In 2023, I no longer qualify for the flat-rate tax scheme. Should I file a tax return or not?

If the freelancer is in a situation where he/she no longer meets the conditions of the flat-rate tax, the taxpayer is obligated to file a tax return. Which specific situations require filing a tax return? How to file a tax return?

The taxpayers in the flat-rate tax scheme are engaged in gainful activity (doing business) and pay one payment under the flat-rate tax in a category according to the amount of income from the previous year. This payment in 2023 includes:

• health insurance deposits,
• social security deposits,
• income tax.

What to do if a freelancer in the flat-rate tax scheme is employed or has other income, e.g. from renting?

The conditions for entering the flat-rate tax scheme for 2023 are:

• income up to 2 000 000 CZK,
• the taxpayer must not be employed,
• the taxpayer must not be a VAT payer,
• the taxpayer must not be in insolvency proceedings,
• income from rent or other income must not exceed 50 000 CZK (per year).

It means that if the freelancer becomes employed during the year, becomes VAT payer, has rental income or other income exceeding 50 000 CZK per year, he/ she does not fulfill the conditions of the flat-rate tax scheme.

In this case, they have to file a tax return, including reports for insurance companies.

Examples where a taxpayer does not qualify for the flat-rate tax scheme in 2023

A freelancer in the flat-rate tax scheme must file a tax return if at least one of the following situations occurs:

• the freelancer has also become an employee (there is a combination of employment and business),
• the freelancer also worked on an agreement to perform work (DPČ - Dohoda o pracovní činnosti) where the income exceeded 4 000 CZK,
  • the freelancer also worked on an agreement to complete a job (DPP - Dohoda o provedení práce) where the income exceeded 10 000 CZK,
• the freelancer also worked on an agreement to complete a job (DPP - Dohoda o provedení práce) where the income did not exceed 10 000 CZK and the freelancer simultaneously signed the taxpayer declaration,
• had income other than business income exceeding 50 000 CZK per year, e.g. from renting or selling property,
• the freelancer income is higher than the decisive income for the given category,
• become a voluntary or compulsory VAT payer,
• become a partner in a limited liability company,
• become a general partner of a limited company,
• insolvency proceedings have been opened against him.

How to complete your tax return if you have been registered for a flat-rate tax?

The solution is to complete your tax return in our smart app at www.OnlinePřiznání.cz.

• In the 3rd step: Sources of income, mark the question: Did you pay flat-rate tax during the year 2023?
• Enter the months you were in the flat-rate tax scheme.

• By filing your tax return, you are entitled to tax allowences. These are applied in step 4 of the app.
• In step 5 with the reports you need also to include in the deposits payed in the flat-rate tax scheme into the payed deposits on health insurance.

• follow the same procedure for social insurance, where you also list the advances paid in the flat-rate tax scheme.

The app on OnlinePřiznání.cz will prepare your tax return, in which there will be also taken into account the flat-rate tax scheme. You can download it in PDF or XML format.

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