Tax support for IT freelancers in the Czech Republic

We offer a comprehensive tax support service for IT freelancers in the Czech Republic: accounting, tax projection, crypto-consultations, stocks, dividends, visa issues, and much more.
SIMPLIFIED VAT PAYER
1,600
CZK
/
70
EUR

    This price covers:

  • The obligations of a "Hybrid" VAT payer
  • The preparation of up to 10 documents per month
  • The preparation and submission of a VAT report or a Summary VAT report (services in the EU)
  • Control of Datové schránky
  • The preparation and submission of an annual tax report, PSSZ and VZP
  • 1 hour’s worth of consultation per year
  • E-mail support
FULL-FLEDGED VAT PAYER
2,000
CZK
/
85
EUR

    This price covers:

  • The obligations of a fully-fledged tax payer
  • The preparation of up to 20 documents per month
  • The preparation and submission of a VAT report, a VAT Control message or a Summary VAT report
  • Control of Datové schránky
  • The preparation and submission of an annual tax report, PSSZ and VZP
  • 1 hour’s worth of consulting per year
  • Salary accounting for one employee
  • E-mail support
* Tariff prices are shown without VAT, per month when paying yearly. Display prices for a no-commitment monthly payment.

The main benefit for registering an individual entrepreneur in the Czech Republic

The magic of the lump-sum tax system in the Czech Republic is that you do not need to collect evidence of your expenses at all. IT expenses are automatically considered equal to 60% of the number of invoices issued.

The main benefit to joining the IE club in the Czech Republic is that one may gain access to a residence permit or even EU citizenship. If you’re not sure if this applies to you, get a free consultation from our specialists. They will evaluate your specific situation and advise you on the optimal solution.

Which tax mode should I choose?

If you are registered as an individual entrepreneur and issue invoices to customers in other EU countries (or conduct foreign economic activity), then you need to at least register for the simplified (“European”) VAT accounting system (the “Simplified VAT Payer” tariff). In this case, you submit VAT reports only at the time of invoicing in the EU, but you remain a VAT defaulter inside the Czech Republic. If you want to fully enjoy the benefits of VAT refunds within the Czech Republic (for example, from buying a new computer, car or mobile phone), or you have many counterparties paying VAT in the Czech Republic (for example, DoMyTax, lawyers, and B2B clients), then, in this case, the most logical step is voluntary registration for VAT within the country (the “Fully-fledged VAT payer” tariff). It is worth noting that as soon as your revenue in the Czech Republic exceeds 1 million CZK within 12 consecutive months, you are obliged to become a fully-fledged VAT payer.

