Do you work on Upwork, on Fiverr, or directly for a company abroad? Whether you write code for a startup in San Francisco, design logos for an agency in Berlin or translate texts for a client in London, your tax obligations stay in Czechia. Plenty of freelancers assume that money from abroad is taxed "somehow differently" — or not at all. The opposite is true. Here are the rules, and the trouble they save you.
The starting point: tax residence
The whole system rests on one concept: tax residence. Under Section 2(2) of the Income Tax Act you are a Czech tax resident if, in Czechia, you have:
- A place of abode — a permanent home available to you in circumstances suggesting you intend to live there, or
- Habitual presence — you spend at least 183 days here in a calendar year.
As a Czech tax resident you must declare and tax your worldwide income in Czechia, whatever country it came from. Money from Upwork for work done for an American client is taxed here exactly like money from a Czech company.
Freelancing abroad is still Section 7 income
Income from freelancing for foreign clients is income from self-employment under Section 7 of the Income Tax Act, the same as income from Czech clients. You need a živnost (trade licence) and you are an OSVČ (self-employed person) with all the rights and duties that come with it:
- Filing the personal income tax return (form DPFDP7)
- Paying income tax advances
- Paying social security and health insurance
- Keeping tax records or full accounts
- The option of flat-rate expenses — 80 % for craft trades and agriculture, 60 % for other trades, 40 % for the liberal professions
Double taxation treaties
When you work for clients abroad there is a risk the same income gets taxed twice, once in the client's country and once here. To prevent that, Czechia has double taxation treaties with more than 90 countries.
Two ways of relieving double taxation
1. The credit method
Tax paid abroad is deducted from your Czech tax liability. If you paid CZK 10,000 abroad and your Czech tax comes to CZK 25,000, you pay CZK 15,000 here. The credit may be ordinary (capped at the Czech tax attributable to the foreign income) or full (the whole foreign tax is deducted).
2. The exemption method
The foreign income is taken out of the Czech tax base entirely; you tax only your Czech income here. This is better when the foreign rate is lower than the Czech one. Exemption may be with progression — the foreign income still counts when the rate is determined — or full.
Which method applies?
It depends on the particular treaty and on the type of income. Every treaty is its own document. For example:
- United States — credit method (ordinary credit)
- Germany — exemption with progression for most types of income
- United Kingdom — credit method
- Slovakia — credit method
Four situations you are likely to be in
1. Working through Upwork or Fiverr
Upwork and Fiverr are American platforms, but the clients can be anywhere. In the overwhelming majority of cases neither the platform nor the client withholds any tax. You receive the gross amount less the platform fee and tax the whole thing in Czechia as self-employment income.
The platform fee — Upwork charges 10 %, Fiverr 20 % — is a deductible expense if you claim real expenses. Under flat-rate expenses you do not claim it separately, because the flat rate already covers it.
2. A direct client in the EU
You work directly for a German company under a contract for work or services. In that case:
- The income is taxed in Czechia — services supplied by a self-employed person are usually taxed in the provider's country of residence
- The client withholds nothing, and should not, as long as you have no permanent establishment in Germany
- You issue an invoice without Czech VAT, under the reverse charge (see the VAT section below)
3. A direct client outside the EU
You work for an American, Canadian or other non-European company. The principle is the same:
- You tax the income in Czechia
- The client should not withhold tax, unless you have a permanent establishment in that country
- If the client does withhold — some countries require it for certain types of income — you claim the credit under the relevant treaty
4. Remote work for a foreign employer
If you work as an employee rather than an OSVČ for a foreign company but do the work from Czechia, the picture changes. Employment income (Section 6 of the Income Tax Act) is taxed according to the treaty, and usually in the country where the work is physically done — that is, here. This is a complex area and deserves an individual assessment.
Converting foreign currency
Income in a foreign currency has to be converted into Czech crowns. You have two options:
- The uniform exchange rate under § 38 of the Income Tax Act — an average of the ČNB rates for the tax year, published by the General Financial Directorate after the year ends. Simpler: one rate for the year.
- The daily ČNB rate on the date the payment is received or the supply takes place. More accurate, more work.
Whichever you pick, you have to use it consistently for the whole tax period. For most freelancers the uniform annual rate is the more practical of the two. Note that Taxorio itself converts with the daily ČNB rate and does not offer the uniform rate — if you want to use it, you convert outside the app.
