Business in Czechia for foreigners

Rates in 2026 changed mid-year — this hasn't happened in a long time. The consolidation package raised the minimum OSVČ base from 35% to 40% of the average salary from January 1, 2026. Then, a novel rescinded this: from July 1, the base returned to 35%, retroactively from January. In practice: the minimum social base fell from 19,587 to 17,139 CZK per month, the minimum záloha (advance payment) — from 5,720 to 5,005 CZK (−715), and the lump-sum tax in the 1st bracket — from 9,984 to 9,162 CZK (−822).

Importantly, what the reduction did NOT affect: the medical záloha remained 3,306 CZK for the entire year 2026. It did not fall in July. Only social contributions and the lump-sum tax fell — and that's why the 'minimum OSVČ' now consists of 5,005 + 3,306 CZK.

Now the main thing — the money for January–June that you overpaid at the old rate. This is 4,290 CZK (six months at 715 CZK each) if you paid social zálohy separately, or 4,932 CZK (six months at 822 CZK each) if you are on the lump-sum tax. One of the two, not both. And this money will not return on its own.

There are several options: a written request for a refund to the OSSZ (reviewed within 60 days), crediting the overpayment to future zálohy, distributing it for the rest of the year, or accounting for it in the annual přehled (summary). But none will work automatically — until you ask, the overpayment will simply remain in the system. Check your case with ČSSZ or with an accountant: the change is recent, and interpretations in different sources still vary.

This is the most common mistake in self-calculations: people take one "income" and multiply it by both rates. That's not how it works – there are two types of insurance, and they have different bases. Social security (pension insurance): rate 29.2%, and the assessment base is 55% of your tax base. Health insurance: rate 13.5%, base is 50% of the tax base. The same profit yields two different bases, and you cannot confuse them.

Minimums for 2026 (from July): social security advance payment for main activity is 5,005 CZK, health insurance is 3,306 CZK. New self-employed individuals (OSVČ) pay a social security advance of 3,575 CZK – this is 25% of the base, and it hasn't changed all year. For secondary activity, the figures are different: the minimum social security base of 5,387 CZK results in an advance payment of 1,574 CZK, and the decisive amount of 117,521 CZK per year is the threshold around which it is decided whether you owe social security contributions at all. There are no health insurance advance payments for secondary activity – the calculation is done once a year based on the summary report.

The deadlines are also different, and this is where people most often "get burned." Social security advance payments are due by the last day of the month FOR which they are calculated. Health insurance is due from the 1st to the 8th of the FOLLOWING month. This means the July social security payment must be made by July 31st, and the July health insurance payment by August 8th. Two different rhythms in one calendar. For completeness: the maximum social security base is 2,350,416 CZK per year, and sickness insurance is voluntary, with a minimum of 243 CZK per month.

Once a year, these advances are reconciled in a summary report (přehled). Deadlines for 2025: for a paper-based report (DAP) submitted to the Czech Social Security Administration (ČSSZ) and the insurance institution – by May 4, 2026; for an electronic report – to ČSSZ by June 1st, to the insurance institution by June 4th (sources differ by a few days here – clarify your exact date directly); through a tax advisor – by August 3rd; if there is no obligation to submit a DAP – to the insurance institution by April 8th. Any outstanding balance (nedoplatek) must be paid within 8 days of submission. Also: from January 1, 2026, the summary report to the insurance institution will only be submitted electronically by those who have a data box (datová schránka) – and you have one, it is created automatically with your company ID number (IČO). Rates and dates are available at cssz.gov.cz.

The lump-sum tax is one payment per month instead of tax and two contributions. Bands for 2026: the first is 9,162 CZK from July (it was 9,984 CZK), the second is 16,745 CZK, the third is 27,139 CZK; the last two have not changed. The first band from July breaks down as follows: 100 CZK tax + 3,306 CZK health insurance + 5,756 CZK social insurance. Annually (at a 35% base), this amounts to 109,944 / 200,940 / 325,668 CZK respectively.

