Social Charges and Health Insurance for a Czech Trade License
Social Charges for a Trade LicenseIn the first year of of the trade license, everybody will pay the minium social charges, independent of the (expected) revenue *, which is:
- 2019 minimum social charges 2388 CZK / month *
* Unless you have a job as employee and using the trade license as secondary income, in that case the monthly social contribution is 0 CZK / month.
* Additional, so-called Premiums are not included in this sum. The Premiums pay out (a rather most sum) in case of long-term illness / inability to work. Also they have an effect on state support during maternity leave.
When filing the income tax return for the previous, we will calculate if those minimum social charges were enough to cover the revenue that you made or that you must pay extra.
Also, based on the income of the previous year, we will calculate the new monthly social charges for the next year, or that you continue to pay the (annually adjusted) minimum contribution. Note that if in the previous year your Trade License was active only a few months (so all income is concentrated in a small period of time), the new monthly charges will be much higher in the new year.
Health Insurance for a Trade License:Although the social charges are easily explained (everybody needs to pay, no difference in nationality), unfortunately the health insurance is more difficult to understand, it depends on nationality, visa status, employment status, and who provides family income. We will explain this in more detail during the first consultation, because there are so many options and variations.
However, for reasons of simplicity, the 3 most common types are explained below:
1 - Public Health Care for EU Citizens, US citizens on Business Visa, non-EU with Permanent Residence Permit or employment:As with Social charges, everybody will start in the first year of his trade license with the minimum health contribution, independent of the (expected) revenue *, which is:
- 2019 minimum health contribution 2208 CZK / month *
* If you also have a job as employee, and using the trade license as secondary income, then the monthly health contribution is 0 CZK / month for the first year.
IMPORTANT NOTE: US Citizens on a Business Visa, must enroll into Public Health Care, starting 1.5.2016
Just like the social charges, when the income tax return is being prepared, we will also calculate if the minimum health contributions were enough or that you must pay extra for the previous year..
Also, based on the income of the previous year, we will calculate the new monthly health contributions for the next year. Again, if in the previous year your Trade License average income level per month was high (for example: most of your income was concentrated in 1 or 2 months), the new monthly charges will be significantly higher in the new year.
2 - Public Health Care for Citizens from Croatia, Macedonia, Montenegro, Serbia, Turkey and Japan:Because of the bi-lateral agreement between Czech Republic and Croatia, Macedonia, Montenegro, Serbia, Turkey and Japan those citizens pay monthly health contributions just like EU Citizens, instead of commercial health insurance 3rd-Country Nationals would pay normally.
3 - Commercial 'Complex Care' Health Insurance for non-EU on a Business Visa:Generally speaking, people with a long-term D-Visa for Business do not pay monthly public health care contributions, because they already paid commercial health insurance when they applied for a visa or extended the visa.
The Commercial Health Insurance is not dependent on income, and ranges between 700 to 1100 CZK / month.
Arguably, the commercial health insurance is not as good as Public Health Care - and in many cases it is possible to register a 3rd-Country National at Public Health Care, including children and spouses (for no extra costs). Ask for the possibilities during the consultation.
Important: The big difference after 2018 for Revenue over 1 M CZKStarting 2018, the 60/40 limit has lowered from 2M CZK to 1 M CZK. THIS IS ONE OF THE BIGGEST CHANGES IN RECENT TIMES, which affects all Revenues over 1M CZK, but Revenues between 1M CZK and 2M CZK the most. The higher Revenues (3M, 4M and up) will only see a change of a few %. Everybody will pay more Income Tax, Social Charges and Health Insurance.
- We highly recommend to book a Business Consultation if you have a Revenue over 1 M CZK, since Tax / Social / Health contributions may amount to up to 30% of your Revenue and in some case increase as much as 50% compared to what you were paying in 2017 (!)