Czech Trade license of freelancer and information about taxes

What Is the Czech Trade License for Freelancers?

The Czech trade license of a freelancer is the business status of a self-employed person with the ability to do several business activities. The person with a trade license will have a registered tax number and the same rights as a company registered in the Czech Republic.

There are 82 common activities that fall under one trade license. These activities don’t require any special education or university degrees.  The most common activities for our clients include graphic design, IT and general consulting, foreign language teaching, sales, photography services, and event organizing. The trade license holder can participate in all 82 activities under one trade license and under a tax number.

The most important conditions for obtaining the trade license are a criminal clearance report from the home country if the foreigner doesn’t have permanent residency in the Czech Republic. The Czech Trade License Registration process typically takes 2 days to complete.

Criminal clearance report

Most foreigners need to provide a criminal clearance report from their home country when registering a Czech trade license. However, there are exceptions. Check below to see if you qualify for an exemption or if you'll need to submit the report.

A criminal clearance report or temporary residency is not required for EU citizens for registering a Czech Trade license and other authorities.

A criminal clearance report is not required from Ukrainian citizens with a Czech protection visa or foreign police registration

After Brexit, British citizens are considered third-country nationals, and for obtaining a Trade license in the Czech Republic, you must obtain a Criminal Clearance Report from the UK and a Temporary residency permit. You can apply online here

British citizens with Temporary residency also alternatively can also get a UK criminal clearance report from any local Czech Point in the Czech Republic.

UK citizens who didn't obtain temporary residency under Brexit protection should apply for a freelancer visa to be able to legally obtain a trade license, invoice using a Czech trade license, and pay taxes.

A criminal clearance report form doesn’t exist in the US. So, US citizens must provide an affidavit confirming they have not committed any crime. This is an affidavit that must be signed at the U.S. Embassy. Make an appointment online to visit the U.S. Embassy in the Czech Republic. They will provide the proper form to fill out and sign in person. The embassy fee is 50 USD.

For those who are still in the US, arrange an affidavit form at the nearest Czech embassy. US citizens who already have a Czech visa can get their affidavit authorized for trade license registration at any Czech notary as well.

A Canadian criminal clearance report should be translated into the Czech language. Here is a list of official translators in Canada, and it should have a super legalization stamp from the Czech embassy. For Canadians who are already living in the Czech Republic, please contact the Canadian embassy.

Criminal clearance reports should be translated into the Czech language and must have an Apostille stamp from the local authority of your country. Legal translations can be done for an additional fee in Prague.

A criminal clearance report is not required from:

• Permanent Residency holders.

• Partnership visa holders.

• Blue Card holders.

• Student Visa( visa code: D/VC/23) holders.

• Refugees and Asylum Seekers.

• Family Members of EU citizens.

Consent with the business address

Each trade license holder should have a business address. Renting an office is not necessary. It can be a so-called virtual or remote office. For those who already have their own apartments, the home address can be used as the business address.

Additionally, we can offer reliable business addresses from our office building for 7,300 CZK for 12 months. You can check our virtual business address support package here

Social Tax and Health Insurance in 2025

EU citizens are registered with public health insurance and social tax after registration and activation of trade licenses.

Other nationalities’ trade license is activated and registered at the social tax after they collect their Czech visas at the Czech embassy. Since May 2016, US citizens must be registered with public health insurance. Other non-EU nationalities should buy commercial health insurance according to the future period of stay.

Since 1.1.2015 maximum amount for health insurance was canceled, and there is no maximum amount limit for Czech insurance from the Czech trade license income.

Each Trade license holder should pay a monthly contribution deposit during the year, and depending on the amount of final yearly income, they might pay contributions payment balances or get a refund the part of the payments.

The minimum monthly Social Tax deposit for existing trade license holders in 2025 is 4,759 CZK ( 57,158 CZK per year) and 3,399 CZK (40,788 CZK per year) for the new trade license holders. The minimum deposit amount is set only for the first year and can be higher in the next year depending on your total income for the tax year.

