You are used to making quick and clear decisions. Yet there’s one that’s worth slowing down on: choosing the flat-rate tax band for 2026. It looks simple on paper, but in reality it decides whether you pay just enough or too much each month. A well-chosen band will give you peace of mind and room to focus on business instead of advances and boundaries. Wrong estimate? That one usually comes in late and expensive.
In this article, we’ll take you through the whole scheme in a few minutes: explaining how the flat-rate tax bands work, how to choose the right one, and what to do if your income exceeds your chosen band. You’ll find out why the nature of your business determines your band choice, what the monthly advance payments are for 2026 and how to avoid a nasty top-up.
The point of the flat-rate scheme is to combine three payments into one – income tax, health and national insurance – which significantly reduces administration.
The flat-rate regime is open to personal income tax payers who are self-employed, are not VAT payers (an exception is a VAT-identified person), are not partners in a public partnership or general partners in a limited partnership, are not insolvent, do not take a conventional salary from employment at any given time (except for income with withholding tax) and did not exceed the qualifying income for the selected band in the tax period immediately before entry. Notification of entry is normally made by 10 January of the year in question (or by the date of commencement of activity for newly self-employed persons). However, for 2026, the deadline of 12 January 2026 applies because 10 January falls on a Saturday.
Not sure how to do your taxes correctly so you don’t get it wrong? We can help you navigate the law, whether it’s dealing with a specific tax situation, preparing for an audit by the tax authority or defending yourself in court.
The flat-rate scheme has three bands from 2023, based on the amount of income and the nature of the activity. The key point is that the law does not look at the actual expenses claimed in the band, but what expenses would be claimable as a percentage of income if you went outside the flat rate scheme. That is, whether your activity would have been subject to an 80%, 60%, 40% or 30% expenditure allowance. For the bands, we then work with a test of whether at least 75% of the income falls into 80% or 60% flat rate activities .
QUOTE: An expense lump sum is a way to set your tax expenses as a percentage of income earned , outside of the flat rate regime (in “traditional” taxation), instead of proving actual expenses.
For the sake of argument, let’s summarize which activities might have what expense allowance (if you were going outside the flat-rate regime):
Band I can be entered in three situations:
Band II includes self-employed persons whose income did not exceed CZK 1.5 million. CZK regardless of activity, or income up to CZK 2 million. CZK, if at least 75% of the income is generated by activities with a possible 80% or 60% expenditure flat rate.
Band III is open to anyone whose income does not exceed CZK 2 million. CZK 2 million, regardless of the type of activity. It is a safe harbour for those who want to use the flat-rate scheme even at higher incomes and do not want to keep an eye on whether 75% of their sales come from the more favourable 60% or 80% categories.
Have you signed up for a flat tax? read what you can expect from it.
For 2026, the following monthly advances (which include income tax, social security and health tax) apply:
Advances are payable by the 20th of each month. If you join the scheme when you start your business, the first advance is due by the 20th of the following month together with the advance for that month.
If you have exclusively artisanal activities (80% flat rate) and you earned, for example, 1.9 million euros, then you should consider the amount of income you earned . You can still be in Band I because you meet the condition that at least 75% of your income is from 80% flat-rate activities and you did not exceed CZK 2 million. CZK.
On the other hand, if you are a doctor, lawyer or tax adviser (typically 40% flat rate) with income of CZK 1.2 million, you can qualify for the tax exemption. CZK, you can no longer opt for Band I because you have exceeded the threshold of CZK 1 million. CZK and your activity does not belong to the groups with 60% or 80% expenses. The solution is band II (or band III).
You don’t have to. The band is optional, and you can choose a higher band if it suits you better for some reason (e.g. you expect income growth and want to have a buffer). You can only ever switch between bands by 10 January in the tax year via a Notice of Change of Chosen Band, you cannot switch during the year (effectively 12 January 2026 for 2026).
You announce your entry on the date of commencement of the activity. The first deposit is then due by the 20th of the following month together with the deposit for the current month.
In practice, you keep an internal schedule for the invoice and allocate each item to the correct activity type. For mixed items, choose appropriate keys (time, pieces, rate) to make the split defensible.
It’s not. Sick pay is voluntary for self-employed workers and is paid separately over and above the flat-rate social insurance payment.
A common concern: What if I earn more than I expected during the year and exceed the threshold for my chosen band? You don’t change the band during the year. But after the end of the year, you evaluate your actual income. If your income exceeded the limit for your chosen band but did not exceed the limit for the higher band, you can file a Notice of Different Flat Rate Tax and pay the flat rate corresponding to the higher band for the whole period you were in the scheme. On the other hand, if your income also exceeds the limit of the highest band or any other condition of the scheme, you will in principle cease to be a flat rate taxpayer and enter the standard scheme with an obligation to file a tax return.
