Fair enough: Personal finance for beginners. In the Czech Republic, it is possible to save millions, but no one should see them.
The case of Motol Director Miloslav Ludvík offered a glimpse into the old familiar waters of corruption, which allowed him to earn millions. There are many ways to acquire wealth, but even some legal procedures can raise eyebrows. What is not forbidden is allowed, what the eyes do not see, taxes are not paid from it. The grey color belongs to the economy all over the world, sometimes it can even be beneficial and we are happy to paint it over white. Not only the case around the Prague hospital shows, however, that arrogance can be quite expensive.
The devil's advocate could defend the bribes of corrupt Miloslav Ludvík by saying that while the director was embezzling public budgets with unprecedented taste, his hospital was thriving and one of the few that stayed in the black numbers.
However, his managerial success embodied in an unusually balanced cash-flow will never erase horrendous corruption activities with a white coat. But let's say hypothetically he took bribes of 100 million crowns and saved 200 million crowns compared to other similar hospitals in the management of the hospital, it would still be beneficial for the state treasury. But the police don't intervene according to commercial calculations, but according to the violation of rules called laws.
Sterile tax optimization and Schwarz system
Last time we wrote here about how it is possible to get decent money in the public sector completely legally and to snub moralists with a long nose. The same way it is possible to perceive private property and paint it in all colors of moral relativization.
A beautiful term for this process is "tax optimization". The sterile name carries from a legal perspective crystal-clear tax advantages, as well as misuse of law or tax evasion. Let's drink first from the crystal clear waters.
"UNEQUAL TAXATION OF THE SELF-EMPLOYED. They cannot be lumped together. The increase in minimum contributions affects low-income real entrepreneurs, but alongside that we have extreme benefits for high-income office self-employed and the bad lump-sum system with flat tax,"
He is probably the loudest living critic of lump sum taxation in the Czech Republic, sociologist Daniel Prokop.
Payment of lump sum taxes, or the use of expense allowances, is on the one hand a sign of shaking off the reins of bureaucratic reporting from the backs of active entrepreneurs, but on the other hand it can be balancing on the edge of legality, running a business on black according to the popular "schwarcsystem".
The name of the system is not named after the Czech term schwarz (black in German). It is the real nomen omen of a pioneer in tax savings through a preferential tax regime for entrepreneurs Miroslav Švarc.
The gray coin of Czech business with two sides
It sounded like a joke current report, which suggests that a stricter crackdown on this phenomenon is being planned domestically, and unworthy successors to Mr. Švarc's business methods may face a reputational problem. The criteria for the Svarc system are quite vague and almost anyone can relativize the causality of its existence. Evidence of this is, among other things, the fact that since the founding of this method, it has repeatedly been legal and illegal.
Peeking under the hood of "black" self-employed persons is difficult, although the fact that there is a historically very high number of tradesmen in the Czech Republic in international comparison testifies to their proliferation, a large number of tradesmen and the unusually advantageous taxation of their work (a Czech lump-sum taxpayer can realistically tax earnings 10%, in Austria in a comparable case 54%). However, when effective control is not possible, the grey system can exist.
Another example is the relatively frequent discussion about cash payments. In the context of the expansion of electronic payments, payment by banknotes for services remained an archaism, accompanied by questions about cash payments as a tool of tax evasion. After all, Miloslav Ludvík also had a fondness for cash. You simply can't put "behind the navel" payments by card.
The whip for swindlers was the famous EET, but its political architects from the ANO movement turned the system off during the covid crisis to help entrepreneurs. Was the Czech business supposed to save on receipt paper during the lockdown or was it the possibility to move part of the profit out of the tax obligation spotlight?
But the reality of the grey economy is not black and white. Without super-advantageous flat-rate taxes colored by Swartz system, some, especially poorer paid, job opportunities would not exist. Of course, IT contractors with hundreds of thousands salaries taxed at 10% are not meant. Gray work with cash profit can become between being and not being for countryside operators like small pubs or small shops. Each coin has two sides.
Sources: author’s article, comment, profispolesnosti.cu, e15.cz, x.com, ČSÚ