The minimum monthly Public health insurance of VZP for trade license holders is a minimum of 3,143 CZK (37,716 CZK per year) in 2025, and also only for the first year. You might pay a difference after the calculation of your final income for the previous year. The final calculation comes from your yearly clean (tax base) income.  Social Security tax is 29.2%, on 55% of the net ( tax base) income. Health insurance is 13.5% of 50% of the net ( tax base) income.

Minimum social and health insurance contribution deposits are charged even if you have 0 CZK income. That is why it is wise to cancel or pause your trade license if you are not generating income to avoid expenses for minimum contribution deposits.

Social security tax has a maximum limit and is taxable up to 2,234,736 CZK of Net Income. Over this amount of income, social security is not taxable. The maximum limit of social security payment amount is calculated by multiplying 48 by the average salary, which is 48 × 46,557 CZK in 2025.

NOTE: During the first year of registering your trade license freelance business, you only pay minimal deposits for social tax and health insurance contributions. Depending on your income during the whole year, you may need to pay the remaining balance after deducting the total deposits you made in the previous year.

Once you submit your income tax report, new deposit amounts for social tax and health insurance will be calculated and set, assuming your income will be similar to the previous year. This ensures that you can settle all deposit payments and avoid any outstanding balances if your income is similar to last year’s income.

That is one of the reasons why you are paying higher deposits for social tax and health insurance higher than the previous year.

Income tax or Annual tax report

Income tax for trade license holders is fair. The Czech trade license holders can choose various types of tax options. Income tax is 15% of net income, and there is a 30,840 CZK tax discount that is applicable for all trade license holders. The Income tax will be 23% for the amount over 1,676,052 CZK.

Method 60/40 is the most common. The collection of payment receipts or invoices from expenses is not necessary. You can simply deduct 60 % of your yearly gross income and pay taxes on 40% of your gross income when you do your yearly income tax.

It means a fixed  60% cost allowance and a 40% income. For example, if the total gross income for last year was 300,000 CZK, then 300,000 – 60% cost allowance( fixed expenses) = 120,000 clean income. 15% tax will be paid from 120,000, which means 120,000 - 15%= 18,000 (tax amount) - 30,840 (tax discount) = 0 CZK (final tax amount).

In this example, taxes will not be paid. This method is convenient and the best solution for EU citizens and EU family members(partner visa). We don’t recommend this method for other nationalities who need to renew their visas or residency permits in the future because income proof is required if they don’t have at least 700,000 CZK in 2025.

For the situation and calculation that was used above, other nationalities should use the method of tax from the full amount to avoid visa renewal rejections due to insufficient funds.Please check more information about the income proof calculation of MOI offices here.

The Tax method 60/40 applies to income up to 2,000,000 CZK. In case if your income is over 2,000,000 CZK, you can still use the 60/40 method.

For Example, your yearly gross income is 2,100,000 CZK, and the calculation would be 2,100,000 - 100,000= 2,000,000, and now we deduct 60 %, 2,000,000 - 60%= 800,00,0, and adjust 100,000. So, in case if our gross income is 2,100,000, which is over the limit of using 60/40 and using partly 60/40, the final tax base is 900,000 CZK.

We offer a full-service package for obtaining a Czech trade license for a flat fee of 10,900 CZK.  

This includes:

•  Trade license registration (all government fees included)

• Activation of the trade license

• Registration with the Financial Tax Office

• Registration with the Social Security Office

• Registration with the Public Health Insurance Office

• Setting up payment instructions 

• Lifetime After-Service support

Non-EU and non-US clients may require certified translations of criminal clearance reports (an extra fee may apply).   Trade licenses for third-country nationals are issued with expiration dates.

For full details and additional services, please visit our Service page 

Income Tax 2025

The income tax amount is increased to 23% for income above 1,676,052 CZK. Income tax under the net income of 1,676,052 CZK is 15%.

For example, your gross income is 3,500,000 CZK and your Czech income tax from freelancing in 2025 would be the following.

Using the 60/40 method up to 2,000,000 - 60%( 1.2 million CZK) = 800,000 CZK

1,500,000 + 800,000 = 2,300,000 CZK is your tax base

2,300,000 CZK - 1,676,052 CZK = 623,948 CZK.

