#### _**A) Social security**_

•	The minimum advances (social security) for 2023 are **CZK 2,944 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 2023 it is CZK 96,777), you do not have to pay any advance payments for social insurance next year as well.
•	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 2.1% of the monthly assessment base. The minimum amount is CZK 168 (for 2023) 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 (it amounts to about 2.7% of profit), but the minimum is **CZK 2,722 per month** (for 2023). In the first year of their trade licence, everyone starts with the minimum health care contribution.
•	The health insurance company 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 2023.**
•	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. The **monthly payment** for the year 2023 is **CZK 6,208**. No tax deductions or tax allowances can be asked.

#### _**!! IMPORTANT !!**_

Once a year, you are obliged to do a **Tax Return for the Self-Employed** 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. 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.

#### _**What if Self-Employment is Only My Secondary Activity?**_

Self-employment can also work as a secondary income, therefore you can have a full time job as well. This is possible only if you have other employment and** earn more than minimum wage**. 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 [here](https://expat.praha.eu/news/article/becoming-self-employed)).
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 96,777 per calendar year (2023)**. 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.


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Regular payments for trade licence owners

Regular payments for Trade licence owners

##### 1. Deadline
The basic deadline for submitting a tax return for 2022 is **3 April 2023**. If the tax return is filed electronically, then the deadline is extended to 2 May 2023.

A tax return can be filed: in person, by mail, electronically. Taxpayers with a data box submit their tax returns through it. Self-employed persons (in Czech “OSVČ”) must file their tax return through a data box.

##### 2. You will need these documents
If a person is employed, they will need a **certificate of taxable income** from their employer. Trade license holders should compile their **invoices** paid for the given calendar year. Flat-rate expenses or real expenses related to their business may be applied. If flat-rate expenses are used, filers are not obliged to keep any receipts or invoices received.

Trade license holders must determine any **advances** they paid for **pension insurance** (ČSSZ, or PSSZ in Prague) and **public health insurance** (VZP or provider you are registered with). Taxpayers should automatically receive this information after the end of the year (if you have an e-account with these institutions the information is available online). These numbers will be needed to prepare a statement of income for self-employed persons.

##### 3. Deductions
Tax filers also need a confirmation of their deductions. In order to claim the **mortgage interest deductions**, those filing taxes must prove how much interest they paid the previous year via confirmation from the bank. If the taxpayer has **dependent children**, one of the parents may claim a deduction for them. Similarly, if a taxpayer wishes to claim a **deduction for a non-working spouse**, then that spouse must sign a declaration that his or her income has not exceeded a certain limit that year (CZK 68 000). You may also deduct payments for **kindergarten**.

After summing up all your types of income, you will get your **tax base**, from which you can deduct all that we mentioned above (if applicable). The **tax rate** imposed on your total tax base is 15% for the tax base up to approximately CZK 1 867 728 and 23% for the tax base above this amount.

##### 4. Download the tax return form
Find a tax **[return form online](https://www.financnisprava.cz/en/taxes/tax-forms/personal-income-tax)** (in English), but you have to submit the filled in form solely in the Czech language. Thus, we recommend finding an English-speaking accountant or even a tax consultant to help you with this task.

##### 5. Submit
You can submit your tax return in any **office** of the Financial Authority (there are [12 offices in Prague](https://www.financnisprava.cz/cs/financni-sprava/financni-sprava-cr/organizacni-struktura/organy-financni-spravy/financni-urady/2000-financni-urad-pro-hlavni-mesto-prahu)), but if you already have **temporary/permanent residence**, it should be in the area of your residence. Find out with this website which office you belong to. On this website fill „PSČ PLÁTCE DANĚ“ which refers to the postal code of your accommodation. If you submit your tax return once you also have to do it in the same office the following year, unless you will ask the Tax Authority for the relocation of your “profile” to another tax office (in case of moving).
You can submit it online via government website **[mojedane.cz](http://mojedane.cz/)** (you can access it through your Data mailbox), unfortunately only in the Czech language.

