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Impact of Svarc system on Tax Revenues in the Czech Republic
[Dopad švarcsystému na daňové příjmy v České repubice]

Author

Listed:
  • Savina Finardi
  • Anna Melicharová

Abstract

The article discusses the importance of the Svarc system and its impact on tax revenues in the Czech Republic. According to Czech case law, part of the income is legally taxed in the partial tax base on income from independent activity, although it should rather be income from dependent activity. This is a main feature of the Czech tax system, and it has impact on Czech public finance. Tax revenues of individuals in the Czech Republic are driven mainly by dependent activity, i.e., income from employment. For the analysis, a method was chosen that focuses on the share of self-employed persons without employees in the working age population, according to the economic branches of NACE. The aim of the article was to identify the economic sectors in which, according to Eurostat data, the Svarc system is being overused and subsequently, the lost personal income tax and social security and health insurance from employment were estimated. The total estimate of such tax gap is CZK 14.4 billion.

Suggested Citation

  • Savina Finardi & Anna Melicharová, 2021. "Impact of Svarc system on Tax Revenues in the Czech Republic [Dopad švarcsystému na daňové příjmy v České repubice]," Český finanční a účetní časopis, Prague University of Economics and Business, vol. 2021(4), pages 19-29.
    • Handle: RePEc:prg:jnlcfu:v:2021:y:2021:i:4:id:566:p:19-29
    DOI: 10.18267/j.cfuc.566
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    References listed on IDEAS

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    1. Peter Birch Sørensen, 2005. "Dual Income Taxation: Why and How?," EPRU Working Paper Series 05-10, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
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    3. Vesa Kanniainen & Paolo M. Panteghini, 2013. "Tax Neutrality: Illusion or Reality? The Case of Entrepreneurship," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 69(2), pages 167-193, June.
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    More about this item

    Keywords

    Tax Revenues; Svarc system; Tax Optimization; Daňové příjmy; Švarcsystém; Daňová optimalizace;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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