Costs of a Trade Licence

Costs of a Trade Licence

01.02.2022
4 min.

Calculation of costs of IT freelancer

Basic calculation parameters:

  • Legal form – trade licence for IT services;
  • Non-payer of VAT;
  • Slovak legislation;
  • Keeping a motor vehicle in the accounting books;
  • Income is marked with a plus sign (+);
  • An expense is marked with a minus sign (–).
  • A monthly invoice for computer services is variable given the quantity of supplied services – the average quantity is 20 days, i. e. 20 days x 8 hours per day for each month.

Do you want to know your monthly/yearly profit and costs?

First business year – Monthly balance

If you decide to apply flat-rate expenses (column “Amount in EUR (flat-rate)”), it is not necessary to keep accounting books. Therefore, you will not apply common business expenses, just flat-rate expenses + health insurance + social insurance). For income in 2019 and later, the maximum flat-rate expenses amount to 20,000 EUR per year and 60% of total income per month (the flat-rate row in the table).

Item descripitonAmount
in EUR
Amount in EUR
(flat rate)
A monthly invoice for computer services
(20 days x 8 hours x 25 EUR)
+4 000 EUR+4 000 EUR
Health insurance (minimum)
(prepayment)
-79,31 EUR-79,31 EUR
Social insurance (you are exempt from social
insurance contributions in the first business year)
0 EUR0 EUR
Internet and voice services (the amount is indicative
because it varies depending on the subscription plan
or operator)
-50 EUR0 EUR
Meal vouchers (20 vouchers x voucher value
of EUR 4.50)
-90 EUR0 EUR
If you keep a motor vehicle in the accounting books,
this item represents its servicing and fuel costs
(if you do not own a motor vehicle, this item
represents travel costs)

-200 EUR
0 EUR
Flat-rate expenses0 EUR1,666.66 EUR
(max. 20,000
EUR per year)
Total income+4 000 EUR+4 000 EUR
Total expenses-419,31 EUR-79,31 EUR
Tax base3 580,69 EUR2 254,03 EUR
Monthly tax (tax base x 0,15)-537,10 EUR-338,10 EUR
Monthly profit (income – expenses – monthly tax)+3 043,59 EUR+3 582,59 EUR

2. First business year – yearly balance

Item descriptionAmount
in EUR
Amount in EUR
(flat-rate)
A yearly invoice for computer services
(20 days x 8 hours x 25 EUR x 12 months)
+48 000 EUR+48 000 EUR
Health insurance (minimum)-951,72 EUR-951,72 EUR
Social insurance (you are exempt from social
insurance contributions in the first business year)
0 EUR0 EUR
Internet and voice services (the amount is indicative,
because it varies depending on the subscription plan
and operator)
-600 EUR0 EUR
Meal vouchers (20 vouchers x voucher value
of EUR 4,50)
-1 080 EUR0 EUR
If you keep a motor vehicle in the accounting books,
this item represents its servicing and fuel costs
(if you do not own a motor vehicle, this item
represents travel costs)

-2 400 EUR
0 EUR
Bookkeeping costs-200 EUR0 EUR
Purchase of HARDWARE (e. g. notebook)– 1 000 EUR0 EUR
Purchase of SOFTWARE (e. g. ESET Smart Security
64.90 EUR + Microsoft Office 2019 259,99 EUR)
– 324,89 EUR0 EUR
Flat-rate expenses-0 EUR-20,000 EUR
(maximum)*
Total income+48,000 EUR+48,000 EUR
Total expenses-6,5556.61 EUR-951,72 EUR
Tax base+41,443,39 EUR+27,048,28 EUR
Monthly tax (tax base x 0,15)-6,216,51 EUR-4,057.24 EUR
Yearly profit (income – expenses – yearly tax)+35,226,88 EUR+42,991.04 EUR

* Self-employed persons will be able to apply flat-rate expenses amounting to 60% of their taxable income up to 20,000 EUR per year.

**15% tax rate for individuals – entrepreneurs with a turnover below EUR 49,790.

In the second business year, you become obligated to pay social insurance and road tax for a motor vehicle. The minimum amount of social insurance is around EUR 187,78 per month (the amount does not include optional unemployment insurance). The amount of road tax is determined based on the vehicle’s registration in a territorial unit and cylinder capacity.

The calculation does not account for tax base reduction by non-taxable items because their calculation depends on different criteria. If you meet the necessary criteria, you are able to deduct the following items from the tax base:

The indicative yearly comparison of common expenses and flat-rate expenses shows that flat-rate expenses are more profitable. Their great advantage is that you do not have to physically keep any receipts, invoices or documents.

In addition to flat-rate expenses, a sole trader reduces his/her tax base by paid health and insurance contributions.

Our recommendations for expenses:

  • Purchase of professional literature;
  • Training courses, certification;
  • Purchase of office furniture;
  • Purchase of hardware (monitor, mouse, cables etc.);
  • Purchase of software (Microsoft Office, antivirus etc.);
  • Travel expenses (tickets, accommodation expenses);
  • Hygiene products (cleaning agents, toilet paper etc.);
  • Office costs (decoration, wallpapers, carpets etc.); and
  • All other expenses associated with the subject of your trade licence.

The calculation of yearly profit is indicative. It was made on 1 February, 2022. The amount of costs and insurance contributions may change as per applicable legislation.

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