Czech tax records of income and expenses: full guide

Tax records of income and expenses for sole traders

Daňová evidence — tax records — is how most Czech sole traders (OSVČ) track their business for tax purposes. It is simpler and more approachable than double-entry accounting, but it still comes with rules laid down by law. This guide covers what it involves, how to keep it properly and where the traps are.

What tax records are and who keeps them

Tax records are governed by Section 7b of Act No. 586/1992 Coll., on income taxes (the ITA). They consist of a record of income and expenses and a record of assets and debts (receivables and payables).

Tax records are kept by sole traders with income from self-employment under Section 7 of the ITA who do not claim expenses as a percentage of income. A sole trader who is not entered in the commercial register and whose turnover stays under CZK 25,000,000 is not obliged to keep accounts and may keep tax records instead.

Tax records are not the same thing as accounting. Accounting follows Act No. 563/1991 Coll. and is mandatory for companies and for sole traders entered in the commercial register or with turnover above CZK 25 million. Tax records are the simpler alternative for smaller sole traders.

The cash basis

The fundamental difference between tax records and accounting is when income or an expense is recognised:

• Tax records — income is recorded when the money is received (to the account or in cash), an expense when it is paid. The date the invoice was issued does not decide anything.
• Accounting — revenue and costs are recognised when they arise (the accrual principle), regardless of when the money moves.

In practice: if you issue an invoice in December 2026 and the customer pays it in January 2027, the income normally belongs in the 2027 tax records. The moment of actual payment therefore decides the period — though moving payments around artificially can have contractual as well as tax consequences.

What you have to track

The law requires records in four areas.

1. Income and expenses

The core of the whole thing. You record every cash movement connected with your business:

• Income — payments from customers, advances received, other business income
• Expenses — payments to suppliers, purchases of materials, running costs and deductible insurance contributions. Income tax advances are not deductible and are tracked separately.

For each entry, record:

• the date of the receipt or the payment
• the document number
• a description of what it was for
• the amount
• whether it is a taxable or a non-taxable item

That last distinction is the important one. Only taxable income and deductible expenses feed into the tax base. Non-taxable items — loans received and repaid, personal deposits and withdrawals — are recorded but leave the tax base alone.

2. Assets

Tangible and intangible assets used for business have to be recorded. The categories are:

• Long-term tangible assets — acquisition cost above CZK 80,000 and useful life over one year (computers, machines, vehicles, office equipment)
• Intangible assets (software, licences, patents) — since 2021 the separate tax treatment of intangible assets has been abolished (Section 32a of the ITA). The tax write-off equals the accounting write-off over the useful life, and there is no statutory value threshold for depreciation.
• Low-value assets — below those limits, charged straight to expenses

Long-term assets are not expensed in the year of purchase; they are depreciated over time according to the depreciation groups (3 to 50 years, depending on the type of asset).

3. Receivables

Amounts your customers owe you — typically unpaid issued invoices. Record:

• the invoice number
• the customer
• the amount
• the due date
• the status (unpaid, partly paid, paid)

4. Payables

Amounts you owe your suppliers — typically unpaid received invoices, recorded the same way as receivables.

Taxorio helps you follow the status of issued invoices and your stored expense documents. Complete tax records, though, need more than income and expenses: a record of assets and debts, receivables, payables, cash where relevant and whatever else your situation calls for. Use Taxorio as the source data and the record of supported documents — not as an automatic substitute for every statutory record.

How to categorise expenses

Sensible categories make the records readable and make a tax inspection easier. Every expense should sit in a category that matches how it is treated for tax:

• Software and licences — programs, cloud subscriptions, domain names
• Hardware and equipment — computers, monitors, printers, phones (up to the low-value asset limit)
• Travel — fares, fuel, subsistence allowances where the conditions are met, accommodation on business trips
• Phone and internet — tariffs and mobile data, in the proportion used for business
• Services — accounting, legal work, hosting, marketing, training
• Office — rent, utilities, office supplies
• Other — anything that does not fit the categories above

Taxorio ships with a fixed list of predefined expense categories — software, hardware, materials, tools, travel, fuel, phone, services, office, insurance, training and more — which covers what a sole trader usually needs and keeps sorting quick.

Recording income: the routine

Income is recorded on the basis of payments received:

1. Issue the invoice — with all the required details
2. Send it — electronically as a PDF, or by post
3. Watch for the payment — check your bank statement
4. Record the income — once the money lands, enter it with the date it was received

Taxorio lets you record the payment status on the invoice itself. The dashboard then shows total income for the period against your expenses.

