Tax return (daňové přiznání) as proof of income
For a mortgage, the personal income tax return serves as the main proof of income for the self-employed (OSVČ) and others who have no confirmation from an employer. The bank usually wants the last 1–2 filed returns with proof of filing and often also certificates of no arrears from the tax office and the health insurer. It calculates income from the partial tax base under § 7 of Act No. 586/1992 Coll., on income taxes.
Example
A sole trader with revenue of CZK 1,500,000 applies 60 % lump-sum expenses (paušální výdaje), so the partial tax base is CZK 600,000. The bank works not from turnover but from the base after tax and insurance contributions, roughly CZK 33,000 a month. At an internal threshold of 45 %, that supports a payment of about CZK 15,000, i.e. a mortgage of around CZK 2,800,000 over 30 years at 5.00 %.
In practice
In the year you plan to apply for a mortgage, work out what tax optimisation will cost you before you file: a low tax base saves tens of thousands in tax but can cost hundreds of thousands in loan size. Under the flat-rate tax (paušální daň) regime, many banks calculate income as a share of turnover. Timing matters too. In March the last return is already a year old and the new one has not been filed, which makes it an awkward moment to walk into a bank.
How it differs
An employee proves income with an income confirmation from the employer, a document that does not exist for the self-employed. The annual tax reconciliation (roční zúčtování) is also different: the employer prepares it for employees, and banks usually do not ask for it as proof of income.
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