Is the Flat Tax for Self-employed Persons in the Czech Republic Beneficial?

Abstract

The article aims to evaluate for what amount of tax base or tax liability of a self-employed person the flat tax regime is advantageous. This evaluation is carried out in the legislative conditions of the Czech Republic valid in 2023. While the world's literature often understands the flat tax as the existence of a single tax rate, the concept of a flat tax in the Czech Republic is different. It combines payments for social security contributions and personal income tax as one payment. Since the flat tax amount is fixed, the research question is formulated, considering the literature, in the form of what tax base the entry into the flat tax regime is advantageous. Literature often mentions that taxpayers with a high tax base can benefit from the flat tax regime. However, it is a research question whether this will also apply in the conditions of the Czech Republic, where this payment also includes the aforementioned social security contributions. The different conceptual approaches to the flat tax in the Czech Republic create the broad potential that will be developed in this study.