Main or side activity
According the law self-employed persons have to pay following contributions:
— prepayment for income tax (quarterly);
— prepayment for social insurance (monthly);
— prepayment for health insurance (monthly).
It does not mean, that every self-employed should pay all these prepayments at once. Important is, whether the self-employment is his main or side activity.
Self-employment as a side activity
If you are an employee in the Czech Republic and you register your individual business as a side activity, you do not have to pay any of the prepayments, because the contributions to social and health insurances is paying your employer. If your annual net income from business doesn’t cross the amount of 64.813 CZK, you don’t have to pay the prepayment contributions the next year too. When you cross 64.813 CZK, you should pay next year monthly contributions for side activity to social insurance: 789 CZK.
Side activity becomes main activity when annual income from business is bigger than your employee salary.
Self-employment as main activity
If you begin doing business as individual as your main source of income, you should begin to pay minimal monthly prepayments:
1.972 CZK for social insurance;
1.823 CZK for health insurance.
Overview of incomes
Until the end of April next year the self-employed should submit the Overview of incomes form to Health and Social insurances. It doesn’t matter whether they do this as their main or side activity. This form calculates the real contributions due last year. It is calculated using following tariffs:
— social insurance contribution =14,6% from the net income stated in the tax return;
— health insurance contribution = 6,75% from the net income stated in the tax return.
If the self-employed paid less, he should pay the rest to insurance office. By overpayment he could receive the money back. If he paid minimal contributions, insurance office doesn’t pay back.
Income tax prepayments
In the first year of doing business nobody has to pay income tax prepayments. Self-employed begin to make prepayments, only if they paid tax over 30.000 CZK last year.
