Trade License vs Salary vs Dividends
An often-hear questions is: so...what is 'better'? a Salary? a Trade License? Dividends from an SRO or foreign company?
Of course 'better' means usually: how do I get to keep most of my money without bleeding too much in taxes.
With SRO Dividends, you can not escape paying 21% Corporate Income Tax (was 19%), and then 15-23% Withholding Tax before the money is 'yours' and out of the company.
Roughly 33% disappears in those 2 Taxes, and you are not making any Social Security contributions or Health Insurance payments - these will be additional costs.
With a foreign company paying out Dividends it usually works like this: the Corporate Income Tax is paid by the company in the country where it is located (some countries: only on locally generated Revenue) and the 15-23% Withholding Tax is paid by the shareholder through the Czech Personal Income Tax Return.
If a company is at a loss - you can't pay out Dividends. You will be still able to payout Salary or a Shareholder loan.
With an Salary from an Employment Contract, in Czech Republic your boss pays 34% Social- and Health charges on top of your Gross Salary (the so-called Super Gross Salary), and the difference between the Gross (in your contract) and Net (in your hand) is 11-27% (for average salaries: about 22%) and consists of Income Tax, Social Security and Public Health Contributions.
If you are your own boss (paying salary out of your own SRO): your SRO will pay the Super Gross Salary, and you get the Net Salary. Divide the Super Gross Salary by 1.8 to get to Net Salary.
Sometimes it is advisable to take a salary out of your own SRO: for business visa extension purposes, or because you will have access to Public Health Care.
On a Dohoda o provedene prace (it is not an Employment Contract, it is more a simplified contract for one-off or low-hour jobs), only 15% Income Tax is withheld, you are not making any Social Security contributions or Health Insurance payments.
You can earn only 10.000 CZK / month per task - but... you can have multiple dohodas at multiple businesses. However, if you have multiple Dohodas it is usually better to get a Trade License to get past the 10.000 CZK limit.
The moment that more than 10.000 CZK is paid out on a Dohoda....it transforms to an Employment Contract.... which is much more expensive for the company - so careful how much you pay out to someone with your SRO or Trade License!
With a Trade License, for Revenue between 600.000 CZK and 2.000.000 CZK, Tax + Social + Health *combined* is about 14% - and about 11% for people who are not in Public Health Care (most third-country nationals)
Sure, over 2M Revenue the percentage rises to over 30% at 5M Revenue, but compared to the other options - that's still the best deal.
Here a picture to make it easier to understand:
Of course: this is nutshell information - the reality is more complex.
If you really want to have an exact answer to your situation: book a consultation.