Regular payments for trade licence owners

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). 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.