You make a few mugs, jewellery or decorations and want to “just try” to sell them. No paperwork, no stress, no trade. But the line between a casual sale and a business is legally much closer than it seems. When do you still sell legally without an ID number, when do you have to have a business, what do you have to do with taxes and what obligations do you have to your customers?
Many creators feel that as long as they sell “only occasionally” or make only a few thousand crowns a month, it is not a business. However, the Czech legal system does not recognise the term “occasionally”. The decisive factor is not the seller’s feeling or the amount of income, but whether the activity fulfils the characteristics of a business.
A business is considered to be an activity that is continuous, independent, carried out in one’s own name, on one’s own responsibility and for profit. These characteristics are always judged in the aggregate and on the facts, not on what you call the activity.
Consistency does not mean that you have to sell every day. It is enough that the activity has some regularity or continuity – for example, if you continuously add to the offer on the platform through which you sell, take orders during the year or plan to produce more units. Autonomy means that you make your own decisions: setting prices, choosing materials, communicating with customers. The purpose of making a profit is already fulfilled when you sell with the aim of making a profit, not just getting rid of surplus items.
A typical example of non-business is a one-off sale: for example, selling your own products once a year at a Christmas fair without follow-up or getting rid of a few items when cleaning. However, once you set up a profile on the platform, present products, take orders and expect to sell in the future, the activity quickly moves into business mode.
The important thing to remember is that the authorities are always assessing reality, not statements like “it’s just a hobby” or “it’s just a hobby”. If the characteristics of a business are met, you are obliged to have a trade licence – regardless of how much you actually earn.
Not sure if you’re still selling occasionally or if you’re already in business? Don’t know what business to choose, what to include in product descriptions, how to set up claims correctly, or how to avoid tax and copyright issues? We can help you navigate your obligations before a problem arises.
As soon as your sales meet the characteristics of a business, you are obliged to have a trade licence and to do business under your own ID number. It doesn’t matter whether you sell a few products a month, are a student, on parental leave or in employment. These circumstances affect taxes and levies, not the obligation to have a trade.
For most makers selling their own products – jewellery, ceramics, textiles, decorations or illustrations – the right choice is a freelance business. Specifically, this is the field of ‘production, trade and services not specified in the annexes to the Trade Licensing Act’. The advantage of a free trade is that it requires no professional training or experience and covers a wide range of handicraft and creative activities.
Setting up a trade is administratively simple. It is carried out at any trade office or via Czech POINT. You fill in a single registration form, pay an administrative fee of CZK 1,000 and the office will then register you not only with the trade, but usually also with the tax office, health insurance company and social security administration. You will be assigned a business registration number automatically, there is no need to apply for it separately.
It is necessary to have a trade licence before you start your business, not when it “takes off”. Retrospective establishment of a trade is not possible and selling without a licence may be assessed as unauthorised trading with penalties. Therefore, the practical solution is to set up a trade when you see that the sale will not be a one-off but is intended to continue.
The good news is that a trade licence does not “commit you to anything forever”. If you decide to stop selling, you can discontinue or cancel it at any time – without penalty and without complicated paperwork.
A free trade is the least regulated type of trade and can be easily obtained through the trade licensing office. Obtaining a trade licence does not require specific qualifications, making it an accessible form of business for the general public. We have discussed how to get a trade licence and what falls under the free trades in a separate article.
One of the most common misconceptions of small creators is the idea that as long as they earn less than CZK 50,000 a year, they “don’t have to worry about anything”. However, this limit applies only to casual income, not to the business as such. Once your sales meet the characteristics of a business, you enter a completely different tax regime – regardless of the amount of earnings.
For genuinely casual sales (i.e. outside the business), if the sum of all such receipts in a year does not exceed £50,000, they are exempt from income tax. Once you exceed the limit, the whole amount is taxed, not just the difference over the limit. This income is reported as other income in the tax return and is not subject to social security or health insurance.
