This guide explains everything about invoicing in the Czech Republic as a freelancer (trade license holder). You’ll find out what details must be in your invoices, what are receipts and when you have to issue those, and you’ll also get some downloadable invoice templates.
Invoices and receipts – when do you have to issue these as a freelancer in Czech Republic
If you work as a freelancer in the Czech Republic, you must issue an invoice for every payment you receive. In some cases (especially when working with companies), you first create the invoice, send it to the company along with due date and they pay you later on. In some cases (especially when working with individual clients), you first get paid and then you issue an invoice for that payment.
What information must a freelance invoice include in Czech Republic
There is some information that every invoice must include by the law, specifically the Czech Civil Code (Law No. 89/2012 Coll. Civil Code). This information slightly differs depending on if you are a VAT payer or not (if you are not sure, check out our How to Pay the Income Tax, Social Security and Health Care for Your Trade License article).
What must a non-VAT payer invoice include?
If you have just got your trade license, in most cases, you are a non-VAT payer which means your invoice should include the following information:
- your business name – which is basically your full name as stated in your trade license,
- your business address as stated in your trade license – if you change your business address, you must update it in your invoices as well (that is why many people use a virtual business address so they do not have to change anything when they move),
- your business number (IČ or IČO) – that is your 8 digit trade license number,
- the name of the register in which you are registered as an entrepreneur – trade register (“živnostenský rejstřík”) in most cases.
The above information is what is mandatory according to the Civil Code. We recommend adding some more information as well though since they help you keep track of everything and make your and your accountant’s lives a bit easier when the tax time comes:
- your client’s details – whom you are invoicing – this will be especially important if your client is a company since they’ll need the invoice for their annual tax return so they would most likely not accept an invoice that does not mention their business details,
- statement that you are not a VAT payer – when VAT is involved, taxes become more complicated for both sides (see the article above) so clearly stating you are not a VAT payer is a good idea,
- the work you are invoicing for – i.e. “English lessons for November” or “Provision of IT services”. Keep in mind you can only invoice for activities listed in your trade license! You can not invoice for IT services if your trade license only includes English teaching,
- the amount due – probably one of the most important parts of any invoice 🙂 You can either include just the total number (i.e. 25 000 CZK) or break it down (i.e. 100 English lessons x 250 CZK each = 25 000 CZK). If you work on a project, it might make sense to use just the total number, if your pay depends on the amount of hours or some other variable, might be a good idea to break it down. You also can technically invoice in other currencies than CZK but we would recommend discussing this with an accountant first (get in touch for recommendation of the accountant we work with) since there are some additional rules you have to keep in mind in such case,
- means of payment/payment details – for example your bank account number if you are requesting a bank transfer, for cash payments see “receipts” section below,
- the issue date – this is kind of obvious, the date when you issued the invoice, used to determine the due date,
- the due date – this is especially good to involve when invoicing companies, the standard due date in the Czech Republic is 14 days from when you issued the invoice (delivered it to the client) but you can adjust it based on your mutual agreement (some companies pay as soon as you deliver the invoice, some companies want you to provide even 2 months due date),
- the word invoice (“faktura”) and it’s number – adding a unique number to each invoice helps you keep things organized and easier later on – you can use one simple number series for your invoices (i.e. 0001, 0002, 0003), have different series for different clients (i.e. IBM0001, IBM0002, GOOG0001, GOOG0002) or any other system that suits you. Just avoid having two invoices with the same number.
The visual side of an invoice does not matter, you can use the template below, you can create your own or you can use one generated by some invoicing software (see below). You can use whatever colors you want, you can brand it if you want to. What is important is that you always include the above mentioned information into your invoices.
You can also create invoices in English although it might not be recommend if you plan on using your invoices for any immigration related matters (i.e. applying for your first business residence permit) since the MOI requires all submitted documents to be in Czech language.
What must a VAT payer invoice include?
Generally, the same rules as for non-VAT payers apply to VAT payers’ invoices. There are just some additional requirements specified in Act No. 235/2004 Coll.Value Added Tax Act. For example the mandatory parts of the VAT invoice are broader than for non-VAT payers:
- your business name,
- your business address as stated in your trade license,
- your business number (IČ or IČO),
- the name of the register in which you are registered as an entrepreneur,
- VAT Number (DIČ or DIČO) for both your and your client (if they are VAT payers),
- day of taxable transaction (if differs from issue date) – this is usually a date of when the service or product was delivered or when payment was received,
- scope and type of service supplied or quantity and type of product supplied,
- tax base – i.e. 10 000 CZK,
- tax rate – i.e. 21%,
- tax amount – i.e. 2 100 CZK (must be in CZK).
There might also be other information needed in the invoice depending on your specific situation (i.e. invoicing another VAT payer outside of CZE).
If you are a VAT payer, we strongly recommend hiring or at least consulting with an accountant.
Receipts for cash payments in the Czech Republic
Although it is generally recommended to accept electronic payments (i.e. bank transfer), especially if you plan on using your trade license to prove your income to the immigration authorities, there might be situations when you accept payments in cash.
In such cases you should issue an invoice + a receipt (confirmation that you physically received the money in cash). Ideally staple both documents together.
Archiving your invoices
You have to keep your invoices accessible for potential future tax office checks. Although the exact amount of time varies depending on your situation (type of business, revenue, VAT/non-VAT payer etc.) the general recommended timeline to keep your invoices accessible would be at least five years, ten years if you can. You do not have to keep them in physical form, scans/electronic versions are fine.
TIP: Always issue two invoices (and two receipts in case of cash payment) – one for the client and one for your own records.
Downloadable invoice templates and receipt templates for freelancers in Czech Republic
Please find some templates of invoices available for free download below.
Invoice – non-VAT payer
Receipt – non-VAT payer
Invoice – VAT payer
Receipt – VAT payer
Invoicing software for freelancers
If you issue one invoice a month, you might not need any accounting software, although it might still be a good idea to use one since it usually makes your freelancing life a lot easier. If you issue more than one invoice a month, a simple accounting program could do you a lot good.
We recommend an online system called iDoklad since we have personal experience with it and it has everything you might need as a freelancer or a small company.
Get in touch if you have any additional questions 🙂