Recording expenses: the routine

Expenses are recorded on the basis of documents you have paid:

1. Receive the document — an invoice or a receipt
2. Pay it — by transfer, card or cash
3. Record the expense — with the date of payment, and assign a category
4. Keep the document — the original or a digital copy

Taxorio includes AI recognition of documents: photograph a receipt or an invoice and the app reads the supplier's name and IČO (the Czech business identification number), the amount, the tax base and the VAT, and fills them in for you to check. If you work at a desktop, mobile scanning bridges the gap — the desktop shows a QR code, you scan it with your phone and photograph the documents there, and the photos arrive in the app.

Deductible and non-deductible expenses

Not every expense reduces your tax base. To be tax deductible under Section 24 of the ITA, an expense must:

• be incurred to generate, secure and maintain income
• be evidenced by a document
• be of a reasonable amount

Deductible examples: materials, business software, accounting services, a sole trader's social security and health insurance contributions, depreciation, travel allowances, phone and internet in the business proportion.

Non-deductible examples: personal spending unrelated to the business, fines and penalties (with exceptions), entertainment and hospitality, personal income tax itself, loan repayments (the principal — interest may be deductible).

The alternative: flat-rate expenses

If you would rather not track actual expenses, you can claim expenses as a percentage of income. The percentages are set by law according to the activity:

• 80 % — agricultural production, forestry and water management, and craft trades — capped at CZK 1,600,000
• 60 % — other trade licence (živnost) activity — capped at CZK 1,200,000
• 40 % — other self-employment such as royalties, interpreting or expert work — capped at CZK 800,000
• 30 % — rental income — capped at CZK 600,000

With flat-rate expenses you do not have to evidence individual costs, but you still have to keep records of income and receivables. It pays off when your real expenses are lower than the percentage.

How long to keep documents

• Tax-record documents (invoices, receipts) — at least as long as the tax can be assessed, i.e. under Section 148 of the Tax Code generally three years from the end of the deadline for filing the return
• In practice, five years at least, because the assessment period can be extended — for instance when a tax inspection starts
• Tax documents of a VAT payer — 10 years from the end of the tax period in which the supply took place (Section 35 of the VAT Act)
• Accounting records (if you keep accounts) — five years
• Financial statements and annual reports — ten years
• Payroll sheets and social security documents — thirty years, for pension purposes

Electronic archiving is fully accepted as long as the documents stay legible and unaltered for the whole period. Store them as PDFs or as good-quality photographs.

The year-end close

At the end of the calendar year — which is also the tax period — you close the records:

1. Check the records are complete — every item of income and every expense is in
2. Take stock of receivables and payables — the position as at 31 December
3. Take stock of assets — check the asset records and calculate depreciation
4. Work out the tax base — taxable income minus deductible expenses
5. File the income tax return — form DPFDP7; for 2025 the deadline is 1 April 2026 on paper, or 4 May 2026 when filed electronically
6. File the annual statements (přehled) — the summary of income and expenses for the social security administration (OSSZ) and for your health insurer

Taxorio exports a CSV book of income and expenses as source data for the return. The DPFDP7 XML on the PRO plan covers the basic supported scenario of Section 7 income; other types of income, tax reliefs and deductions have to be added on the MOJE daně portal, and the whole output checked there before filing.

Keeping an eye on the numbers

A running picture of the business matters beyond tax. You should be able to say at any time:

• what your total income and expenses are for the current period
• what the current tax base looks like, as an estimate of what you will owe
• how much is sitting in unpaid invoices
• where you stand on VAT, if you are registered

Taxorio's dashboard shows income, expenses, VAT figures and charts, and the tax calendar lists the dates that are coming up.

The mistakes that come up most often

1. Recording income in the wrong period

Income belongs to the period when the money actually arrived, not when the invoice was issued. Comparing bank statements against the records is exactly how a tax inspection finds this.

2. Missing documents for expenses

Every deductible expense has to be evidenced. Without the document the expense cannot be claimed, so keep every receipt and invoice.

3. Personal spending in the records

Expenses unrelated to the business do not belong there. Where you use a phone or a car partly privately, claim only the business proportion.

4. Forgetting non-monetary income

Barter — payment in kind — is taxable income too and has to be recorded at market value.

5. Getting depreciation wrong

Assets above the threshold have to be depreciated according to their depreciation group. They cannot be written off into expenses in one go.

Summary

For most sole traders, tax records are a manageable way to track the business. What makes them work is the routine: record payments as they happen, keep the documents, separate taxable from non-taxable items, and keep the record of assets and debts alongside income and expenses.

Keeping it in a spreadsheet? The column layout and the limits of Excel are covered in Czech tax records in Excel 2026.

Official sources

• Czech Financial Administration — entrepreneurs and the self-employed
• Section 7b of the Income Tax Act — the content of tax records

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.