate tax. However, if you continue to have this income, consider whether it makes sense to stay in the flat-rate scheme - you will have to file your tax return again next year.

TIP: Read our article on the rules for self-employed flat-rate tax to find out who it typically pays out to.

Don't worry about tax and leave it to us

Have you found you need to file a tax return but don't know how to do it? Contact us and we'll sort out your income tax return for you. And if you're not sure if the liability applies to you, book a tax consultation.

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