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:
- 2017 minimum social charges 2061 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 2017, we will calculate if those minimum social charges were enough to cover the revenue that you made in 2017 (The social charges are about 5.8% of the Revenue, for Revenue up to 2 M CZK), or that you must pay extra.
Also, based on the income of 2017, we will calculate the new monthly social charges for 2018, 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:
- 2017 minimum health contribution 1906 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 (it is about 2.7% of revenue up to 2 M CZK) or that you must pay extra for 2017.
Also, based on the income from 2017, we will calculate the new monthly health contributions for 2018. 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.
Significant Contribution Increase for a Trade License with a revenue over 2 M CZK / yearStarting 2015, for revenue over 2 M CZK, Income Tax , Social Charges and Health Contributions have gone up significanty.
Up to 2 M CZK, Tax / Soc / Health will still be 14.5%, but for the Revenue over 2 M CZK, they will be calculated from 100%, instead of the 40%, which is 2.5 times more. This is because the 60/40 rule can not longer be used for Revenue over 2 M CZK.
- We highly recommend to book an appointment with our senior consultant if you have a revenue over 2 M CZK, since Tax / Social / Health contributions may amount to up to 27% of your revenue(!)