How Czech freelancer income tax is calculated
Personal income tax (DPFO) for Czech self-employed (OSVČ) is calculated from the tax base — the difference between income and expenses. You can deduct either actual expenses or a flat-rate percentage of income. The tax rate is 15% of the tax base; income above CZK 1,762,812 is subject to a higher rate of 23%.
Flat-rate vs actual expenses
Flat-rate expenses are simpler — you don't need to track individual receipts. The rate depends on your type of activity: 80% for craft trades (max CZK 1,600,000), 60% for other trades (max CZK 1,200,000), 40% for free professions (max CZK 800,000), and 30% for rental income (max CZK 600,000).
Freelancer vs employee — key differences
Employees pay 7.1% social insurance and 4.5% health insurance on gross salary. Czech freelancers pay 29.2% of the assessment base (55% of profit) for social insurance and 13.5% of 50% of profit for health insurance.