And now the price of this convenience — and people often find out about it too late. Discounts do not apply to the lump-sum tax: the basic discount for the taxpayer (sleva na poplatníka) of 30,840 CZK simply expires. The tax bonus for children (daňový bonus) does not apply at all. Deductions (mortgage interest, gifts, pension savings) — also not. In a loss-making year, you pay the full amount anyway. Calculate it yourself: a discount of 30,840 CZK plus a bonus for two children (15,204 + 22,320 CZK) is over 68,000 CZK per year, which you voluntarily give up. Therefore, the lump-sum tax is almost always disadvantageous for families with children and for those with low profit margins.

Limits are calculated based on the previous year's income. The first band is up to 1,000,000 CZK for any activity; up to 1,500,000 CZK if at least 75% of income falls under lump-sum expenses of 80% or 60%; up to 2,000,000 CZK if 75% falls under 80%. The second band is up to 1,500,000 CZK for any activity or up to 2,000,000 CZK under the same 75% condition. The third band is up to 2,000,000 CZK. Those who cannot use the lump-sum tax include: VAT payers (plátci DPH) and those who are obliged to register (but an identified person — identifikovaná osoba — can), income over 2,000,000 CZK, a partner in a general partnership (společník v.o.s.) or a general partner in a limited partnership (komplementář k.s.), individuals in insolvency, as well as those who have income from dependent activities — except for income taxed at source.

And the toughest part — the deadlines. You can enter or leave the lump-sum tax system only by January 12th. This is one chance per year: if you miss it, the next attempt is not until January 2027, and you live in the current system for the whole year. The payment itself is due by the 20th of each month. Conditions and limits are available at financnisprava.gov.cz.

There are two thresholds, and they work differently – this is the main thing to remember. If you exceed 2,000,000 CZK in turnover, you will become a VAT payer (plátce) from January 1st of the following year (you can also register voluntarily immediately if you wish). If you exceed 2,536,500 CZK, you automatically become a VAT payer from the 2nd day after exceeding the limit, without any delay. The application (přihláška) must be submitted within 10 working days of exceeding the limit.

Turnover is calculated for the calendar year – from January to December. This is a change from 2025, and it's where most outdated texts are found: previously, the threshold was calculated over 12 consecutive months, so old articles mentioning "12 consecutive months" will mess up your calculation. VAT rates in 2026: 21% standard rate and 12% reduced rate (for construction, catering, accommodation, hairdressing services).

And separately – the identified person (identifikovaná osoba), the most common surprise for freelancers. The most typical way to get this status is through advertising on Facebook or Google: you received a service from abroad, and the status arose. Other cases: you provided a service to a business in the EU or purchased goods from the EU exceeding 326,000 CZK per year. Registration is required within 15 days, and the tax return (přiznání) is due by the 25th of the month.

But there's no need to panic: an identified person is not a VAT payer (plátce DPH). You do not charge your own VAT, you do not get the right to deduct VAT (odpočet), and you do not submit a control statement (kontrolní hlášení) (only VAT payers submit this, also by the 25th), and you can safely remain in the lump-sum regime. So, the worst thing this advertising brings you is a separate tax return for the service received from abroad. Current rules are available at financnisprava.gov.cz.

Yes — and on the same terms as a Czech. Dočasná ochrana (temporary protection) serves as a residence document; a separate permit to do business is not needed. You will need: a valid DO, an ID card, and a výpis z rejstříku trestů (criminal record extract) — both Czech and Ukrainian. The Czech one is issued at any CzechPOINT for 100 CZK.

And now for the trap, which causes people to lose their businesses for no reason: a živnostenské oprávnění (trade license) is issued for a limited time — exactly for the duration of your dočasná ochrana. Not indefinitely. When you extend your protection, the license does not automatically extend with it: you must inform the živnostenský úřad (trade licensing office) separately. If you don't inform them, the license expires with the old DO, and no one will remind you about it.

