Disclaimer: This guide explains general rules checked on 17 July 2026. It is not individual Czech tax or legal advice. Retention periods depend on why a document is kept, your registration status, and the transaction concerned.
A foreign sole trader in Czechia is often told: “Choose the expense percentage and you can throw away every receipt.” The useful part of that advice is that percentage expenses (výdaje procentem z příjmů) do not require proof of each real purchase as an income-tax deduction. The misleading part is “every.” You still need reliable income records, a receivables register, customer documents, and any files required by VAT, contracts, ownership, or a future change of method.
This article uses OSVČ (osoba samostatně výdělečně činná) for a self-employed individual. It does not assume Czech citizenship or tax residence. Cross-border income, residence, and permanent-establishment questions may require a separate analysis.
Percentage expenses are not the Czech flat-tax regime
| Czech term | What it does | Records consequence |
|---|---|---|
| Výdaje procentem z příjmů | A statutory percentage of income is claimed as expenses on an ordinary income-tax return instead of actual costs. | You keep income records and a receivables register. You do not prove each actual purchase for that percentage deduction. |
| Paušální daň / paušální režim | A separate flat-tax regime with a monthly combined payment when all eligibility conditions are met. | It has its own income and band tests. It is not an English synonym for percentage expenses. |
If you need rates, caps, and worked calculations, use our broader comparison of Czech flat-rate and real expenses. Repeating the calculator here would obscure the records question: what must remain auditable after the percentage method is chosen?
The income-tax minimum
Under Section 7(7)–(8) of Act No. 586/1992 Coll., the Income Tax Act, the percentage is deemed to include all expenditure connected with earning the relevant self-employment income. A laptop, subscription, travel cost, or subcontractor invoice is therefore not deducted again. The same provision requires the taxpayer to maintain income records and records of receivables arising from that activity.
The Czech Financial Administration’s official Entrepreneur (OSVČ) page states the same distinction. Full Czech tax records (daňová evidence) under Section 7b contain income, expenditure, assets, and debts. Section 7(13), however, directs non-accounting sole traders to Section 7b when they do not use percentage expenses. A percentage user is not simply keeping “daňová evidence minus receipts”; the statutory record set is different.
What a usable income ledger should show
- the date and method by which the income was received,
- the amount, original currency, and documented CZK conversion where relevant,
- the customer and invoice number or another unambiguous description,
- the activity category when different income streams qualify for different percentages,
- the related bank line, cash document, platform statement, or set-off,
- refunds, cancellations, partial payments, and corrections.
A yearly bank total is not enough to explain the business. A transfer between your own accounts is not fresh revenue; a platform payout may be net of fees; cash does not appear in the bank; and a deposit may require different treatment from payment of a completed job. Your record should show who paid, what they paid for, when the value was received, and which activity produced it.
A receivables register is more than a folder of invoices
For every unpaid or partly paid invoice, record the number, customer, date it arose, due date, original amount and currency, payments received, and balance. Update the item after payment, credit note, set-off, assignment, or write-off. At year-end you can then distinguish cash income already received from amounts still owed. The invoice is evidence of the claim; the register shows its current state.
The expense method does not cancel invoice obligations
Percentage expenses answer how your income-tax base is calculated. They do not answer whether you must issue a document to a customer. Under Section 31 of Act No. 455/1991 Coll., the Czech Trade Licensing Act, a trade entrepreneur must provide a sales or service document at the customer’s request with the required identification, date, description, and price. A contract, consumer rule, or profession-specific law can require more.
A VAT payer has separate tax-document duties. Retain outgoing invoices, advance tax documents, credit notes, and evidence of delivery to the customer. They substantiate the amount and nature of income and help reconcile open claims. Sequential numbering and customer identification are not universal requirements for every document issued by a non-VAT, non-accounting sole trader. They apply where VAT, accounting, contractual, consumer or sector-specific, or another special rule requires them. Each document must instead satisfy the rules for its particular type and purpose.
