In the Czech Republic, authors and artists are considered self-employed for tax purposes, even without a business license. Engaging in authorship as a side job to their main employment with a monthly fee of up to 10,000 crowns is beneficial as tax obligations are eliminated.
A 15% withholding tax is deducted from the fee, leaving the author without any tax worries. They can ask their employer for an annual tax settlement. Besides, the author is covered for health, retirement, and sickness insurance from the employment. However, authors’ fees of over 10,000 crowns per month are paid in full, and the author must self-tax and pay social and health insurance.
When performing the main independent earning activity in authorship and artistic activity, it may pay to enter the monthly lump sum tax regime. Authors and artists are entitled to only a 40% expense lump sum, while other tradesmen are to 60%, and when performing agricultural or craft activities, even an 80% lump sum.
Applying the lump sum expense also affects social and health insurance calculations. If the assessment base is higher than the minimum, the compulsory insurance 2023 is calculated from half the tax base. Authors usually have low actual expenses during the year, so they often choose an expense lump sum to determine the tax base, even though they have the lowest rate compared to tradesmen.
Authors and artists can reduce their annual tax base under the same legal conditions as other taxpayers. Non-taxable items are adjusted in § 15 of the Income Tax Act and are stated in lines 46 to 54 of the tax return. All authors and artists state a taxpayer discount of 30,840 crowns in line 64 of the tax return, even if they did not receive regular monthly author’s fees.