How to complete the tax return and when and where to send it? The next article will tell you.
VAT payers cannot enter the flat-rate regime. However, you can be a VAT identified person, which is a special category where you are not a taxpayer but have selected obligations in relation to cross-border transactions. This distinction is crucial for self-employed people with business links abroad.
If you discontinue a business and resume it in the same year, you automatically return to the same regime and band to avoid unnecessary jumps out of the regime. At the end of the year, it is always determined whether you remain in your chosen band or whether you need to submit a notice for a different flat rate (if you have only gone over the limit into a higher band).
The flat rate scheme is not ideal for everyone. It is particularly worthwhile where simplicity is a virtue and where the difference from traditional taxation (or flat rate expenditure) is not tied to large tax allowances and deductions. Below you will find quick indicators and model situations.
Unless your work entails large expenses (materials, purchase of goods, costly transportation), the difference between the traditional scheme and a flat tax is likely to be small and worthwhile due to its simplicity.
In the flat-rate scheme, you pay one fixed amount per month (tax + social + health). There’s no need to keep calculating advances, tracking profits and recalculating when there are fluctuations during the year. At the end of the year, you just check whether you have exceeded the limit of the chosen band and, if necessary, report a different amount of the lump sum (additional payment for a higher band).
In the flat-rate scheme , you don’t claim tax allowances and deductions (spo use ‘s allowance, higher rate child tax credit, mortgage interest deduction, gifts, pension or life assurance). If you don’t claim these, then there’s nothing to lose and the flat-rate is often worthwhile.
A fixed amount per month will stabilise your budget, even if you have a peak season/peak. You won’t get unwanted surprises in the form of rising advances in the middle of the year.
The flat-rate advance is fixed. For small incomes (typically a secondary self-employed job/parenting), the classic tends to be cheaper because the premium in the classic is based on reality (and low for a secondary activity), whereas in the case of a lump sum you’d pay the full fire every month.
E-shops, reselling, logistics, paid advertising, subcontracting… In classic you apply real costs or a 30-80% expense flat rate (outside of the flat tax regime). In a flat rate you do not apply costs at all – a fixed payment can then be very disadvantageous.
Do you have children, a mortgage, gifts, pension or life insurance? These items often knock tens of thousands a year off your tax bill in the traditional regime. In the flat-rate scheme, you lose these benefits. If the child tax benefit alone swallows up more than the annual tax portion of the flat-rate plan, then the classic plan clearly leads the way.
You cannot be a VAT payer in the flat rate scheme. If you are approaching the turnover limit for taxability, it makes sense to stay out of the flat rate. (An identified person for VAT doesn’t matter).
If you frequently oscillate near the thresholds (e.g. £1.45-1.55m or £1.9-2.0m), expect to be more likely to top up your band after a year. It doesn’t matter legally, but it should be taken into account. So consider the higher band or stay in the classic scheme.
The flat-rate tax for self-employed people combines income tax, health tax and social security tax into one monthly payment and is available to non-VAT payers (you can be an identified person) who are not insolvent or partners in a limited company/company and meet the income thresholds. From 2023 it has three bands linked to the amount of annual income and the nature of the activity (80/60/40/30%).
For 2026, the monthly advances are: Band I: CZK 9,984, Band II: CZK 16,745, Band III: CZK 27,139; payable always by the 20th of the month. Entry into or change of band can only be notified until 12 January 2026 (for new self-employed persons at the start).
You choose your own band. The band does not change during the year; after a year you assess your actual sales: if you have exceeded the limit, you pay the higher flat rate retroactively (unless you also exceed the band III ceiling or other conditions of the scheme). If you stop your activity and resume it in the same year, you return to the original scheme/band automatically.)
The scheme is usually worthwhile if you have low real costs and do not claim high allowances or deductions; it is less suitable if you have low income (side business), high costs or high tax allowances.
You don’t have to. You can choose a higher band if you want. You can only change from the beginning of the year (until 12 January 2026).
Not exactly. You don’t change the band during the year, you assess your income at the end of the year and, if necessary, report a different flat tax amount corresponding to the higher band. If you exceed even the limits of the highest band or some other essential condition, the scheme will indeed end.
Entry is only possible until 12 January 2026 (or until the date of commencement for new self-employed persons). After that date, you cannot enter during the year. The only exception is entry on commencement or renewal.
Not sure how to do your taxes correctly so you don’t get it wrong? We can help you navigate the law, whether it’s dealing with a specific tax situation, preparing for an audit by the tax authority or defending yourself in court.
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.
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