From this, a practical conclusion: the term of your business is tied to the calendar for extending your DO. The 2026 procedure is two-step — an online registration by March 15, 2026, provided protection until September 30, 2026, and then an in-person visit for a visa stamp by September 30, which alone extends protection until March 31, 2027. This means September 30, 2026, is a crucial deadline not only for your status but also for your živnosť (sole-trader licence). Without the visit, protection ends, not continues.

Each time you extend your DO, set yourself a reminder: inform the živnostenský úřad. It takes a few minutes, and the cost of a mistake is suspended activity and invoices that you are no longer legally allowed to issue. Explanations for Ukrainians with DO are on the MPO website.

A živnosť (sole-trader licence) costs surprisingly little: the first registration (ohlášení) is 1,000 CZK, each subsequent one is 500 CZK, and a concession application (žádost o koncesi) is also 1,000 CZK. You can submit it at any municipal trade licensing office (obecní živnostenský úřad), at a CzechPOINT, or online via the Unified Registration Form (JRF). The excerpt (výpis) is issued within 5 days of receiving the registration form. The most valuable part here is the JRF itself: the unified registration form covers 5 authorities at once (trade licensing office, tax office, social security administration, health insurance institution, and employment office), meaning one form instead of five visits.

There are four types of živnost, and your choice determines what qualifications you need: free (volná) – no qualifications required at all; craft (řemeslná) (Annex 1) – requires a vocational certificate or practical experience; specific (vázaná) (Annex 2) – requires special qualifications; concession (koncesovaná) (Annex 3) – also requires a separate permit from a state authority.

The main myth about limited liability companies (s.r.o.) concerns capital. The minimum share capital today is 1 CZK (§ 142 para. 1 of the Commercial Code), and all old texts about 200,000 CZK describe a rule that no longer exists. Actual costs are as follows: notarial deed based on a template contract – from 2,000 CZK + VAT (individual contract – from 4,000 CZK + VAT); court fee for a template contract with a monetary contribution – 0 CZK, direct registration by a notary – 2,700 CZK, court filing – 6,000 CZK. Thus, a "simple" s.r.o. costs approximately 3,500–6,000 CZK, and an individual one – approximately 8,000–12,000 CZK.

However, you should look not at the entry cost, but at the exit cost. In an s.r.o., profit is taxed twice: first, 21% corporate income tax, then another 15% withholding tax upon dividend payout – effectively about 32.85% for withdrawing money. A sole trader pays 15% (and 23% only on the amount exceeding 1,762,812 CZK per year), but they are liable with all their personal assets and pay advance payments even in a slow month. Therefore, the question is not about the 5,000 CZK startup cost, but about how much you plan to withdraw and what risks you are taking. Official directories are available at RŽP and MPO.

If you are not a VAT payer, everything is simple: you issue an accounting document according to § 435 of the Civil Code. You only need the name, registered office, IČO (company identification number), and registration details. There should be no VAT details – you do not charge it. Recommended note: 'Nejsem plátce DPH' (I am not a VAT payer) – this resolves half the questions from the client's accounting department.

For VAT payers, everything is stricter. § 29 of the VAT Act requires a full set: the designation 'Faktura – daňový doklad' (Invoice – tax document), a unique identification number, supplier details (name, registered office, DIČ – VAT identification number), buyer details (plus DIČ if they are a payer), scope and subject of the supply, issue date, date of tax liability, unit price without tax, tax base, tax rate, and the amount of tax in CZK.

And this is why it's not a formality: if even one detail is missing, the document ceases to be a tax document – and your buyer loses the right to deduct VAT because of it. This is exactly why invoices are returned to you 'for a trifle': for the counterparty, this trifle costs real money, and they are not allowed to forgive it.

Separately about the payment deadline, because a common mistake occurs here. Splatnost (due date) is NOT a mandatory invoice detail. If you don't specify a date, it doesn't make the invoice invalid: § 1963 of the Civil Code applies, meaning 30 days from the delivery of the invoice or from the acceptance of the work, whichever happened later. If you want a different deadline, agree on it in the contract and duplicate it on the invoice. Tax document details are available at financnisprava.gov.cz.