1,676,052 CZK - 15%= 251,408 CZK.

623,948 CZK - 23% =143,508 CZK.

So the total amount of income tax from 3,500,000 CZK of gross income is 394,916 CZK (251,408 CZK + 143,508 CZK).

Simple Guide for Handling Czech Tax and Contribution Payments in 2025:

1. Czech Income Tax

• Where to Pay: Transfer your income tax payment to the account number of the tax office in the district where you live.

• Example: If your business is in Prague 1 but you live in Prague 4, pay to the Prague 4 office.

• Reference: Use your DIC number as the payment reference.

• Deadline: The deadline for Czech income tax payment is 60 days after you file your tax report

2. Czech Social Tax and Health Insurance

• Payment Instructions: Pay the balance to the same bank account where you make your monthly payments.

• Deadline: The deadline for the contribution balance payment is 8 days after submitting your social tax and health insurance declaration.

3. Refunds for Overpayments

• Contributions Overpayment: Include your bank account number on the application forms to receive refunds. Refunds for contributions are issued in April or May 2025.

• Income Tax Overpayment: Income tax bonuses or overpayment refunds are returned within 60 days after submitting your income tax return.

Capital Gain and Crypto Tax

In the Czech Republic, income from cryptocurrency and capital gains is taxed at either 15% or 23%, depending on your total annual net income (tax base).

• 15% tax rate applies if your total income is up to 1,676,052 CZK.

• 23% tax rate applies to income exceeding 1,676,052 CZK

Only net income( profit) from Capital gains and Crypto is taxed. This means you need to pay taxes when you sell your investments and make a profit, and the profit amount is taxed. If you had a loss( the amount you bought is less than what you sold), then you don't declare any tax.

When you have a trade license and income from capital gains and crypto, then both incomes are merged, and the final tax is calculated. But the income from capital gains and crypto should be declared as private income for better tax optimization. Because if you declare the capital gains and crypto income as business income, then your social security and health insurance payments become higher.

Please, check the Czech Crypto and Capital Gain Tax calculator for 2025/2026

Tax relief

Tax relief refers to expenses deductible from taxable income (your tax base). For example, if using the 60-40 reporting method, tax relief applies to the 40% base you will pay taxes on. Tax reliefs in 2025 are applicable if the freelancer's annual clean income is over 113,400 CZK.

Deductible expenses from taxable income in the Czech Republic include:

1. Voluntary Blood, Plasma, or Organ Donor Relief (for voluntary blood, plasma, or organ donors who opt not to get paid)

• 3,000 CZK for voluntary blood donors

• 3,000 CZK for voluntary plasma donors

• 20,000 CZK for voluntary organ donors

2. Mortgage Interest Rate Relief (for the months in which you have an active trade license while also paying on a mortgage)

You can claim a maximum deductible amount of 150,000 CZK for mortgage interest. The relief applies only to the interest portion of your mortgage payments, not the full mortgage payment. The maximum monthly deduction is 12,500 CZK, which is calculated by dividing the annual maximum deduction by 12 months.

For example, if you started paying your mortgage on November 1st of the previous year and paid 30,000 CZK in interest, you can only claim 25,000 CZK. Because you had the mortgage for only 2 months, and the monthly maximum deduction limit is 12,500 CZK.

3. Pension and Retirement Funds (for private pension savings within the non-government sector)

• Up to a maximum deductible amount of 24,000 CZK from private pension savings investments

4. Life insurance (for private life insurance payments in the Czech Republic)

• Up to a maximum deductible amount of 24,000 CZK for life insurance payments

5. Continuing Education Examination Fees (for examination fees to certify an improved / progressing level of education)

• Up to a maximum deductible amount of 10,000 CZK

6. Research (for the implementation of public research and development

• No limit to the deductible amount

7. Supporting Professional Education (for any related expenses to support the education of another person: tuition, exam fees, etc)

• No limit to the deductible amount

Note: The maximum tax relief deduction is based on how many months you were eligible during the tax year.

