Accounting and Tax services
Our core business IS Accounting, Taxes and VAT services. This is also the big difference with most registration agents in Czech Republic. Many *only* register Trade Licenses and have no idea about taxes. Some *may* cooperate with an accountant. But we ARE accountants. And that makes an essential difference!
We know what we're talking about when it comes to:
- Tax Residency (the 183-day rule), DTAs (Tax Treaties for avoidance of double taxation)
- Personal Income Tax Return - with other sources of income (employment, investment, AirBnB, crypto currency, dividends from SROs and foreign companies, LLCs and alike)
- Invoicing, Foreign Currencies, Foreign Accounts - How to invoice Czech clients, how to invoice EU businesses (subject to VAT in most cases!), how to invoice outside EU
- VAT, ESL (Souhrne Hlaseni) - When to Register for VAT, when to file VAT Returns, which exception rules
- Trade License or SRO - Are you better off with an SRO? (the answer is usually no, BTW)
Income Tax Return
There are currently 3 methods for handling Income Taxes for self-employed on a zivnostensky list.
- the Pausalni Dan method - a monthly all-in-one payment for Tax / Social / Health, no requirement to file a Tax Return, severe limitations - ask us why we are so against it!
- the Real Expenses method - simply said: Revenue - Expenses = Tax Base. From the Tax Base Tax / Social / Health is calculated. Usually not the optimal method.
- the 60/40 method - up to 2M Revenue, you can claim 60% virtual expenses, resulting in cca 12% Tax / Social / Health (9% without Health)). For most people the right choice.
Roughly at the same time as filing the Income Tax Return, the overview(s) for the Social office and the Public Health Care (if applicable) need to be filed, between January and March of the following year. When filing electronically, there is an additional month to file. It is also possible to file for an extension, which adds an additional 3 months.
If you are Tax Resident in Czech Republic, you are supposed to file your global income - so also from employment, investments and business profits abroad. It will be necessary to look in the bi-lateral tax agreement to determine in which country you will actually pay taxes. Especially in the first and last year in Czech Republic this is relevant - so it is clever to book a consultation to determine what to do.
We will inform you automatically well ahead in time that the tax seasons is approaching by a newsletter.
We extensively make use of Google Drive, so you do not need to visit our offices for bringing papers. We can handle (almost) everything remotely.
See also Income Tax Return
VAT Return
Many Self-employed / Freelancers do not need to be VAT-registered, and just need an annual Income Tax Return + overviews for the social / health office. For those clients it is not necessary to do accounting during the year - so we see them just once a year.
However, if you invoice businesses in the EU and/or generate more than 2M CZK per 12 months from Czech clients (before 2023 this limit was 1 M CZK) you *must* be VAT-registered, either as 'Full VAT' or 'VAT Light' so make sure you understand the rules (or book a consultation, and we'll explain it).
As a rule of thumb, when registered for 'Full VAT' you will have to file each month a VAT Return and a Kontrolni Hlaseni (for CZ clients) and a Souhrne Hlaseni (for EU clients, if any). VAT on Czech expenses can be claimed. New businesses will almost never get a 'Full VAT' registration.
'VAT Light' is a requirement when invoicing VAT-registered businesses in the EU. Only for the months you invoice to the EU you will have to file a VAT Return and a Souhrne Hlaseni, but never a Kontrolni Hlaseni. VAT on Czech expenses can not be claimed, and for any Czech clients you are still a VAT-less entity (the 'VAT Light' is only 'visible' outside Czech Republic)