Self-employed people often use the help of their wife (husband) in carrying out their self-employed activities, as far as tax obligations are concerned, it is about cooperation. When does cooperation bring interesting savings on social insurance?
According to the Income Tax Law, a spouse can transfer a maximum of 50% of income and expenses to a co-operating spouse and the amount of excess income over expenses cannot exceed CZK 540,000 or 45 000 CZK for each month of cooperation in a calendar. year. .
The cooperating wife (husband) is also independent
From the tax point of view, the cooperating wife (husband) is also an independent person and when cooperating in 2021, she must not only submit an income tax declaration, but also declare to the health insurance company and to the locally competent DSSA. In case cooperation is carried out at work, so the family saves on social insurance. Employment cooperation is considered an ancillary self-employed activity and gross profit for the year 2021 in the amount of CZK 85,058, social insurance is not paid from performing secondary self-employment.
Read also : How to Calculate Taxes for a Female Cooperator
A practical example
Entrepreneur Filip made a gross profit for 2021 of CZK 540,000. Mr. Filip is his main freelancer, assisted by his wife Romana. Ms. Romana has been employed throughout the year and cooperation is a secondary self-employed activity for her. Mr. Filip will transfer 15% of income and expenses to his wife Romana, resulting in a gross profit of CZK 81,000.
- Calculation of family SP without cooperation – If Mr. Filip had not transferred 15% of his income and expenses to his wife within the framework of the cooperation, then the annual social insurance for 2021 would be CZK 78,840 (CZK 540,000 x 50% x 29.2%). Annual social insurance is calculated from the tax base, the actual tax base being half of the tax base. The social insurance rate is 29.2% of the base.
- SP family in cooperation – In cooperation, the gross profit of Mr. Filip is 459,000 CZK (540,000 CZK – 81,000 CZK). The tax base is half of the tax base. Thanks to the cooperation, Mr. Filip will pay for social insurance in 2021 CZK 67,014 (CZK 459,000 x 50% x 29.2%). Mrs. Romana will not pay any social insurance of the secondary self-employed activity, as the gross profit is capped.
Thanks to cooperation, spouses will pay less for social insurance CZK11,826 (CZK 78,840 – CZK 67,014). A lower social security contribution will mean a lower state pension for Mr Filip in the future. There will be no financial savings on personal income tax and health insurance due to cooperation. In cooperation, Mr. Filip will pay less for income tax and health insurance, but Mrs. Romana’s wife will pay the same amount for income tax.
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Income tax savings
Higher family tax savings may occurif cooperation is carried out, for example, while receiving parental allowance, when it is also a self-employed activity on a complementary basis and no tax credit is applied for any other taxable income and tax deductions. When using only the taxpayer reduction of CZK 27,840, nothing is paid on income tax up to the tax base of CZK 185,600. When using the cooperation institute, it is not possible to apply a discount for a wife whose decisive income does not exceed CZK 68,000 in the amount of CZK 24,840.
Following a practical example
If Ms. Romana were to cooperate during maternity and parental leave in 2021 and had no other taxable income, then in addition to the social security savings calculated above, there would be a tax savings on the personal income of CZK 12,150, as Mrs. Romana would not pay income tax on the transferred gross profit of CZK 81,000, while without cooperation Mr. Filip would have paid income tax on this amount . Without cooperation, Mr. Filip could not apply for the reduction for his wife, because his wife’s determining annual income would be more than CZK 68,000, since the maternity leave received is included in the assessed income.
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