For example, if you had a mortgage for only 1 month, you can deduct only 12,500 CZK — this is the monthly equivalent of the annual deduction limit of 150,000 CZK

Tax discounts

Tax discounts are deductions to the total tax amount (not the tax base). In the Czech Republic, tax discounts include:

1. Annual tax discount for freelancers (available for everyone, no matter if your trade license has been active for the full year, or only one month of the last tax year): 30,840 CZK

• The discount applies to income from self-employment, regardless of whether it is your main source of income or it is side income (together with full-time employment)

• The freelancer tax discount is applied for the full amount of 30,840 CZK, no matter if your trade license business was active for one year or just two months in the past tax year.

2. Tax discount for an unemployed spouse (or a spouse with income under 68,000 CZK for a full year: 24,480 CZK)

• The income of the spouse is considered the spouse’s net income. Starting from 1.1.2024, the spouse must also provide daily care to a child under 3 years old. Parental leave bonuses and maternity pay bonuses are not considered income.

• The total maximum amount of tax discount for an unemployed spouse or a spouse with an income of 68,000 CZK is 24,480 CZK for a full year or 2,040 CZK per month. The maximum and qualifying amount of tax discount depends on how many full months the marriage lasted in the previous tax year.

• For example, if you had a trade license for all 12 months but got married on November 30 last year, and your marriage lasted only 1 full month. After dividing the maximum yearly discount by 12 months, you'll receive a tax discount of 2,040 CZK for that month.

Tax bonuses

A tax bonus is an amount that the taxpayer can claim back from the tax office due to overpayment after deductions. This amount includes bonuses for parents of one, two, or more children:

• Up to a maximum bonus of 15,204 CZK for a first child

• Up to a maximum bonus of 22,320 CZK for a second child

• Up to a maximum bonus of 27,840 CZK for three or more children

Only one of the parents may claim a tax bonus for children

The total maximum amount of the tax bonus for a child depends on the number of children and the number of full months the child or children were present in the previous tax year.

The maximum amount of the child bonus you might qualify for depends on the child's existence in the last tax year, not the duration of your business license. For example, if you have one child and had a trade license for all 12 months, but your child was born on November 30 last year and existed for only 1 month (December), you qualify for 1 month of the total tax bonus for the year, which is 15,204 CZK / 12 = 1,267 CZK for one month.

Or, if you had a child for the entire year but had an active trade license for only one month, you can still claim the full child bonus of 15,204 CZK.

Personal income tax advance deposit

If you pay over CZK 30,000 income tax (after relief, discounts, and bonuses) in a given year, you should pay income tax advances the following year. Income tax advances are deposits that will go towards part of your income tax balance at the end of the next taxable period.

However, note that you do not need to make income tax deposits if:

• Your income taxes were CZK 30,000 or less.

• It is the first year of running a business or freelancing.

• You also have full-time employment, which pays the advances.

• You’re registered and paying flat taxes.

Categories in which you will need to pay an advance towards your personal income tax include:

1. You paid income tax over CZK 30,000 but less than CZK 150,000. In this case, you must make deposits semi-annually (2x per year) at 40% of the original tax obligation.

2. You paid income tax over CZK 150,000. In this case, you must make quarterly advance payments at 40% of the original tax obligation.

Important Note: If you cancel your trade license but have upcoming tax advance payments, you need to cancel them with the tax office. Otherwise, they’ll still expect the deposits, and you could face penalties for missing a payment.

Trade license validity and extension

After activating a trade license, how long the license is valid depends on your residency status. In some situations, there will be a validity (“valid until”) date. Other types of residency grant trade license validity for an unlimited amount of time.

• Non-EU Zivno Visa or any Long-Term Residency holders have a trade license valid for the duration of their visa / residency. (Make sure to extend the trade license when applying for a new visa, biometric card, or bridge visa during the residency process.)

• Ukrainian Citizens with Refugee Status possess a valid trade license for the duration of their temporary protection visa. (Remember to extend the license when applying for a new protection visa.)

• Partnership Visa and Permanent Residency holders receive an unlimited trade license. (There is no need to file for extensions. However, it is important to remember to pause the trade license if not actively generating income from self-employed activities.)

