Freelance 2021 payment calculator
This handy calculator estimates how much you’ll owe this year while self-employed. Calculate your social and health insurance payments and income tax with the click of a button!
As a freelancer with no employer to pay or take care of your taxes, you will manage Czech freelancing taxes on your own. If you decide to hire an accountant, tax advisor or Pexpats, you may avoid the responsibility to calculate freelancer income and taxes.
If you’re interested in the simple preview and calculation of the tax rates for a freelancer in the Czech Republic, keep reading!
Let’s meet Alex, who is a freelancer in the Czech Republic. He is a marketing consultant and his income is 600.000CZK/year. He is willing to use a 60/40 tax calculation method.
60% from 600.000CZK = 360.000CZK (expenses)
40% from 600.000CZK = 240.000CZK (tax base)
Alex has a wife Kate who is on parental leave, because Alex and Kate have two children. Kate’s annual income didn’t pass the limit of 68.000CZK. Alex is also paying an interest fee 50.000CZK/annual on his mortgage.
What discounts can he claim?
Credit for a tax payer = 27.840CZK
Wife with an income less than 68.000CZK/annual = 24.840CZK
First child = 15.204CZK
Second child = 19.404CZK
What about the interest fee on Alex‘ mortgage? This can be also deducted from the tax base!
Final tax base:
240.000CZK – 50.000CZK = 190.000CZK
15 % from 190.000CZK = 28.500CZK final tax BEFORE discounts(freelancer income tax)
28.500CZK – 27.840CZK – 24.840CZK = 0CZK
+ tax bonus 15.204CZK + 19.404CZK = +34.608CZK
Congratulations to Alex, who will not only pay 0 tax, but will claim extra money.
Alex will pay 12 x 2.393CZK = 28.716CZK/minimal annual deposit
For the tax calculation, he will use his tax rate 240.000CZK and always divide by 2.
28.716CZK is less than 120.000CZK, so his health insurance deposit payment will be “minimal,” which is set by the health insurance office every year, and stands at 2.393CZK for year 2021.
Social Security Tax
Alex will again use 240.000CZK / 2 = 120.000CZK as a tax rate.
120.000CZK x 29,2 % = 35.040CZK
Minimal annual deposit for 2021 is 31.056CZK (which Alex paid)
35.040CZK – 31.056CZK = 3.984CZK (Alex shall pay as extra)
Is the Czech Republic the best country for freelancing?
For expats moving abroad, one of their top concerns is finding the best country for freelancing. The Czech Republic is popular for expats looking for work, as it is fairly easy to be approved for a freelance license and there is no limit to how much you can earn on a Czech freelancer salary. Czech freelancing taxes are also quite low or even zero for those earning below a certain amount of money annually. Zinvo tax or Czech freelancing taxes can be tricky at first, but with some research or support from an accountant or agency, you can find why many think the Czech Republic is the best country for freelancing.
Pexpats has been assisting expats from around the world adjust to their new lives in the Czech Republic. We offer services such as obtaining temporary residency cards, registering for parking permits, arranging Czech trade licenses, as well as our free Czech trade license tax calculator. We have the experience to take you through the processes of starting life in your new home, or updating legal statuses or visa while living in Prague. We developed an app so you can find quick answers and support at every step of the way, and will never have to navigate the bureaucracy and legal procedures alone.