##### 6. Other obligations for self-employed
Once a year you have to also submit the **Summary of Income and Expenses** to both the **social security office and your health insurance office**. The deadline is **2nd May**. 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.

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Czech income taxes for 2022: a guide for foreigners

Income tax for 2022

The Program targets **highly skilled digital nomads**, proficient in the IT sector, as a response to the shifting landscape of global workforce mobility and freelancing, notably accelerated by the COVID-19 pandemic. Its main objective is to **streamline the relocation process** of these professionals to the Czech Republic.

Eligibility for the Program extends to citizens from specific countries, namely **Australia, Japan, Canada, South Korea, New Zealand, the UK, the USA, and Taiwan**. It caters specifically to two categories of digital nomads:

**Remote Employees**: This includes foreign employees who continue working for their foreign employer while stationed in the Czech Republic. The work is conducted remotely, facilitated by digital communication tools. The digital nomad remains an employee of their foreign company and does not establish a formal employment relationship with a Czech employer.

**Freelancers (Self-Employed)**: Foreign individuals who possess or plan to acquire a Czech Trade License fall under this category. They engage in self-employment while being a part of the Program.

The Program accommodates **immediate family members** of the digital nomads, such as spouses, registered partners, and children. These family members can apply for residence permits simultaneously.

Enlisted digital nomads gain several advantages under the Program:

1. _Visa/Residence Application_: They can submit their long-term visa or residence permit applications at Czech Republic embassies/consulates abroad. This privilege extends to their immediate family members as well.

2. _Application Processing_: The processing of their visa or residence permit applications is expedited, with a commitment to review within 45 days from submission.


However, it's crucial to note that participation in the Program is **not guaranteed by law**. The Ministry of Industry and Trade is responsible for evaluating applications. Interested individuals must send their applications to the designated email address, _**digitalnomad@mpo.cz**_.

[More information](https://www.mzv.cz/seoul/en/ko/longterm/digitalnomad.html) and forms.

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Czech Republic Launches New Government Program – Digital Nomad

digital nomad program

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 and to become a Legal Person (=PO, právnická osoba). The best source of information is on the [**Ministry of Industry and Trade (MPO) website**](https://www.mpo.cz/en/).

#### _**Trade Licence**_

Before going to the **Trades Licensing Office**, you should have a clear idea in what area you want to do your business. Not all business activities are trades. For example, artists do not need to be authorized to do so, neither do small farmers. However, there are a number of Trades to choose from.
Basically there are two main types of the Licensed Trades, the first of which has three sub-types:

**With Reporting Obligation Only:**

**1.**	Free, or Unqualified Trade (**Volná živnost**) – only the general conditions must be met. 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.

**With Concession Obligation:**

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: freight transport, travel agencies or funeral services.

#### _**Getting the Trade Licence**_

What Are the Requirements?
- 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.

#### _**Where to Apply?**_

Collect all the required documents. Submit all the documents to the closest Trade License authority. Most Trade License offices are only open on Mondays and Wednesdays so plan wisely. 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.

#### _**List of the Required Documents**_

1.	Passport/ID.
2.	“Single Registration Form” (download [here](https://www.mpo.cz/assets/cz/podnikani/zivnostenske-podnikani/crm-jednotny-registracni-formular/2017/9/MPO_PO.pdf)) – 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.
5.	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.
5.	Documents proving your professional qualifications (if needed depending on the type of Trade Licence).
6.	Service fee CZK 1,000 (CZK 500 for every subsequent notification/change).

#### _**What to Do After Registering at the Trade Licence Office?**_

1.	You will receive further instructions at the Trade Licence Office. They will send your registration directly to the **Financial Authority** and **Social Security Office** (OSSZ = Okresní správa sociálního zabezpečení). It is also recommended to visit the OSSZ in person, while the **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.	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.

Find out more about regular payments [here](https://expat.praha.eu/news/article/regular-payments-for-trade-licence-owners).

Regular payments for trade licence owners

Czech income taxes for 2022: a guide for foreigners

Czech Republic Launches New Government Program – Digital Nomad

Becoming Self-Employed in the Czech Republic