VAT records remain a separate track
An OSVČ can use percentage expenses for income tax while being a Czech VAT payer. Act No. 235/2004 Coll., the Czech VAT Act, requires VAT payers and identified persons to keep data needed for their VAT obligations. Those VAT records do not disappear because the income-tax return uses an expense percentage.
- VAT payer (plátce DPH): retain received tax documents and supporting evidence for input-VAT claims, plus information about supplies, taxable supply dates (DUZP), rates, and corrections. The VAT Act requires tax documents to be retained for 10 years from the end of the VAT period in which the supply took place.
- Identified person (identifikovaná osoba): this status normally does not provide the ordinary input-VAT deduction of a payer, but invoices and transaction data are needed for relevant cross-border services or acquisitions and any return or recapitulative statement.
- Non-payer without a special VAT registration: the percentage method does not itself create VAT ledgers, but the income, receivables, and customer-document obligations still apply.
Assets and stock can still need a file
A percentage user does not keep the entire Section 7b asset ledger merely because of the income-tax expense calculation, and depreciation is not claimed on top of the percentage. Still, create an assets file for expensive equipment, vehicles, and stock. Keep the acquisition document, date and price, serial number, finance agreement, any earlier depreciation history, business/private use, and disposal details.
The reason may sit outside the percentage deduction: a VAT business-asset record, proof of how goods offered for resale were acquired, warranty, insurance, finance, leasing, or a grant. It also matters if you later move back to actual expenses. One percentage year should not erase the history of an asset acquired under an earlier method.
Switching methods is not just changing one checkbox
Section 7 says the chosen percentage treatment cannot be changed retrospectively. You may switch for a later tax year, but the boundary can require transition work. When moving from actual expenses to percentage expenses, Section 23 and the closing tax records for the earlier year may require an adjustment involving receivables, stock, reserves, and certain liabilities. A supplementary return for that earlier year can be required.
When moving in the other direction, you need clean opening information about receivables, liabilities, stock, and asset history so that the new actual-expense records neither deduct an item twice nor omit it. The correct mechanics depend on the direction and the exact facts. Review the transition before filing the first affected return, particularly if you have substantial invoices outstanding or inventory.
Why retain expense receipts voluntarily?
| Purpose | Useful file | What it proves or enables |
|---|---|---|
| Annual method review | Actual-cost summary and major supplier invoices | You can compare next year’s options using facts rather than memory. |
| VAT | Tax document, contractual evidence, and payment trail | VAT has its own document and substantive conditions. |
| Assets and stock | Acquisition, finance, serial number, disposal | Ownership, insurance, resale, VAT, and future records. |
| Warranty or dispute | Order, invoice, delivery, and correspondence | The product, price, date, and agreed performance. |
| Grant, loan, or insurance claim | Documents required by the programme or contract | Private contractual conditions survive the tax choice. |
These are operational reasons to retain a file. They do not turn the purchase into an extra income-tax deduction. A practical archive labels documents as “income/receivables required,” “VAT or contract required,” or “useful for managing the business,” instead of pretending that every receipt has the same legal status.
A lean monthly workflow
- Where a numbering sequence applies, connect each outgoing document to the customer, receivable, and settlement.
- Close the income ledger monthly across banks, cash, platforms, set-offs, and refunds.
- Review the live receivables register instead of relying on a PDF folder.
- Classify purchase files by retention purpose: VAT, asset, contract, warranty, or management information.
- Before a method change, export receivables, liabilities, stock, and assets and obtain advice on the transition adjustments.
Taxorio can keep outgoing invoices, their payment status, and recorded expenses together. Retaining purchase source files can support VAT preparation and show your real cost base for the next annual decision. Taxorio does not decide the legally required retention period, replace a Czech tax adviser, or make an individual purchase deductible on top of the statutory percentage.