Questions and Answers

  • If I issue invoices outside the European Union, is VAT registration necessary?
    No, registration as an Identified entity is required only if B2B services are provided to customers from EU countries.
  • At what time is it necessary to register for the "Hybrid/European" VAT?
    Registration is carried out within 15 days from the moment that the service is rendered or the invoice is issued.
  • If I provide services outside the Czech Republic (EU and 'third world countries'), do I need to pay VAT in the Czech Republic?
    No, services outside the Czech Republic are exposed in reverse-charge mode, which means that VAT liability is transferred to the buyer of the service. In the Czech Republic, this is not subject to VAT, and the buyer is responsible for VAT according to the laws of his country.
  • If my EU client has not provided me with a VAT number, what should I do? Do I have to invoice him with Czech VAT? Do I have to submit a report to the European Union?
    No, the Czech sole proprietor, in any case, issues an invoice without Czech VAT indicating the reverse-charge mode. If the client has not provided his VAT number, the Czech sole proprietor will not be able to file a VAT report to the European Union. There is no liability for the inability to submit a report due to the absence of a VAT number from the client. We recommend warning the client about his obligation to register for VAT in his country and his obligation to provide a VAT number.
  • If I change one cryptocurrency for another, does this need to be taken into account when calculating the profit from the sale of cryptocurrencies?
    Yes, at the time of the exchange of cryptocurrencies, income may also arise, so these transactions must be taken into account when calculating income.
  • If I give a cryptocurrency to a relative, should I admit it in the annual report?
    In the case of cryptocurrency donation, there are no tax obligations for you, since no income has been received and the cryptocurrency has been transferred as a gift. We advise you to draw up a donation agreement and indicate in it the market value of the donated cryptocurrency at the time of the gift. This will allow your relative at the time of the sale of the cryptocurrency to pay tax only on the difference in price (the sale price minus the gift price).
  • If I'm mining cryptocurrency, do I have to have a license for that?
    Mining is considered an entrepreneurial activity and is subject to registration as an individual entrepreneur. Income from the sale of cryptocurrencies obtained as a result of mining can be reduced by the costs incurred to generate income (electricity, equipment, rental of premises and others). Indeed, you can demonstrate losses which can be used to reduce your de-jure level of income over the next 5 years.
  • Are there any benefits when investing in securities?
    Yes, this type of income has two options for tax exemption. If the income from the sale of securities within a calendar year does not exceed 100,000 CZK, such income will be exempt from tax. Also, if you owned securities for more than 3 years before selling them, the income, without limitation, will be exempt from income tax. In other cases, the income is reduced by the purchase price of the securities sold, i.e. you pay tax only on net profit.
  • Do I have to report income from dividends received in the USA in the Czech Republic?
    As a rule, yes. This issue should be clarified in the Double Taxation Treaty (a convention) between the US and the Czech Republic. If it states that income can be taxed in the country of tax residence, the dividends are indicated in the annual report, while you have the right to take into account the tax paid abroad. As a result, you do not pay tax twice. In the case of the USA, we recommend that you provide the Czech Republic's tax domicile in advance so that you will not be taxed in America at the rate of 30%. This rate for residents of the Czech Republic is limited by the Convention to 15%.
  • Can I get a mortgage in the Czech Republic?
    Yes, through having Czech income from an employment contract or from entrepreneurial activity, you are eligible for a mortgage in the Czech Republic.
  • Is the Czech national health insurance system available to foreigners?
    If you are a citizen of the European Union and your business activity takes place on the territory of the Czech Republic, you must register in the nationwide system. If you are a citizen of a non-EU country and are not employed in the Czech Republic at the same time, you cannot use this system. But do not worry – there is always an opportunity to conclude commercial insurance and get similar coverage as the national insurance system provides.
  • Can I suspend or terminate the activity of an individual entrepreneur?
    Yes, both options are available. If you know that you will not be doing business for some time, you can suspend not only registration but also insurance payments. Termination of activity involves a complete stop with a deletion of your id number.

Why is it a good idea to entrust DoMyTax with IT freelancer accounting?

  • We not only speak your language but also understand the problems that taxation can cause for foreigners, including issues of obtaining and extending residence permits, getting mortgages, etc.
  • We are qualified in matters of taxation of any complexity: foreign income, cryptocurrency, dividends, sale of shares, and much more.
  • You will save money. Our specialists will compile reports so that you don’t pay more taxes than you need to.
  • You will be able to extend the reporting period by 3 months. Our team has a tax specialist (dainový poradce), who has the right to file reports with an extension of 3 months from the standard filing period and will also help solve issues of any complexity.

Additional services:

  • Registration of an individual entrepreneur with annual accounting (free of charge). The “Start" tariff is suitable for invoicing in the Czech Republic – 12,00 CZK,
  • Registration for pensions and medical insurance – 650 CZK / registration,
  • Opening a bank account - 12,000 CZK,
  • Termination / suspension of an IE (including insurance) – 4,500 CZK,
  • Making changes to the IE’s registration data – 7,500 CZK,
  • Tax consultations – from 1,000 CZK / hour,
  • Postponing the deadline for submission (up to 3 months), including the signature of the declaration by a tax specialist – 7,500 CZK

* Prices are shown excluding 21% VAT.

References