Free trade – conditions and fields

What is a trade

A trade is defined by the Trade Licensing Act as “asystematic activity carried on independently, in one’s own name, on one’s own responsibility, for profit and under the conditions laid down by the Trade Licensing Act.” It is therefore one type of business that allows you to work on your own without an employer, but also without the protection mechanisms and other benefits typical of employees, such as fixed working hours or holiday entitlement. Sole traders also pay their own social security and health insurance and pay their own taxes. This includes the obligation to file an annual tax return. A person running a trade is called a self-employed person (self-employed).

Trades are divided into two main groups, the reporting trades and the licensed trades. The reporting trades include free trades, craft trades and tied trades. In this article we will focus only on the free trade.

Trade reporting free

This is the least regulated type of trade, which can be arranged by virtually anyone. It can be arranged without the need for special permits or qualifications. All you need to do is register with the trade office.

How to get a trade licence

To obtain a trade licence, you need to go to the trade office. Take your ID card and a completed single registration form with you. If you want to have a place of business other than your permanent residence (i.e. your mailing address), you will also need a land registry extract confirming that you are the owner of the property or a lease agreement for your intended place of business.

There is a fee of CZK 1,000 for registration. As this is a notifiable trade, it is effective immediately.

The second option is to set up a business online. You can do this simply by filling in a single registration form, which you send via data box (or by post if you do not have a data box) to the address of the trade office. In this case, however, the trade does not come into existence immediately, but only after about a week, when you will receive an extract from the trade register, in which you will be assigned your identification number (IČO).

Conditions for setting up a free trade

You do not need any specific training or permits to start a freelance business. The only requirements are legal capacity and good character, i.e. a clean criminal record. However, it should be said that even a criminal record is not always a barrier. It depends on what is on it – the main barrier may be offences that are related to your previous business activities, such as embezzlement.

List of branches of the free trade

The liberal trades include those fields of work in which anyone can set up a trade without the need for specific qualifications or training. Whether, for example, the products or trades within a free trade will not have to meet certain standards is another matter. A total of 82 trades are classified as free trades:

1. Provision of services for agriculture, horticulture, fish farming, forestry and hunting.
2. Activities of professional foresters and drawing up forest management plans and curricula.
3. Diagnostic, testing and advisory activities in plant protection and treatment of plants, plant products, objects and soil against harmful organisms with plant protection products or biocidal products.
4. Management of reproductive material of forest tree species.
5. Animal breeding and training (except for livestock production).
6. Mineral processing, peat and mud extraction.
7. Manufacture of food and starch products.
8. Cultivation burning.
9. Manufacture of feed, compound feed, feed additives and premixes.
10. Manufacture of textiles, textile products, clothing and clothing accessories.
11. Manufacture and repair of footwear, luggage and saddlery.
12. Wood processing, manufacture of wood, cork, wicker and straw products.
13. Manufacture of pulp, paper and paperboard and goods made from these materials.
14. Publishing activities, polygraphic production, bookbinding and copying.
15. Production, reproduction, distribution, sale, rental of sound and sound-visual recordings and production of non-recorded data carriers and records.
16. Manufacture of coke, raw tar and other solid fuels.
17. Manufacture of chemicals and chemical mixtures or articles and cosmetic preparations.
18. Manufacture of fertilisers.
19. Manufacture of plastic and rubber products.
20. Manufacture and processing of glass.
21. Manufacture of building materials, porcelain, ceramic and plaster products.
22. Manufacture of abrasives and other mineral non-metallic products.
23. Cutting of technical and jewellery stone.
24. Manufacture and metallurgical processing of ferrous, precious and non-ferrous metals and their alloys.
25. Manufacture of metal structures and metal products.
26. Arts and crafts metal processing.
27. Surface treatment and welding of metals and other materials.
28. Manufacture of measuring, testing, navigational, optical and photographic instruments and equipment.
29. Manufacture of electronic components, electrical equipment and manufacture and repair of electrical machinery, apparatus and electronic equipment operating at low voltage.
30. Manufacture of non-electric household appliances.
31. Manufacture of machinery and equipment.
32. Manufacture of motor vehicles, trailers and car bodies.
33. Construction and manufacture of vessels.
34. Manufacture, development, design, testing, installation, maintenance, repair, modification and structural alteration of aircraft, aircraft engines, propellers, aircraft parts and equipment and aircraft ground equipment.
35. Manufacture of railway motive power vehicles and railway vehicles on tramway, trolley bus and cableway and rolling stock.
36. Manufacture of bicycles, invalid carriages and other non-motorised means of transport
37. Manufacture and repair of upholstery products.
38. Manufacture, repair and maintenance of sporting goods, games, toys and prams.
39. Manufacture of medical devices.
40. Manufacture and repair of ionising radiation sources.
41. Manufacture of school and office supplies, except paper products, manufacture of jewellery, card and fancy goods, umbrellas, souvenirs.
42. Manufacture of other products of manufacturing industry.
43. Operation of water supply and sewerage systems and water treatment and distribution.
44. Waste management (except hazardous waste).
45. Preparatory and finishing works, specialised construction activities.
46. Glazing, framing and passepartout.
47. Mediation of trade and services.
48. Wholesale and retail trade.
49. Pawnbroking and retailing of used goods.
50. Maintenance of motor vehicles and their accessories.
51. Pipeline and land transport (excluding rail and road motor transport).
52. Storage, packaging of goods, cargo handling and technical activities in transport.
53. Freight forwarding and customs representation.
54. Accommodation services.
55. Provision of software, information technology consultancy, data processing, hosting and related activities and web portals.
56. Activities of information and news agencies.
57. Purchase, sale, management and maintenance of real estate.
58. Rental and lending of movable assets.
59. Consulting and advisory services, preparation of expert studies and reports.
60. Planning of land development.
61. Preparation and elaboration of technical proposals, graphic and drawing work.
62. Design of electrical equipment.
63. Research and development in the field of natural and technical sciences or social sciences.
64. Testing, measurement, analysis and inspection.
65. Advertising, marketing, media representation.
66. Designing, designing, arranging and modelling.
67. Photographic services.
68. Translation and interpreting services.
69. Services in the field of administrative administration and services of organizational and economic nature.
70. Operation of a travel agency and guide activities in the field of tourism.
71. Extracurricular education and training, organization of courses, training, including lecturing activities.
72. Operation of cultural, cultural-educational and entertainment facilities, organization of cultural productions, entertainments, exhibitions, fairs, shows, sales and similar events.
73. Operation of physical education and sports facilities and the organisation of sports activities.
74. Household laundry, ironing, repair and maintenance of clothing, home textiles and personal goods.
75. Provision of technical services.
76. Repair and maintenance of household goods, objects of a cultural nature, products of fine mechanics, optical instruments and measuring instruments.
77. Provision of services of a personal nature and for personal hygiene.
78. Provision of family and household services.
79. Provision of services for legal persons and trusts.
80. Provision of services related to virtual assets.
81. Production, trade and services not elsewhere classified.

What is not a trade – beware of the Švarcsystem

A scourge called the shvarcsystem is emerging in the labour market. This is a specific type of illegal employment. It is a system where a company “employs” tradesmen who invoice it monthly as a client, but in reality these workers are subjected to conditions that correspond to a standard employment relationship. That is, they have the disadvantages of an employment relationship (such as low flexibility, etc.) but do not have the advantages of an employment relationship (such as paid leave, notice period, etc.).

This model allows the employer to avoid paying health and social insurance for their employees, resulting in lower costs for the company. Therefore, a person who works on the basis of the shvarcsystem is a sole trader “on paper“, but in reality does not work as a sole trader at all.