Self-employment

So if you want to become self-employed, maybe you have a clear business plan in mind, maybe you are just thinking about leaving your job and working by yourself. In any case, you have to deal with mandatory administration first. There are two ways how to start your own business: one option is to apply for a Trade Licence and become a self-employed natural person (=fyzická osoba). The other option is to set up a company, e.g. a limited liability company (see below in a special section) and to become a Legal Person (=PO, právnická osoba).  The very best source of information is on the Ministry of Industry and Trade (MPO) website.

Here we present a general overview. For particular questions or if in doubt, please contact us.

1. Free, or Unqualified Trade (Volná živnost) – only the general conditions must be met (see below). These include eg. sales, exports, imports, manufacture of textiles, administrative services, marketing and consulting (with the exception of financial and tax consulting), teaching, etc. You can register/notify several free trades at a time. The administration fee for the first notification of the trades is CZK 1,000 and CZK 500 for any subsequent notification. 
2. Professional Trade (=Vázaná živnost) – you must prove professional competence for the activity. These include accountants, driving school owners, but also mountain guides or masseurs. If you do not have the right qualifications, you can hire an authorised representative. 
3. Vocational Trade (=Řemeslná živnost) – you are required to provide an apprenticeship certificate, graduation certificate, diploma or six years’ experience in the field. These include e.g. bakers, blacksmiths and hairdressers.

Permitted Trade, or Special licence/Concession (=Koncesovaná živnost) – you must prove your professional competence and gain the permission of the relevant state administration body. These trades include, for example, freight transport, travel agencies or funeral services.

The Licenced Trade (=živnost) is “a systematic activity carried out independently in its own name, under its own responsibility, in order to make a profit and under the conditions set forth in the ‘Trade Licensing Act’. In other words, you can apply for a Trade Licence if you:

• are older than 18 years,
• have no tax overdues/debts at the tax office and overdues/debts of social and health insurance,
• are eligible for legal acts (evidenced by an identity card*),
• are an impeccable person (documented by an extract from the criminal record),
• meet the qualification requirements for a given type of business (see the types of trade above).

*For EU-citizens: European ID is requested

*For non-EU subjects: long-term visa/residence or permanent residence is required. If you first need the trade license in order to apply for the long-term visa, you can get a temporary trade license for the purpose of the application.

Trade License Office in Ostrava is located in the building of the City Hall (address: Prokešovo nám. 1803/8, 729 30 Ostrava), phone: +420 599 443 080 (English: office 118), +420 599 443 075 (German: office 114), e-mail: jkm@ostrava.cz. At the automatic call-out system please choose „Výdej dokumentů“ and then choose: Zita Řezáčová. When entering the building it is the left wing entrance. The clerk will also offer you advice as to how to proceed with the next steps at the office.

The presence of English/German speaking clerks is not always guaranteed, please book an appointment in advance or come along with a Czech-speaking person.

1. Passport/ID.
2. “Single Registration Form” (download here) – there is no need to bring the document as it will be filled by you electronically on the spot.
3. Criminal record from your home country or the state of the most recent staying (in case you have temporary/permanent residence in the Czech Republic, the criminal record will not be requested). It can be obtained for EU countries (except for HU, PT, NL and FI) via most Czech Post Offices at the CzechPoint counters. Ask for the Criminal Record (= ‘výpis z rejstříku trestů s přílohou’). There is a CzechPoint counter close to the main central entrance to the City Hall. This process may take up to 25 working days and the fee is CZK 100. For non-EU citizens, please, contact your Embassy to get the Criminal Record. More guidance on this topic.
4. Proof that the owner of the real estate where you want to have the seat of your business agrees with Seat Placement – „Souhlas s umístěním sídla“ (Form: “Consent to the Seat Placement” – Natural person, Legal person). If there are more owners, such as the real estate is owned by a married couple, you have to bring a separately filled in and signed form from each of the owners.
   NB: If you are still staying in a hotel or your landlord does not agree that the seat of your Trade Licence activities is at the premises you are renting, you can rent an office in an office building, or make a ‘virtual seat’. The choice is wide covering various services and it is recommended to choose a good address along with a package of services that will influence the price, eg OFIGO in Ostrava Zábřeh.
5. Documents proving your professional qualifications (if needed depending on the type of Trade Licence), or Responsible Representative (if you do not have proof of professional qualifications). Declaration on the consent of the responsible representative with the appointment to this position, with an officially certified signature (if the responsible representative does not make this statement in person in front of the trade association).
6. Service fee CZK 1,000 (CZK 500 for every subsequent notification/change).

1. You will receive further instructions at the Trade Licence Office. They will send your registration directly to the Financial Authority, Social Security Office (OSSZ = Okresní správa sociálního zabezpečení) and to your Health Insurance company. Sometimes, it is not possible to use the “Single Registration Form” to inform the Social Security office and the Health Insurance company, in this case, please register to 8 days. Health insurance companies usually directly require a visit in person to clarify if it is your main or secondary activity. The OSSZ and Health insurance company will then inform you of when and how to pay the advances for the social and health insurance. These are calculated according to whether the business is your main or secondary activity.
2. After completing all the requirements, the Trade Licence Office will give you your Identification Number (=Identifikační číslo, IČ, or IČO) and an Extract from the Trade Register. There is actually no fixed “trade licence” in a printed format. The Extract from the Trade Register serves as proof of all your business activities and it can be downloaded from the Trade Register. 
3. An important further step is to visit a bank and open a new business bank account in your name and Identification Number. This should be used only for business purposes and later reported in your tax files. After you have done all the above steps you can start invoicing your first customers.
4. From January 1st, 2023, all self-employed persons have a duty to communicate with state authorities via electronic Data Mailboxes. Establishment of mailbox and communication with the state authorities are free. See more on gov portal.
5. After notifying the Trade and obtaining the Trade Licence, you will automatically be registered as an income taxpayer using the single registration form. You will then file a personal income tax return once a year and at the same time pay the tax: at the latest, by the end of April of the following year. 
6. You can also volunteer as a VAT payer. If your revenue exceeds two million crowns in the last 12 months, the VAT registration becomes compulsory. The tax authority will assign you your unique tax identification number (=DIČ, daňové identifikační číslo) for communication with the tax authority. It usually starts with ‘CZ’.
7. For social security and health insurance payment please scroll down.

