The recently approved amendment of VAT Act and other acts introduces also some fundamental changes effective from 1 January 2023 to the flat-rate tax institute, which was firstly introduced from 1 January 2021.
The new adjustments concerning the flat-rate tax follow the increase of the limit for value added tax payers to CZK 2 million. In order to enter the flat-rate regime, the threshold for income from self-employment has been increased from CZK 1 million to CZK 2 million.
As the increase in the income limit for entry into the flat-rate regime allows for a flat-rate tax to be imposed on personal income tax payers with a very wide range of incomes, the flat-rate tax and the public insurance premiums are no longer set at the same level for everyone, but three bands of the flat-rate regime are introduced, derived from the amount and nature of the taxpayer’s income. In each of the selected bands, taxpayers will pay a different amount of flat-rate advances and, as a consequence, the flat-rate tax and the flat-rate public insurance premium will be different.
Who are the beneficiaries of the individual bands of the flat-rate regime?
Band I:
- Taxpayers whose income from self-employment in the previous tax year did not exceed CZK 1 million, irrespective of the independent activity from which this income is derived.
- Taxpayers whose income from self-employment in the previous tax year was up to CZK 1.5 million, if at least 75% of such income consists of income to which may otherwise be applied percentage expenses at the rate of 80% or 60%.
- Taxpayers whose income from self-employment in the previous tax year was up to CZK 2 million, if at least 75% of such income is income to which expenses may be applied as a percentage of income at the rate of 80%.
Band II:
- Taxpayers whose income from self-employment did not exceed CZK 1,5 million in the previous tax year, irrespective of the type of the business activity
- Taxpayers with income from self-employment in the previous tax year up to CZK 2 million, if at least 75% of such income is income to which expenses may be applied as a percentage of income at the rate of 80% or 60%.
Band III:
- Taxpayers whose income from self-employment did not exceed CZK 2 million in the previous tax year, irrespective of the self-employment activity.
What is the amount of monthly lump-sum advances and lump-sum tax?
The amount of the taxpayer’s lump-sum advances in the 2023 advance period is the following amount per month by lump-sum band:
- Band I of the flat-rate scheme: CZK 6 208
- Flat-rate band II: CZK 16 000
- Flat-rate band III: CZK 26 000
Please do not hesitate to contact us should you need any further information or assistance with respect to the flat-rate regime.