If you hope to extend your business visa or long-term residency in 2023, make sure that you don’t forget about any income invoicing for your annual tax report 2022, such as freelance income, capital gains, cryptocurrency income, etc..
Your proof of income will be your annual tax report for 2022 for your visa extensions in 2023! The Immigration office has a fixed income calculation. If you are single and have no children, your final monthly income should be at least 30 000 CZK (approximately in clean), according to your annual tax report for 2022.
For family couples or families with children, clean income calculations are as follows.
The amount of the subsistence minimum
According to Government Regulation No. 409/2011 Coll. , the amount of the subsistence minimum for an individual is 4 620 CZK.
The amount of the subsistence minimum of a person who is determined to be first in order is CZK 4 470 a month.
The monthly amount of the subsistence minimum of a person who is determined to be second in order is;
CZK 4 040 for a person over 15 years, who is not a dependent child,
CZK 3 490 for a dependent child from 15 to 26 years,
CZK 3 050 for a dependent child from 6 to 15 years
CZK 2 480 for a dependent child under 6 years.
Costs for housing * updated autumn 2022
The highest amount of normative costs for housing since October 1st 2022 according to Government Regulation No. 449/2016 Coll. is:
CZK 18 129 for one person or two people in a family
CZK 20 812 for three people in a family
CZK 24 995 for four and more people in a family
And you should add 2 944 CZK for social tax monthly and VZP Health insurance 2 722 CZK (if you have a Czech public health insurance) monthly in 2023. These 2 amounts are minimum deposits, so if your income has been higher and caused an increase of your monthly deposits, you shall consider those amounts instead!
For example, you are a family of US citizens living in the Czech Republic, you, your spouse and 4 years old child. Your clean income should be as follows:
Subsistence minimum 10 990 CZK + Costs for housing 20 812 CZK + 2 944 CZK + 2 722 CZK = 37 468 CZK
😁 Toto nechápem ??? And if it is your first visa renewal you should add 5176 CZK social tax (in case both parents are business visa holders under trade license) and 4786 health insurance (in case both parents are business visa holders under trade license).
So the amount 37 468 CZK shall be the minimum of your family’s monthly income according to immigration office calculation for the year 2023. And amount 37 468 CZK x 12 months = 449 616 CZK, which should be your minimum clean annual income after income taxes + penalties for delayed payments of social and potentially also public health insurance for 2022.
The Czech trade license holders can choose various types of taxation methods. Method 60/40 is the most common. The collection of payment receipts or invoices from expenses is not necessary. It means, there is a fixed 60% cost allowance and 40% is considered a clean or “net” income.
Income tax for freelancers is 15% of net income and there is an additional 30 840 CZK tax discount given to everyone with a trade license.
For example, if total gross income for last year was 300 000 CZK, then 300 000 – 60% cost allowance (fixed expenses) = 120 000 clean income. 15% tax will be paid from 120 000 which means 120 000 - 15% = 18 000 CZK (tax amount) - 30 840 (tax discount) = 0 CZK (final tax amount).
In this example, taxes will not be paid. This method is convenient and the best solution for EU citizens and their NON EU family members who don't have Czech business residence.
We don’t recommend this method for other nationalities, who need to renew their visas or residency permits in the future, because they may end up with low “net” income (40%), which may not cover their monthly expenses calculated by the Immigration Office. Not being able to prove income leads to visa and residence extension rejections.