The tax base of any business is basically incomes minus expenses.

But the Czech Act on income tax allows the self-employed to declare their expenses with percentage, even when their real expenses that year were lower. There are two things to pay attention at: there are some ceiling amounts of tax-deductable expenses, and if you change between percentage and real expenses, it has some impact on tax base of last year.

For artisans and farmers: 80% with ceiling amount of 1.600.000 CZK.
For common self-employed persons: 60% with ceiling amount of 1.200.000 CZK.
For free professions (lawyers, advocates, medics…): 40% with ceiling amount of 800.000 CZK.
For those who rent real estate: 30% with ceiling amount of 600.000 CZK.

If you change the ways of counting tax from real expenses to percentage or contrarily, you should change the last tax base regarding the price of stock, claims and debts. It is done by submitting additional tax return for the last year, which is a normal procedure and doesn’t lead to any sanctions. To make it the right way it is better to let it do by the professionals.