Becoming Self-Employed in the Czech Republic

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.

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) – 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.
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.