• EU Citizens, their family members, and UK Citizens with Temporary Residency under the Brexit deal have unlimited validity of the trade license.

Czech VAT

The Czech VAT registration limit amount is increased to 2,500,000 CZK from 1.1.2025. You will become a Czech national VAT payer if your income exceeds 2,500,000 CZK during the tax year.

To qualify for Czech national VAT, both of the following conditions must be met:

• Your gross income/turnover over the tax year must exceed 2,500,000 CZK.

• Your income source must be from Czech-registered companies or private individuals (non-business clients).

If you do not meet both conditions, you do not qualify for Czech national VAT.

The Czech Republic has 2 VAT rates

• The standard rate of VAT - 21%

• The reduced rate of VAT - 12%

Examples of Charging VAT for Czech registered businesses while invoicing out of the Czech Republic for the services provided from the Czech Republic.

1. Invoicing as Czech VAT Registered business

a) Invoicing for services from Czech registered businesses to EU registered businesses, 0% VAT - EU reverse charge

b) Invoicing for services from Czech registered businesses to individual clients, charge 21 % VAT

c) Invoicing for services from Czech registered businesses to out-of-EU registered businesses, 0% VAT

2. Invoicing as Czech Light VAT-registered business

a) Invoicing for services from Czech registered businesses to EU registered businesses, 0% VAT - EU reverse charge

b) Invoicing for services from Czech registered businesses to individual clients, charge 21 % VAT

c) Invoicing for services from Czech registered businesses to out-of-EU registered businesses, 0% VAT

3. Accepting services from companies registered out of the Czech Republic

If you receive services from companies registered out of the Czech Republic( google/Facebook ads, Airbnb, etc) you should pay 21% VAT in the Czech Republic.

For example, you promote your business on Facebook and Facebook ads are running in the Czech Republic. Since Facebook is not a Czech-registered business, you should pay a 21% VAT on top of the Facebook ads fee.

Light VAT

Light VAT is needed if you invoice EU-registered companies that are registered out of the Czech Republic. You should apply light VAT statements monthly. Please contact us for the accounting service packages.

Contact us and we will help you to understand the tax system in the Czech Republic!

Understanding the different types of tax identification numbers in the Czech Republic is important for proper tax administration. Here's a breakdown:

• DIČ (Tax Identification Number): This is your Czech tax ID number. It's issued when you register with the Czech tax office and is required for all taxpayers.

• VAT Number: This is your national VAT registration number. It's used when charging and reporting VAT on transactions within the Czech Republic. You must apply separately to become a VAT payer.

• Light VAT (EU VAT Number): This is used specifically for EU cross-border transactions. It allows you to invoice EU-based companies with 0% VAT under the reverse charge mechanism. Like the VAT number, it also requires a separate registration process.

Important: Just because you have a DIČ (your Czech tax number) doesn’t mean you’re registered for VAT or Light VAT. Each one has its own requirements, and you’ll need to go through the application process to get them.

Bank Account and Invoicing

If you're doing business under a Czech trade license, it's important to understand how your taxes work. In the Czech Republic, your taxes are calculated based only on your invoices, not on your bank transactions.

The Czech tax system uses the 60/40 method:

• 60% of your income is automatically counted as expenses.

• 40% is considered your taxable income.

You don't need a Czech bank account or a dedicated business account to operate under a Czech trade license. You can easily get paid through Revolut, Wise, or any other international banking service.

If you issue an invoice in a currency other than Czech Koruna (CZK), you just need to show the official exchange rate valid on the invoice issue date.

Invoices don’t have to be written in Czech either — you can create invoices in any language that's convenient for you and your clients.

Czech trade license as a side income

Side income means you have both full-time employment at a Czech-registered company and have a trade license secondary income.

In the first year of side business, you don't pay social security and health insurance deposits. But depending on your income you might pay balances and start paying deposits for both health insurance and social security contributions after you declare income tax report for the previous tax year.

Even if you income from a trade license is much more higher then your full-time employment salary, the trade license income is always considered as a secondary side income. If you are registered under a flat tax regime and your income type changes from main income to secondary side income, you should cancel your trade license and switch flat tax to a regular tax regime

Trade licenses during the maternity stay, for students or Ritered self-employed are considered as a side income too.