VAT on services for clients abroad
VAT on cross-border services is among the most tangled parts of the system, and one every freelancer needs to get right.
Services to EU businesses (B2B)
If you supply services to a business — a taxable person — in another EU Member State, the place of supply is the customer's country under Section 9(1) of the VAT Act. That means:
- You do not charge Czech VAT on the invoice
- You add the note "Tax to be paid by the customer" (reverse charge)
- You have to verify the customer's VAT number in the VIES system
- You file the EC sales list (souhrnné hlášení) — as a VAT payer and as an identified person alike
- Note: these supplies do not count towards the turnover that triggers compulsory VAT registration — under Section 4a of the VAT Act only supplies with a place of supply in Czechia count
Even a non-payer has to register as an identified person (Section 6i of the VAT Act) when supplying services with a place of supply in another EU Member State to a taxable person. The registration is due within 15 days of the first such supply.
Services to non-EU businesses (B2B)
For services supplied to businesses outside the EU, the place of supply is again the customer's country. The service is outside the scope of Czech VAT. You put the price without VAT on the invoice, and there is no EC sales list — that applies to EU supplies only.
Services to private individuals (B2C)
For services supplied to non-business customers, the place of supply is generally the provider's country, that is, Czechia, and you charge Czech VAT if you are registered. There are exceptions, and one of them matters for freelancers: electronically supplied services to consumers in another EU country are taxed where the customer is, not where you are. If you sell templates, courses or software to EU consumers, check that rule with your adviser before you set your prices.
What has to be on the invoice
An invoice for a client abroad should carry at least:
- Your identification — name, address, IČO (business ID), DIČ (tax ID)
- The customer's identification — name, address, VAT number for EU customers
- The invoice number
- The date of issue and the DUZP (date of taxable supply)
- A description of the services supplied
- The price in the agreed currency
- The VAT treatment — reverse charge, or outside the scope of Czech VAT
- Payment details: IBAN, SWIFT/BIC
The invoice can be in English or another language, but you should be able to produce a translation for the Czech tax office.
The most common mistakes
- Not declaring platform income — Upwork is not based in Czechia, but that has no bearing on your duty to declare. The tax administration receives data through automatic exchange (CRS, DAC7).
- Not registering as an identified person — supplying services to EU businesses triggers the obligation even when you are not a VAT payer.
- Converting currency the wrong way — using the bank's rate instead of the ČNB rate, or switching methods mid-year.
- Not checking the VAT number in VIES — to apply the reverse charge you have to confirm that the customer is registered for VAT in another Member State.
- Missing details on the invoice — an invoice without the reverse charge note or without the customer's VAT number is an easy target during an inspection.
Practical advice
- Open a foreign currency account — you save on conversion fees. Services such as Wise or Revolut offer decent rates.
- Record what the platforms take — Upwork, Fiverr and PayPal fees are deductible expenses.
- Keep your contracts — client contracts, and even e-mail exchanges, can matter when you have to show what the income actually was.
- Watch the VAT turnover — services with a place of supply in another EU country do not count towards the CZK 2,000,000 threshold for compulsory VAT registration (Section 4a of the VAT Act), but they do trigger registration as an identified person.
- File the annual statements on time — the přehled for the social security office and your health insurer is due within one month after the deadline for the income tax return.
Where an invoicing tool helps
Invoicing abroad adds layers to the ordinary administration of an OSVČ: checking VAT numbers in VIES, setting the right VAT treatment, converting currency at the ČNB rate, and collecting the data for the EC sales list.
Taxorio lets you issue invoices with the correct VAT treatment, looks up companies in ARES by IČO and checks EU VAT numbers in VIES, generates QR payment codes and converts foreign currency at the daily ČNB rate. On the PRO plan, at CZK 69 a month, you get unlimited invoices and the XML exports for filing: DPHDP3 (VAT return), DPHKH1 (VAT control report), the EC sales list, and DPFDP7 for income tax. The free plan lets you try the whole workflow on a couple of invoices a month first.
More on the registration duty this can trigger: the identified person and when you become one.
Taxorio scope: Taxorio provides invoicing and income/expense records for Czech sole traders. It is not full accounting or personalised tax advice. For an unsupported or unusual case, verify the treatment with a Czech accountant or tax adviser before filing.