As every self-employed person knows, they have to make monthly social security and health insurance payments. But what should you do if your current contributions do not match your current income? You can find the answer in this article.
As every self-employed person knows, they have to make monthly social security and health insurance payments. But what should you do if your current contributions do not match your current income? You can find the answer in this article.
As a self-employed person, you must pay taxes on your profits and submit a tax return each year. However, you don’t pay tax on the whole amount you receive in your account, but only on the difference between your income and your expenses. The tax rate on your income is 15%.
For expenses, you have the option of either keeping all receipts and invoices and claiming the actual costs, or you can use the flat-rate expense option, which simplifies the whole tax process. Different rates can be used for the calculation depending on the type of activity:
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As a self-employed person, you also have to pay health and social security contributions. For 2025, the minimum advance payments for social insurance are set at CZK 4,759 and for health insurance at CZK 3,143. Changes in the amount of social security contributions only occur after the annual statement is submitted, which is typically in May. At that time, you can adjust your advance payments either to the newly set minimum amount or to the amount calculated on the basis of your income and expenditure statement from the previous year. If you are already paying more than the minimum amount, there is no need to make any changes.
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For self-employed persons running a secondary activity, the minimum deposit for social insurance will increase to CZK 1,496 in 2025; health insurance is not paid in this case. In addition, new entrepreneurs starting a business do not have to pay any advance payments at all in the first year.
An important piece of information is that the amount of these advances depends on the income you earned in the previous year. The life of a sole trader can be turbulent and profits from the previous year are certainly no guarantee of future profits. So let’s now take a brief look at how to respond to a situation where your profits fall dramatically but your advances remain high because you earned a lot last year.
Have you changed jobs since the New Year or lost an important client? Has your income fallen dramatically but your social security and health insurance contributions are still due? Don’t despair, there’s a solution.
But it all depends on your activity. The authorities won’t do anything on their own because they continue to assume that your income hasn’t changed. In addition, they will base the calculation of your advance payments on the previous year’s statement, which you must submit each subsequent year by the beginning of April for physical filing or by May for electronic filing. In the case of tax advisers and solicitors, the latest deadline is during July.
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The solution is simple – ask the Czech Social Security Administration and the health insurance company to reduce your advance payments due to a reduction in your income. The application is made on a special form:‘Application for reduction of the monthly assessment base for self-employed persons‘ with the Czech Social Security Administration or‘Application for reduction of advance payment for insurance premiums for self-employed persons‘ with the General Health Insurance Company.
Today,electronic submission significantly shortens the whole process. Health insurance companies accept forms via client portals (e.g. My VZP) or data box; similarly, the ČSSZ via the e-Portal. A data box or “Citizen Identity” is sufficient for submission. The authorities require only brief information: identification of the applicant, the period covered and a summary of actual income minus expenses for each month.
But the application process doesn’t end there. You still need to prove that your income has actually fallen. The difference in income between last year and this year must be at least one third. This is calculated as the difference between your average income last year and this year, using the last three consecutive calendar months as the basis for the calculation. We have prepared the following table to illustrate this:
| Měsíc 2024 …………… výdělek | Měsíc 2025 …………… výdělek |
|---|---|
| leden 2024 …………… 30 000 Kč | leden 2025 …………… 15 000 Kč |
| únor 2024 …………… 60 000 Kč | únor 2025 …………… 30 000 Kč |
| březen 2024 …………… 60 000 Kč | březen 2025 …………… 20 000 Kč |
| celkem …………… 150 000 | celkem …………… 65 000 Kč |
| Rozdíl příjmů v roce 2025 oproti roku 2024 je 85 000 Kč, což je více než 1/3 | |
The table above shows that income for the first three months of 2025 has fallen by more than ⅓ and therefore it is possible to apply to the authorities for a reduction in advances. You can do this for the first time during April.
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The Czech Social Security Administration or the health insurance company decides whether to reduce the advance payment according to its internal methodology. It applies that advances cannot be reduced below the legal minimum (in 2025, the minimum advance for self-employed persons is CZK 4,759 for social insurance and CZK 3,143 for health insurance).
If you are granted a reduction in advances, it will take effect from the following month. This level of advance payments will then apply until your next tax return, when you will be assessed new advance payments on your 2025 income.
A specific situation arises if you are converting your business to a sideline and are still waiting for the new annual reassessments – typically after you start work, take parental leave or are awarded a pension. Until your business is switched, your old advances apply.
In the meantime, you have the right to make a classic Application for Reduction of the Monthly Assessment Base for the self-employed. Adjusting advances according to the fall in income is therefore not mutually exclusive with secondary activity – the two reliefs can be combined, but each targets a different part of the payment schedule.
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The good news is that even if you overpay, so to speak, the authorities will refund the overpayment at the end of the year when you file your return. Alternatively, you can use the overpayment for the next year’s advance payment. You need to request a refund when you file your statement for the Social Security and Health Insurance Institutions. You must then be reimbursed within a maximum of 30 days. If you have incurred an overpayment of tax and wish to claim it back, you must apply for a refund.
You can apply for a refund either through the tax office’s application, by electronic submission to the Tax Administration, or via a data box. Another option is to send an email, which you must then verify by physically signing the document. The refund of the overpayment will then be made to your account or address within 30 days. It also applies that it is only refunded if it is more than 200 crowns. But of course it pays not to overpay anything unnecessarily, reduce the advance in time and use the money for business development or personal consumption.
Find out how not to pay taxes or pay less.
If you have an outstanding social security or health insurance amount, you must pay it within eight days of filing your statement. The tax arrears must then be paid together with the tax return. Payment can be made at any tax office cash desk, by bank transfer or by bank transfer to the account of the relevant tax office where the income taxes belong.
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Self-employed persons pay 15% income tax on the difference between their income and expenses, plus monthly contributions to social security and health insurance. In 2025, the minimum amount is CZK 4,759 (social) and CZK 3,143 (health); in the case of secondary activities, the minimum amount for social insurance is CZK 1,496 and health insurance is not paid; entrepreneurs starting up do not pay any advances for the first year. The amount of the tax base can be simplified by a flat-rate expenditure (80% for crafts, 60% for most trades, 40% for authorship).
If the income drops by at least a third during the year (the average of the last three months is calculated), the CSSA and the health insurance company can be asked to reduce the advance payments by using the form available on e-Portals or via data box; the authorities only require basic identification and a summary of monthly income. Advances cannot be reduced below the legal minimum and the new amount applies from the following month until the next annual statement. Any overpayments will be reimbursed by the authorities within 30 days (if they exceed CZK 200) or can be carried over to the next period; underpayments must be paid within eight days of submitting the statement. The relief can also be combined with a transfer to a secondary activity.
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