Paying Tax on a Živnostenský List

Ahead of March 31st's tax deadline, Ryan Scott outlines the obligations trade-license holders have to the Finanční úřad

If you're working in the Czech Republic on a trade license (živnostenský list), there are several tax-related issues you must address.

The first is that you must register your license with the tax office (Finanční úřad). At this time you will be given a tax identification number (daňové identifikační číslo, or DIČ).

Before the end of the tax year, you must submit an income tax return (přiznání k dani z příjmů fyzicích osob).

To do this, you'll need to pick up a form from your local tax office.

(The official government website,, has a complete listing of tax offices (in Czech).)

It is absolutely crucial that you keep a record of all your earnings and expenses throughout the year, as the Finanční úřad can demand to see your accounts at any time.

When you pick up your tax return form, you should also pick up your claims for health insurance (zdravotní pojištění) and social insurance (sociální pojištění). You should then take these forms to the offices where you pay health insurance and social insurance, so they can determine if you owe them more or less money than you've paid during the year.

Unlike ordinary employees, people working on a trade license must pay for all of their health and social insurance.

If you want to include deductions (odečtení) for expenses, you must obtain the relevant forms for these as well.

The deadline for tax returns is March 31st, 2008.

If you have a tax advisor the deadline is June 30th, 2008.

The plus side to all this paperwork is that 50 percent of your income is tax-free.

If you are resident in the Czech Republic but receive part of your income from abroad, you are legally obliged to declare it.

You should also contact the country where you are a tax resident and inform them of your tax status here.

Be warned that the method for calculating taxes from foreign sources is complicated.

Different systems are used, depending on which country you receive your second income from, and these regulations are subject to change.

Because of this, it's probably best to seek the help of a professional accountant or tax consultant with this issue.

RELATED ARTICLE: Živnostenský List

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