With this article we would like to draw your attention to the recently published Information of the General Financial Directorate (GFD) on the tax assessment of the obligations of providers of transport services, effective retroactively from 1 January 2023, which replaces the original information from 2017. The information specifies the tax obligations of drivers operating transport services for UBER or BOLT companies.

From the VAT point of view, individual drivers are considered taxable persons, with the obligation to register as VAT payers arising once their turnover exceeds CZK 2 million for the last 12 calendar months. If the driver uses the services of a foreign platform (company) consisting of access to a mobile application, this is so-called electronic service, where the place of supply according to the registered office or place of business of the recipient (driver) is in the Czech Republic, with VAT on the received service being declared and paid by the driver. In case the driver is a VAT payer, he can claim a tax deduction on the received service, but in case he is not registered as a payer, he is obliged to register as an identified person and subsequently declare and pay VAT without being entitled to claim its deduction.

From the perspective of income tax, drivers providing their services within the UBER or BOLT mobile application are considered to be payers of personal income tax under article 2 of Act No. 586/1992 Coll., on Income Taxes (“ITA”). This activity has all the characteristics of a business. Therefore, if the driver of such platforms holds a trade licence, the income from this activity is taxed as income from a trade. In case the taxpayer does not claim the actual expenses incurred, the taxpayer may apply 60% flat-rate expenses against the income. If the driver does not hold a relevant trade licence (although he or she is required to do so), he or she will be treated as a taxpayer carrying on a business with the possibility of applying 40% expenses to his income of 40%, unless the driver claims the actual expenses incurred. To make the picture complete, we add that this income is also subject to social security and health insurance contributions. If the taxpayer meets the statutory conditions and is not obliged to register as a VAT payer, he/she can enter the flat-rate tax regime and does not have to file an annual personal income tax return.

Author: Richard Knobloch, Vladimír Toráč