Freelancer Payment Calculator 2024

Use the Freelance Payment Calculator to see your annual net income after paying social security, health insurance, and income tax. Note: The calculator automatically deducts the standard taxpayer’s discount available to all Czech taxpayers from income tax calculations. In 2024, this discount is CZK 30 840. Thus, if taxable net income is lower than this amount, the total income tax you owe is zero.

If you just started freelancing in the Czech Republic, it’s time to register a trade license and officially start invoicing clients. The Czech trade license (Živnostenský list) is necessary to declare self-employed income. It registers the taxpayer for certain business activities, and provides tax and business identification to invoice goods and services. Need help creating legal Czech invoices? Try Pexpats’ free Online Invoice Generator for automated, hassle-free invoicing.

There are two tax rates for Czech freelancers in 2024: the standard 15 percent, and the progressive 23 percent. Which tax rate you pay depends on your annual clean income. In 2024, the income limit for the 23% tax rate is average gross salary multiplied by 36. That is CZK 43,967 (average gross) x 36 = CZK 1,582,812. For earnings of this amount or lower, the 15% tax rate applies. Any clean income over this amount then has a 23 percent tax rate.

In the first year of freelancing, you pay only the minimum monthly social security and health insurance deposits. At the end of the year, you may then need to pay a balance depending on the amount of income earned. In 2024, social security will require 29.2% from fifty-five percent of annual clean income. Health insurance will be 13% from fifty-five percent of annual clean income. Thus, if your earnings are higher than what the minimum deposits cover, it’s advisable to pay higher deposits voluntarily. This will help to offset any final balance remaining at the end of the year.

The 60/40 method provides an expense allowance for 60% of gross annual income to taxpayers. In this case, the taxpayer will not need to provide any invoices to prove real expenses. Instead, they simply deduct 60% from gross income, and the remaining 40% is taxable. Note that this method is only applicable to earning under CZK 2 million per year.

It’s possible to deduct any business expenses from your income tax report, but only if filing ‘real expenses’. In this case, you cannot file using the 60/40 method. Thus, it’s always best to consider whether your real expenses are higher than 60% of your gross income. Usually, this will not be the case, especially for freelancers in consultancy, sales, and IT industries. These workers tend to have less business expenses and find the 60/40 method more affordable.

To find net income from crypto or from capital gains, use: sale price - purchase / investment price - transaction costs = tax base. For crypto, this might also include any transaction fees, which are deductible from the final sale price. The remainder is the taxable profit (tax base), which then carries 15% or 23% tax rates. Need a bit more information? Take advantage of Pexpats’ Crypto & Capital Gains Tax Calculator to estimate your taxes and find additional resources.

“Tax discounts” are any deductibles which reduce a taxpayer’s total income tax. Take for examples the standard taxpayers’ discount, life insurance payments, mortgage interest rates, and claiming a spouse with lower income. Each of these events reduces the total taxable net income on the tax return. A tax credit on the other hand is a refund amount from the financial office depending on your income. One of the most common tax credits is claiming a child under 21 years old. Taxpayers may also use tax credits in replace of tax discounts when filing.

Freelancers are eligible to claim a maximum deductible of CZK 150,000 for mortgage interest rates relief. Note that this is only for the months in which you have an active trade license and are also paying into a mortgage.

Taxpayers are also eligible to claim tax deductibles for any investments into private life insurance, or private pension and retirement funds. For life insurance, there is a maximum deductible of CZK 24,000. The same amount applies to claims for private pension and retirement savings (within the non-government sector).

Yes. You should have a Czech bank account for receiving payments for all invoices. It’s also more convenient for keeping track and calculating trade license taxes, insurance, and your social security contributions.

There is no law stating that you must have a business bank account. However, having one can make tax reporting much easier. This is especially true if you do not want to use the 60/40 method, and instead will file taxes declaring real expenses. In this case, having a business bank account can save not only time but also reduce costs in accountancy fees. It also makes it easier to keep track of all business-related expenses in general, including contributions to social security and health insurance.

Yes - it is possible to invoice in EUR or in USD, but always add a note onto the invoice stating the exchange rate from CNB on the date of issue. For example, a note on the invoice would say: “on 1.1.2024, the exchange rate of EUR 1 = CZK 24,48.

Students earning less than CZK 86,000 annually do not pay any taxes or contributions to social or health insurance.

The Czech Republic is a popular country for expats to come and work as freelancers. For one, taxes on freelancers aren’t as high as in other nations. Secondly, it’s possible to earn a comfortable salary while integrating into the country. Freelancers may also take advantage of the flat tax option to simplify tax reporting even further. Curious to learn more? Start with our flat tax registration services to see if a flat tax regime makes sense for you.

Want help filing taxes accurately, on-time, and to your advantage? Simplify the entire process with Pexpats’ professional tax accountants and services. Our agents can file taxes on the behalf of both freelancers and full-time employees, no matter how complex the tax return. We investigate and suggest the best tax regime for each individual case, including claimable tax relief, discounts and deductibles. Just let us know how we can help, and we’ll start on your taxes immediately.

Meet Alex, a freelancer marketing consultant earning CZK 600 000 per year and using the 60/40 tax reporting method. In this case, Alex reports:

• 60% of CZK 600,000 = CZK 360 000 (expenses), and 

• 40% of CZK 600,000 = CZK 240,000 (tax base).

Additionally, Alex has a wife, Kate. She is on parental leave, and she and Alex are raising two children together. Meanwhile, Kate’s income does not surpass CZK 68 000, so Alex claims a wife with lower income on the tax return. On top of this, Alex is paying a mortgage interest rate of CZK 50,000 annually.

What discounts can Alex claim? Let’s look:

• Standard taxpayer’s discount = CZK 30,840 

• Spouse with income below 68 000 CZK annual = CZK 24,840 

• Tax discount for the first child = CZK 15,204 

• Tax discount for the second child = CZK 22,320 

But what about the payments in mortgage interest fees? These can also reduce the tax base! The final calculation then becomes:

• CZK 240,000 – 50,000 = CZK 190,000

Now, Alex is looking at:

• 15% tax rate on CZK 190,000 = CZK 28,500 income tax (before discounts)

• CZK 28,500 - 30,840 (the standard taxpayer’s discount) - CZK 24,840 (additional tax relief) = Zero income tax owed.

• Also, as Alex’s discounts total more than the income tax he should pay, he is entitled to a tax bonus of CZK 15,204 + 22,320 = CZK 37,524.

Not only has Alex reduced his income tax to zero in this case, he claims money back in his tax return.