If you have occasional income of up to 50 000 Kč per year, the law says that:
- you do not need a trade licence
- you do not have to report this income in your tax return
- you do not have to pay income tax on it
However, this applies only, if both conditions are met at the same time.
Where the mistake often arises
A common misconception is the idea that any income up to 50 000 Kč is automatically occasional.
That is not true.
The law lays down two conditions:
- it must be occasional income
- the total amount must not exceed 50 000 Kč per year
Meeting only one of them is not enough.
What is (and is not) occasional income
Occasional income is considered to be something that is:
- short-term
- exceptional
- unsystematic
A typical example is a one-off sale of apples from the garden or a random extra earning.
But if you have on your website affiliate links, ad spaces or if commissions come to you regularly every month, it is an activity that is:
- systematic
- repeated
- long-term
Such income can no longer be regarded as occasional.
Recommendation from practice
For these reasons we clearly recommend:
- having a trade licence for advertising activity
- having the commissions paid out against an invoice
- duly paying income tax
If you insist that it is occasional income, we can pay the commission out to you without an invoice – on the basis of a written request for payment.
At the same time, however, we will point out, that according to the law you should tax the income. Any further responsibility is then yours, as is any dealing with the tax office.
On a larger scale it could moreover also constitute unauthorised business activity.
Exceeding the limit of 50 000 Kč
If in a calendar year you exceed the threshold of 50 000 Kč, you must:
- tax the entire income retroactively, not only the part above the limit
Legal basis
You will find the details in the Income Tax Act:
- § 10 para. 1a
- § 10 para. 3
If you are not sure which regime is the right one for you, you can use the public discussion forum or write to us directly at the email address: affiliate@wedos.com.