When you say business, most people think of something like a business license, an IČO, a visit to the trade office and paperwork. But not every business is a trade. And you don’t have to register every business as a trade. You might be surprised at how many things you can legally do without having to get a business license. And yet, we’re still talking about activities that can earn you good money. So what activities can you do without a trade license and what about taxes?
Let’s start one at a time. The law says that business means a systematic activity carried out independently, in one’s own name, on one’s own responsibility and for profit, to paraphrase the Civil Code. But what if you only do something occasionally? Or if your activity falls under special regulations that specifically exclude the activity from trades? Then the Trade Act comes into play. In its § 3, the Trade Licensing Act lists activities that are not trades. And it is these that we will focus on this time.
If we simplify it a lot, we could say that business without a trade licence can be carried out within the following activities:
So let’s look at each point in more detail.
If you write books, compose music, take photographs, paint or design illustrations and sell the results of your work (or receive a fee for it), then this is copyright activity, which is protected by copyright law. Copyright is not considered a trade under the Act, so you can carry on copyright work without a trade licence. Royalty income is taxed when the profit from royalties exceeds CZK 10,000 from a single employer.
How it works in practice:
Jana writes novels and occasionally publishes one through a publishing house. She receives royalties once a year. She does not have an IČO or a trade license, yet she runs a legal business. She does not have a business license, but she is a registered entrepreneur.
Honza photographs weddings and occasionally sells a few photos to a photo bank. Since his photography is only occasional and he does not organize his own commissions, it can still be considered an artistic activity. However, as soon as he would set up a website, offer custom photography and take orders, it would already be a trade.
The form of the activity is what is crucial in this case, not just whether someone is an “artist”. If you are doing commissioned work, it is usually already a business and you should have a trade set up for it.
Take advantage of our legal advice and find out if your activity exceeds the limits of a business without a trade. Just give us a brief description of what you do and how you do it, and we’ll let you know within 48 hours whether you’ll need to set up a trade.
Another category that has its own chambers and regulation is the so-called liberal professions. These people run their businesses according to their own specific laws and do not need a trade licence to do so. However, they must be members of the relevant chamber and follow its rules.
These include, for example: lawyers, notaries, doctors and pharmacists, architects, tax advisers, auditors, translators and interpreters, forensic experts, directors, liquidators and restorers.
If you keep animals or grow plants and are registered as an agricultural entrepreneur under the Agriculture Act, you also do not need a trade licence. Agriculture also has its own regime.
However, the moment you sell the surplus from your garden at the market or on the internet without keeping records and without ensuring hygiene and accounting, you are already risking problems. This is no longer a business, it is no longer a business.
Do you own an apartment, a house, a garage or even a few plots of land and rent them out? Then you don’t need a trade to do this. However, renting out property is not a business unless it is combined with additional services such as laundry, cleaning or catering, unless you only rent out property that belongs to you, and unless you run an Airbnb-type accommodation service in bulk. Once you start running, for example, short-term accommodation with hotel services, it is already a business for which you need a trade licence.
If you are a managing director, trustee, board member or other statutory representative of a legal person and you receive remuneration for this function, it is still not a business. This type of function falls under employment income. But again, if you started working for a company as a self-employed person on an invoice, and it was a disguised form of employment, this would already be a problem.
Tip: Freelancing is the easiest way to start a business. Read on to find out what you’ll need and how to go about registering one.
We are now on pretty thin ice. The law defines casual activity as a one-off, irregular and non-business activity. According to the Income Tax Act, you can have occasional income that is not recurrent, not your main source of livelihood and does not exceed CZK 30,000 per year (the exempt limit).
This includes situations where a mother sells her child’s clothes at a second-hand market or someone disposes of second-hand household equipment and furniture in this way. However, if someone produces things for sale (e.g. jewellery or decorations) and then sells them at markets or on the internet, this is again a business for which a trade licence is required.
Occasional income does not have to be taxed if it does not exceed CZK 30,000 per year.
You therefore need a trade licence when your activity is continuous (you do it regularly), for profit, on your own responsibility and under your own direction (you look for clients, have a website, advertise, invoice…).
The same rules apply to you as to sole traders. You are therefore obliged to submit tax returns and reports to the Social Security and Health Insurance Institutions every year. You must register with the CSSA and the health insurance company within 8 days of starting self-employment.
You can also claim flat-rate expenses for these activities:
If you are not sure whether your activity falls under a trade-related business or whether you can run a business without a trade, consult a lawyer. At The Affordable Lawyer, we can help you with analysis, paperwork and registration if required. Most importantly, you’ll get the confidence that you’re doing everything right.
Tip: Do you want to open a shop in your apartment or house? Whether you want to have a hairdressing salon or a car workshop at home, you will have to meet several conditions. Find out in our article under which conditions it is possible to have an establishment in an apartment or a house.
Not every gainful activity in the Czech Republic requires a trade licence – you can do business without one if your activity is one of the exceptions listed in the Trade Licensing Act. These include, for example, artistic and authorial work (writing books, photography, painting), freelance work (doctors, lawyers, architects), agriculture (if you are registered as an agricultural entrepreneur), management of your own property (e.g. renting out real estate without additional services), performing a function in a company (e.g. managing director), or occasional activity (irregular, one-off and non-business, up to 30,000 per year). The key is whether it is a continuous and profitable activity carried out on your own – then it is already a business and a trade may be needed. Even without a trade, however, you still need to tax your income, file tax returns and reports for insurance companies, and you can claim flat-rate expenses depending on the type of activity. If you’re not sure whether you need a trade, consult a professional.
Our team of experienced attorneys will help you solve any legal issue. Within 24 hours we’ll evaluate your situation and suggest a step-by-step solution, including all costs. The price for this proposal is only CZK 690, and this is refunded to you when you order service from us.
Ondřej is the attorney who came up with the idea of providing legal services online. He's been earning his living through legal services for more than 10 years. He especially likes to help clients who may have given up hope in solving their legal issues at work, for example with real estate transfers or copyright licenses.
In person and online. Just choose the appropriate service or opt for an independent consultation when you are unsure.
