Advances in the first year

As a self-employed person, you will pay your own social and health insurance. It is important to know whether your self-employment is secondary or primary (see the previous article). Both types of insurance are paid through monthly advances and reconciled once a year.

If self-employment is a secondary activity, you do not have to pay any advances in your first year of business. If it is your primary activity, you pay the minimum advances. 

Paying advances

You can set up standing orders for the payments. Your exact payment details will arrive by post or in your data box. 

Health insurance provider
  • Account number: on your health insurer’s website
  • Variable symbol: your personal identification number without the slash
  • Constant symbol: 558 for VZP, 3558 for other insurers
  • deadline: by the 8th day of the month following the month for which the payment is made; for example, the advance for August 2021 is payable from 9.8. to 8.9.2021
Social Security Administration
  • Account number: on the ČSSZ website find your local office and its account number
  • Variable symbol: this will be assigned to you (sent by letter or to your data box)
  • Constant symbol: 7618
  • deadline: during the month for which the payment is made; for example, the advance for August 2021 is payable from 1.8. to 31.8.2021
Health and social insurance statements

After the end of the year, besides your income tax return, you must also submit health and social insurance statements. Although you pay advances during the year, only the statements reconcile how much you actually owe the institutions. It works just like an electricity bill reconciliation. You may have an overpayment or an underpayment. 

If you want to work out whether you will have an overpayment or underpayment, you can use this calculation. 

Health insurance: 13.5% of half your profit for the whole year

Social insurance: 29.2% of half your profit for the whole year

profit = income – expenses (lump-sum or actual expenses)

Subtract the total advances paid during the year from the insurance calculated for the whole year (calculate health and social insurance separately). If the result is positive, you have an insurance shortfall that you must pay within 8 days of submitting the statement. If it is negative, you have an overpayment, which you can have refunded or use towards future advances. 

But there is a catch: again, you must distinguish whether your self-employment is a secondary or primary activity. For secondary activity, health insurance is always payable, with no minimum to meet: you pay the calculated amount. The same applies to social insurance, with one exception. If your business profit is below CZK 85,058, you pay nothing at all. For primary activity, however, you must always pay at least the minimum, corresponding to the minimum monthly advances. 

When completing your year-end statements, interactive forms will help with the calculations and also determine your advance payments for the following year.

Advances in subsequent years – secondary self-employment

From the following year, you will pay advances for health insurance, but only amounts reflecting your actual situation. If your income was low, your monthly advance could be as little as CZK 50. The only exception in which you do not have to pay any health insurance advances is combining employment and self-employment. 

As for advances for social insurance, the same principle applies as for health insurance. A different exception applies here: if your profit for the previous year was below the threshold of CZK 85,058 (which changes every year), you pay no advances in the following year. 

Advances in subsequent years – primary self-employment

You will find your health and social insurance advance payments for subsequent years in the previous year’s statements. Depending on your profit, you will pay either the minimum advances or higher amounts. 

Although it may seem complicated, during the year it is fairly simple if you are not dealing with any changes: you pay the same amount every month. Closing the year can be more complicated, which is why the next article in this series is devoted to it. If you are unsure what to do, please get in touch and we can look at it together. 🙂 

This is the second article in the Newly Self-employed series; in the next article, you can read about tax returns and closing the year.