Self-employment also means that you have 100% liability with all your property including your private property. So an adequate Commercial Insurance of your business activities is vital for some of the Licenced Trades.

You are obliged to pay monthly fees (those fees are advance payments!) for social security and for your health insurance even if you have no profit.

A) Social security

• The minimum advances (social security) for 2024 are CZK 3,852 per month for the self-employed (if it is your main activity). The advances are changing slightly every year. For the Social Insurance you will be assigned a special number. In the first year of the Trade Licence, everyone starts off by paying the minimum social security contribution. The amount for the next year is calculated according to the business profit in the previous tax year.
• If the business based on the Trade Licence is your secondary activity (possible only if you have other employment and earning more than minimum wage), you do not have to pay any advance payments for the first year. And if your annual income does not exceed the so-called decisive amount (for 2024 it is CZK 105,521), you do not have to pay any advance payments for social insurance next year as well. The minimum advance payment for social insurance as a secondary activity for 2024 is CZK 1,413.
• Also, consider if you want to pay “sickness insurance”. It’s not your legal duty. If you want to pay it then the sickness insurance is paid in the amount of 2.7% of the monthly assessment base. The minimum amount is CZK 216 (for 2024) and it is also transferred to the Social Security Office (=OSSZ) account. Sickness insurance makes you eligible for sickness benefits and leave, and for the maternity leave. The sickness insurance starts to be paid only much later after an entrepreneur falls ill (usually even several weeks later), so it rather really covers serious illnesses and many entrepreneurs choose to pay a commercial insurance or put some money aside.
• For the sake of possible future maternity leave it is very important to start paying the sickness insurance long enough in advance (the whole pregnancy and even sooner) and it definitely pays-off. Precise numbers are to be derived from the income and are worth consulting with specialised social workers.

B) Health insurance

• The amount paid in contributions depends on your profit (13.5% of the assessment base – the assessment base for a self-employed person’s health insurance contributions is calculated as 50% of the tax base), but the minimum is CZK 2,968 per month (for 2024). In the first year of their trade licence, everyone starts with the minimum health care contribution.
• If your business is your secondary activity you do not have to pay health insurance as your primary employer should be doing so for you.
• The health insurance house will let you know their account number. You will be sending advance payments for health insurance. The identification number is usually the Birth Number (=rodné číslo, r.č.) which is used as the Variable Symbol. As a foreigner, please ask for the variable symbol.
• In case you are in a Commercial health insurance system (non-EU), you don’t have to pay monthly advance payments, because you are already prepaying an insurance fee. Having a trade licence is unrelated to Commercial health insurance.

*Flat-rate tax*

• Registration for the Flax-rate tax was possible only until the 10th of January 2024.
• Flat-rate tax is a monthly payment made for Self-employed with an annual income of up to two million crowns. The flat-rate tax consists of income tax, health insurance and social insurance minimum contribution. No tax deductions or tax allowances can be asked. 
• This regime is available only to foreigners with access to the public health insurance system (mostly EU, EU family members and permanent residence holders).
• The flat-rate tax is divided into 3 tax rate bands, in which monthly payments vary from CZK 7,498 to CZK 27,139.

!! IMPORTANT !!

Once a year, you are obliged to do a Tax Return for the Self-Employed (more here) and also submit the Summary of Income and Expenses to both the social security office and your health insurance office. The deadline is 2nd May if you are submitting via the data box in XML and 2nd April if submitting on paper.

All self-employed persons (except those with flat-rate tax) are obliged to fill in and submit the summary, even those for which there is no minimum assessment base. Please ask your tax advisor for these statements along with Tax Return.

Self-employment can also work as a secondary income. This is possible for the following cases:

• you are a student under the age of 26,
• you are employed and the employer pays social security and health insurance for you (at least from the minimum wage),
• you receive a maternity allowance or parental benefits,
• you are a retired or disabled pensioner.

No matter if you want to have your trade licence as your main or extra income, you still need to visit the Trade Licence Register to get your IČO (Identification Number) and then inform the Financial Administration Office, Social Security Administration Office and Health Insurance Company (see steps above).

If the earnings from your trade licence are your secondary income, you do not have to pay any advances in the first year of your business. Monthly payments will become compulsory for you once the profit of your business exceeds CZK 105,520 per calendar year (2024). Even if your business turnover was zero, you are obliged to send a report to the Social Security and Health Insurance Company offices after the end of the year. This can be done by your accountant and included in the annual tax declaration. It is recommended to hire an accountant to help you fill in the forms. Based on the reports and your real income, you might pay some extra premiums to health insurance/social security offices at once.

• More ideas, programmes and support for your business can be found on our website Support for your business.