​​If your clean( net) income from your trade license is higher than 111,743 CZK ( your 40% when you use the 60/40 tax method) then you start paying the deposit next year.

So the limit for social tax is 111,743 CZK. If you are over this amount you will pay some balance and start paying a deposit of 1 413 CZK next year, if your clean income for the full year is under 111,743 CZK, then you pay 0 CZK balance and deposits.

Social Tax is calculated in this way: 0,292 x 0,55 x your clean income (40%): months of your trade license last year.

For example, as a side income trade license, you earned 103,500 CZK last year. You used the tax method 60/40. So your clean income (40%) is 41,400 CZK.

Social Tax, you don’t pay any balance or deposit because 41,400 CZK is less than 111,743 CZK. Also, this rule applies if your side income lasts the full tax year.

41 400 CZK (your clean income) x 0,50 x 0.135 = 2 795 CZK. That is what you should pay for your Health insurance balance while you have a trade license as a side business.

Income tax of side business trade license, employee employment income, and trade license income for the full year are merged and declared in one tax report with all tax discounts and bonuses for the full previous tax year.

Flat Tax 2025

In 2021, the Czech Financial Office introduced a new flat tax reporting method. As of 2025, the minimum flat tax amount in the Czech Republic is 8,716 CZK monthly. This amount covers health insurance, social insurance, and income tax, with no paperwork and limited legwork involved.

Updates to the Czech flat tax in 2025 include:

• The division of tax rates into tax rate bands (according to annual income and deductible expenses);

• An increase in the total income limit;

• A change in the payment amount for each bracket.

The flat tax limit is up to a maximum of 2,000,000 CZK, divided into the three bands above, and depending on gross income level.

However, keep in mind that sometimes it is not advantageous to take on a flat tax reporting regime. Paying a flat tax makes more sense for single entrepreneurs. This is because these taxpayers often have few discounts, along with no tax bonuses from offspring.

If you have children or expect to claim various relief and discounts, other tax reporting methods will be more advantageous. Remember to always consider professional tax consultation before signing up for flat tax reporting if in any doubt.

Gift Tax in the Czech Republic

Officially, the Income Act of 2014 abolished Gift Tax in the Czech Republic, as well as inheritance tax. Now, taxpayers must declare all income deriving from donations as part of their regular income tax. This amounts to 15% for natural persons, or 19% from legal entities.

In other words, assets which derive from donations are subject to zero gift tax. However, they are included under income tax as gratuitous income.

This income is thus taxed at the same rate as all other income from one year to the next. That is, unless the donation is exempt from income tax. Exemptions from income tax include:

• Donations from a spouse or direct relatives (children, parents, grandparents, grandchildren)

• Gifts from a collateral line of kin (siblings, nieces, nephews, uncles, aunts; children’s spouses; spouse’s children, spouse’s parents, parents’ spouses)

• Gifts from persons who lived with the beneficiary, donor, or testator for at least 1 year before the transfer or death of the testator in a joint household. This person would thus be a caretaker of the joint household, or were once a dependent of the beneficiary, donor, or testator for maintenance purposes.

Note: Starting from 1.1.2024, any donation that does not exceed CZK 50,000 CZK per year (tax period) is exempt from income tax. This stands regardless of the donor.

Donation is one way to easily and inexpensively transfer real estate to somebody. Real estate is exempt from gift taxes. However, donating real estate does fall under income tax if you are not one of the groups above.

The same rules also apply, so natural persons will pay 15% and legal entities pay 21%. This amount falls under gratuitous income and will have subsequent tax rates from one taxable year to the next.

How to reduce the tax burden by reporting a cooperating person?

You can also transfer part of your income to a cooperating person and thereby reduce your tax burden. The cooperating person helps the self-employed person in business activities. These can be, for example, administration, accounting, customer orders, communication with suppliers, etc.

