Following an earlier decision of the Supreme Administrative Court (SAC), we already know that if a taxpayer performs the activity of a professional sportsman as a trade based on a respective trade license, income from this activity is considered income from trade under article 7 paragraph 1 letter b) of the Income Tax Act, and it is therefore possible to apply flat-rate expenses in the amount of 60 %.

On 9 June 2021, the SAC issued another judgment, in which is assessed the question, if a professional hockey-player was able to apply a flat-rate of 60 %, or of 40 % on his income from independent activity. This was a case where a professional hockey-player entered in a player contract with HC Oceláři Třinec hockey club approximately in the middle of the year 2014 and for the taxable period of 2014 he applied flat-rate expenses of 60 %, despite not having had a trade licence for most of this period. He did not acquire a licence until the end of the year 2014. The tax administrator therefore assessed additional personal income tax for the hockey player for the period of the year 2014 and the Appellate Financial Directorate fully identified with this opinion.

The regional court cancelled the decision of the Appellate Financial Directorate with its decision and deduced, that despite the fact that the hockey-player had no trade licence in the taxable period, he was able to apply flat-rate expenses in the amount of 60 % according to the rules for income from self-employment. According to the regional court, the materiality of the given relation was met, more specifically the will of both parties (the sportsman and the club) that the hockey-player should perform activity in the form of self-employment. For this reason, he was granted the option of applying flat-rate expenses of 60 %.

The Appellate Financial Directorate filed an appeal in cassation against this judgment, which the SAC acknowledged as justified and allowed it. The SAC NSS disproved the conclusions of the regional court, presenting the following fundamental arguments: 

• According to previous SAC case-law, if a natural person operates a consistent activity upon its own responsibility, even if long-term and independent, without having a trade license, this is not performance of a self-employed activity in the sense of article 2 paragraph 2 of the Trade Licensing Act. For income achieved from this activity, it is therefore not possible to apply flat-rate expenses of 60%, but only 40%, because such income is considered income from performing an independent profession. To put it simply: to have the option of applying 60% flat-rate expenses, a sportsman needs to have a trade licence.
  
  
• The regional court thus incorrectly assessed de facto any activity, which would show signs of self-employment, as a self-employed activity.
  
  
• The SAC points out that there is no reasonable explanation for the Income Tax Act to refer in applying flat-rate expenses of 60 % to the interpretation of self-employment in the Trade Licensing Act, and then completely overlook these criteria a point out a need for mere material assessment of a specific activity.

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