Czech 60/40 Rule - Freelancer Tax Simplification – Czech Republic

Czech 60/40: deduct 60% income as business expenses automatically. No need prove or document expenses. Remaining 40% = taxable income. Then apply 15% or 23% rate plus social/health contributions. Example: CZK 1M gross revenue → CZK 400k taxable → CZK 60k tax (15%) + CZK 116.8k social + CZK 54k health = CZK 230.8k total (23% effective).

Czech 60/40 best when: low real business expenses (consultants, developers, designers), want simple accounting, don't want track receipts. If actual expenses >60% income, better use actual expenses method. Can switch methods year to year. Most Czech freelancers use 60/40 for convenience.

Czech 60/40 applies to: trade license income (živnostenský list), certain self-employment. NOT for: rental income (30% limit), employment income, hobby income. Must have proper trade license (OSVČ registration) to use 60/40.

Czech actual expenses: deduct real documented business costs (office rent, equipment, travel, etc). Better if expenses >60% revenue. Requires receipts, accounting, more administration. Example: CZK 1M revenue, CZK 700k expenses → CZK 300k taxable vs CZK 400k with 60/40 → saves tax.