Most often, the cooperating person is a husband or wife, although in some cases it can be children or parents. The cooperating person must reside and work in the same household or participate in a joint “family business” venture. (Find the legal definition of the so-called “family business” in Section 700 of the Labour Code.)

• A child over 18 who is currently enrolled as a student

• Retired parent

• Wife on parental leave

• A spouse whose main employment is with the employer

If the cooperating person is currently on parental leave or otherwise employed, their cooperation is considered a secondary, independent income-earning activity. However, it is more advantageous if the cooperating person’s main self-employment is from the cooperation. This is due to the mandatory contributions to health and social insurance for secondary, self-employed persons.

Additionally, the following conditions apply to a cooperating person:

• They are of at least 18 years of age with the legal power to conduct their own personal and financial affairs

• There is no trade license is necessary, while activities are regarded as self-employed

• Only the cooperating person is able to apply for a spouse or child discount. The entrepreneur cannot.

• All income and expenses must be divided and reported by the entrepreneur and cooperating person according to the law.

• Both parties must fulfill all reporting obligations.

To take on a cooperating person, the entrepreneur must inform the tax office, social security, and the health insurance provider. The cooperating person must also register for income tax on their own behalf, and have a Tax ID number.

Social security offices then provide a variable symbol for making advance payments. The same is true for health insurance, which also requires monthly advances from the cooperating person.

According to the Income Tax Act, if you transfer part of your income to a cooperating person, you must transfer the same percentage of expenses.

For a simple example: if you transfer 40% of your income, you must also transfer 40% of your expenses.

The Income Tax Act also stipulates maximum limits for the spouse or other cooperating persons. These are:

1. For a cooperating spouse, the maximum transfer limit of income and expenses is up to 50%, to a maximum of CZK 540,000.

2. If cooperating with a non-spouse, the maximum transfer limit is 30% of income and expenses, up to a maximum of CZK 180,000.

Note: You can have more than one business partner. However, if you have more than one cooperating person, you can transfer a maximum of 30% across multiple cooperating persons.

For example, let’s take the tax report of Adam, a self-employed entrepreneur. Adam will report his spouse Eva as a cooperating person.

• Adam earned 800,000 CZK and he applied the 60/40 method to his taxes.

• Adam’s expenses are therefore CZK 480,000, with a profit of CZK 320,000.

• Adam applies the basic taxpayer’s discount (CZK 30,840), so he pays CZK 17,160 remaining to pay in taxes.

However, Adam decides to use a cooperating person. And, because the cooperating person is Adam’s spouse, he can transfer 50% of his income and expenses to her.

• Adam transfers CZK 400,000 of his income and CZK 24,000 of his expenses to his spouse Eva.

• Adam’s tax return becomes the exact same as Eva’s.

• They both now have an income of CZK 400,000, expenses at CZK 240,000, a profit of CZK 160,000, with a remaining 15% income tax to pay of CZK 24,000.

• Adam and Eva both apply the basic taxpayer’s discount of CZK 30,840, meaning they now have zero tax liability.

In this case, Adam and Eva both pay zero income tax. Adam reduces his tax burden by claiming Eva as a cooperating person. Meanwhile, Eva’s profit likewise isn’t high enough for any tax liability.

Sickness Insurance for OSVČ (Self-Employed) in the Czech Republic

Sickness insurance is optional for freelancers and self-employed people (OSVČ) with a trade license in the Czech Republic. If you decide to pay it, it will affect your maternity leave benefits and the amount of your monthly parental leave payments.

Minimum Deposits

The minimum sickness insurance payment is 2.7% of your tax base (net income). In 2025, the minimum monthly payment is 243 CZK, and the maximum is 5,029 CZK.

First Year of Registration

During your first year of sickness insurance, you pay the minimum amount of 243 CZK, based on the official minimum tax base of 9,000 CZK in 2025

Second Year

From the second year on, your monthly payments depend on your income from the previous year.

For example, if you earned 1,000,000 CZK last year, after applying the 60/40 expense deduction method (60% expenses), your tax base is 400,000 CZK. Your new sickness insurance payment is calculated like this:

400,000 CZK × 0.55 × 0.027 ÷ 12 months = 495 CZK per month.