From 1 January 2021, a flat tax will be introduced – a single levy for self-employed persons who will no longer have to file a tax return. How high will the flat tax be? Which self-employed persons will be entitled to it?
The long-announced flat tax for the self-employed (self-employed) is already beginning to have firm outlines. Who will be affected and what are the advantages and disadvantages?
Flat tax of CZK 5,740 – too much or too little?
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What is a flat tax?
The flat tax is a payment by the state, which includes the payment of income tax, as well as social and health insurance contributions from the self-employed.
Self-employed persons will not have to send tax returns and statements of income and expenses to the health insurance company and the CSSA.
The flat tax should be completely dhuge and will depend on the preferences of the self-employed.
The disadvantage of the flat tax is that self-employed persons who have applied a tax benefit to children will thus lose their right to claim a tax bonus.
How high will the flat tax be?
The flat tax will be worth CZK 5,740.
How advantageous will the flat tax be?
The flat tax consists of levies in the amount of the minimum contribution to health insurance (CZK 2,514), the minimum contribution to social insurance increased by 15% (CZK 3,126), as well as personal income tax in the amount of CZK 100.
For sole proprietors who claim a tax bonus (and their spouse cannot claim it) or a spouse discount, a flat tax is unlikely to be advantageous.
However, for those who do not apply the tax bonus and want to save paperwork and running around the offices, this will be a useful thing, and due to the higher pension contribution (by 15%) they will be entitled to a higher pension, as most self-employed people currently only the minimum necessary applies.
Furthermore, the payment of taxes in the form of a flat tax will be advantageous for those self-employed persons who have low flat rates and pay more than CZK 100 per month in income tax.
When will the flat tax start paying?
The self-employed will be able to start paying a flat tax from 1 January 2021.
Tip: The tax return submission deadline is postponed to August 18, 2020
Who will be entitled to a flat tax?
Self – employed persons whose annual income will be less than CZK 800,000.
The Ministry of Finance expects that up to 120,000 self-employed persons could join the flat tax. More than 369 thousand self-employed persons should be entitled to a flat tax, but many are discouraged by the loss of the possibility of tax benefits.
How to start paying a flat tax?
A self-employed person who wants to pay a flat tax will have to do so notify the tax office and enter the flat-rate scheme.
Subsequently, he will be able to settle his levies with a flat tax.
If the taxpayer wants to return to the classic levies, he will again have to draw the attention of the financial administration to this fact. However changes will always be made on January 1.
What will be the impact of the flat tax on the state budget?
According to calculations by the Ministry of Finance, the flat tax will also have a positive impact on public budgets, namely CZK 280 million. The impact on social security premiums is also positive, in the amount of CZK 530 million.
When will the flat tax be approved?
The flat tax still has to go through the legislative process. He must pass the Chamber of Deputies, the Senate and must be signed by the President. It can be expected that the opposition will not like the loss of the right to apply the tax bonus and the wife discount.
The Speaker of the Chamber of Deputies, Radek Vondráček (YES), announced that he would like to include the proposal until the first reading before the parliamentary holidays at an extraordinary meeting.
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