Why the Czech Republic Has the Real Lowest Tax Rate for Freelancers and Digital Nomads
Most lists name Bulgaria, Romania, or Cyprus as Europe’s low-tax countries. But when you compare real tax results — not just flat percentages — the Czech Republic comes out ahead. Freelancers, startups, and digital nomads can pay as little as around 4 % real income tax at €60 000 yearly income.
The Myth of 0% Tax Countries for Freelancers
At Pexpats, we often meet freelancers who first look for a 0 % tax country before realizing that even “tax-free” systems have hidden personal taxation. In practice, a permanent 0 % personal-tax country does not exist.
Corporate 0 % is not the same as personal 0 % — Estonia doesn’t tax retained profits, but once dividends are paid, 22 % personal income tax applies in 2025 (and 24 % from 2026).
Residence and non-dom regimes — Cyprus offers 0 % up to €19 500, but income above this rises from 20 % to 35 %.
Exit taxes — France, Germany, Spain, and the Netherlands can tax unrealised gains when you leave.
CFC and anti-avoidance rules — If you run a zero-tax company without real substance, your home country can re-tax your profits.
The real question is where freelancers and digital nomads actually pay the lowest real tax in Europe.
2025 Comparison — Official vs. Real Tax Rates for Freelancers in Europe
The overview below compares official and real personal income-tax rates at €60,000 yearly income for freelancers, digital nomads, and IT professionals in 2025. These figures show where the real tax burden is lowest — not just the statutory percentage.
Czech Republic — 15 % up to CZK 1,676,052 (about €67,000), 23 % above. Using the 60/40 expense deduction rule, only 40 % of income is taxed. After the CZK 30,840 (around €1,230) discount, freelancers in the Czech Republic pay about 4 % real income tax — the lowest in Europe for self-employed professionals.
Bulgaria — 10 % flat personal-income tax on most freelance and business income. Real tax: around 10 %.
Romania — 10 % flat tax on independent activity. Social and health contributions apply above thresholds, so the total real burden is slightly higher.
Cyprus — 0 % up to €19,500, then progressive 20–35 %. Real tax around 30 % at €60,000.
Estonia — 22 % personal-income tax (24 % on dividends from 2026). Corporate profits remain untaxed until distribution.
Exchange rate used: CZK 25 = €1.
For exact calculations, including Czech social and health insurance, use Pexpats’ online tools
Why the Czech Republic Has the Lowest Real Tax in Europe
There are two main reasons why freelancers in the Czech Republic achieve the lowest real income tax in Europe.
1. The 60/40 Method
Freelancers can deduct 60 % of gross income as fixed expenses, even with zero real costs. Tax is paid only on the remaining 40 %.
Example (based on €60 000 gross income):
Tax base = €24 000 (40 %)
15 % income tax = €3 600
Subtract basic discount €1 230 (CZK 30 840)
Final tax about €2 370 — around 4 % real income tax
This combination of the 60/40 deduction and the basic credit makes the Czech Republic the lowest real-tax country in Europe for freelancers, consultants, and digital professionals.
2. Flat Tax (paušální daň) in the Czech Republic
Since 2021, self-employed freelancers can choose the Czech flat-tax regime — a simplified system combining income tax, social, and health payments into one monthly amount.
In 2025 (Band I, for income up to CZK 1 500 000 — about €60 000), the income-tax component inside this flat-tax payment is only CZK 100 per month (about €4), which is €48 per year. That equals roughly 0.08 % of a €60 000 income.
Other parts of the flat-tax payment cover social and health insurance required by Czech law. Even with these included, the Czech Republic remains the lowest real-tax country in Europe for freelancers and remote professionals.
Applications for the Czech flat tax can be filed 100 % online under power of attorney through Pexpats.
0 % Tax on Crypto and Capital Gains in the Czech Republic
Starting February 15 2025, the Czech Ministry of Finance confirmed two major rules that make the country one of the few EU jurisdictions where crypto profits and capital gains can be tax-free under defined conditions., This applies to both individual investors and freelancers under Czech tax law.,
1. Holding crypto for more than 3 years
If you hold cryptocurrency for at least three years, the profit from its sale is fully exempt from personal income tax.
Example:
you bought Bitcoin in 2021 and sell it in 2025 — your profit is 0 % crypto tax, regardless of the amount.
2. Crypto profit under €4 000
If your total annual profit from crypto is under €4 000, it is also tax-free, even if the holding period is shorter.
Example: You bought Ethereum for €4 000 and sold it for €7 900 within the same year. Your profit is €3 900, which is below the €4 000 limit — therefore, you pay 0 % crypto tax.
3. Capital-gains rule
The same three-year exemption applies to shares and other investment gains — after this period, the capital-gains tax is 0 %.,
If crypto or investment income doesn’t meet these exemptions, it must be declared as part of your personal income tax using the 60/40 method or the flat-tax regime.,
Use the Pexpats Crypto & Capital-Gains Calculator to check whether your profit qualifies for 0 % tax or falls into the taxable band.
FAQ — The Lowest Tax Countries in Europe (2025)
1. Do 0 % tax countries exist in Europe? No. A permanent 0 % personal-tax country doesn’t exist in practice. Even if company profits are tax-free, dividends or personal income usually face taxation under residence or withholding rules.
2. Why is Estonia not truly tax-free? Estonia taxes retained profits at 0 %, but once dividends are distributed, a 22 % personal-income tax applies (24 % from 2026).
3. Which countries have the lowest real taxes in Europe? In 2025, the Czech Republic, Bulgaria, and Romania offer the lowest real tax for freelancers. The Czech Republic often wins because of its 60/40 expense rule and flat-tax regime.
4. What is an exit tax? France, Germany, Spain, and the Netherlands can tax unrealised capital gains when a taxpayer relocates abroad — this is called an exit tax.
5. How much tax do freelancers pay in the Czech Republic? Using the 60/40 rule, only 40 % of income is taxed at 15 %. After the €1 230 basic credit, the real tax on €60 000 income is about 4 %.
6. What is the Czech flat-tax regime? The flat tax (paušální daň) combines income tax, social, and health payments. In 2025, freelancers earning up to €60 000 pay only €48 yearly income tax — roughly 0.08 % of income.
7. Is the Czech Republic the lowest-tax country in Europe? Yes. For freelancers, tech workers, and digital nomads, the Czech Republic offers the lowest real personal-income tax in the EU when applying the 60/40 rule or the flat-tax system.
8. Is crypto tax-free in the Czech Republic? Yes. Crypto profits are tax-free after three years of holding or if yearly profit is under €4 000. These rules were confirmed by the Czech Ministry of Finance in February 2025.
9. Are capital gains also tax-free? Yes. The same three-year exemption applies to shares and other investments. After that period, capital gains are fully exempt from Czech income tax.
10. Where can I calculate my real tax in the Czech Republic? Use Pexpats tools:
Content reviewed by Pexpats tax specialists — updated on 8 October 2025.