The situation is different once you are already selling as a business. Business income is always taxed, even if it is low or you end up “in the red”. In addition to income tax, you also deal with health and social security. If you run the business as a sideline (for example, while employed or on parental leave), the levies are more modest, and for social security they often depend on the profit you make.
For income tax , you have the option of claiming actual expenses or opting for a flat rate, which tends to be administratively simpler for small business owners. There is also the option of a flat-rate tax, but this is only suitable for certain cases and you need to meet the legal conditions.
VAT is a separate chapter. Most creators do not have to worry about it at first – mandatory registration only occurs when the turnover exceeds CZK 2,000,000 per calendar year. Nevertheless, it is good to monitor the turnover so that the obligation does not surprise you retrospectively.
When you sell as a business, you are entering into the position of a seller under civil law in relation to buyers – and there are a number of obligations associated with this. It’s not just about complaints, but also about what information you need to provide to customers before they buy.
For online sales, the consumer has the right to withdraw from the contract within 14 days of receiving the goods without giving any reason. This period runs automatically and cannot be excluded. The only exceptions to this are products that are made to order according to the customer’s wishes, for example a piece of jewellery with a name on it or a mug with a specific date on it. For the exception to apply, this must be clearly and understandably stated in the description of the goods. If you withdraw, you will be refunded the price of the goods and the original postage at the rate of the cheapest shipping offered, within 14 days.
In addition, you are liable for defects in the goods for 24 months. This does not mean that you are liable for any damage caused by misuse, but for defects that the item has had or that become apparent in normal use. You must settle the claim within 30 days and the customer has the right to a repair, replacement, discount or refund depending on the nature of the defect.
An often overlooked area is the mandatory seller information. The customer needs to know who is selling the goods to them – i.e. your name, ID number, contact details and price including all charges. A practical solution is simple terms and conditions that you can tailor to your business.
Don’t underestimate complaints and communication records. A simple summary is enough, but in the event of a dispute it is often the only proof that you have complied with the law.
You can read more about other types of trades and the Trade Licensing Act in our article.
Creators often encounter the term copyright when selling their own products, but the true extent of copyright is often underestimated. Legally, a work of authorship arises automatically at the moment of creation if it is the unique result of creative activity expressed in an objectively perceptible form. Thus, in the case of illustrations, original designs, texts, photographs, graphic motifs or copyright jewellery, there is usually no doubt that the work is protected by law.
As the author, you have the exclusive right to decide how your work is used – whether it may be copied, sold, modified or distributed. So if someone takes your design, photograph or product description without your permission, they are infringing on your rights and you can defend yourself. Protection is not created by registration or © designation, but directly by law.
However, the same rules apply in the other direction. Just because you “find something on the internet” doesn’t mean you can use it. Logos of well-known brands, movie characters, illustrations downloaded from photo libraries without a license, or foreign graphics slightly modified in an editor are typical sources of problems. Handmade does not in itself justify the use of someone else’s design. Infringement of copyright can lead to a demand for removal of the goods, damages or a contractual penalty.
Photographs of products also deserve special attention. Unless you take them yourself, you must have the express permission of the author to use them for commercial purposes. The same applies to written descriptions.
For some activities, such as the sale of books, illustrations or licensing of motifs, it is no longer the sale of goods but the provision of copyright, which has a different tax regime. It is therefore important to know when you are selling a product – and when you are selling your authorship.
Selling your own products “on a trial basis” can very easily turn from an innocent pastime into a business with all the legal implications. What is crucial is not the amount of income or whether you see the activity as a hobby, but the way you sell – i.e. whether the sales are consistent, independent and conducted with the intention of making a profit. Once you meet these characteristics, you are obliged to have a trade licence, tax your income and meet your legal obligations to your customers. The myth of the “carefree £50,000 limit” applies only to genuinely occasional income outside the business and cannot be relied upon for regular sales.
In addition to taxes and levies, consumer rights and copyright protection must also be considered. Sellers are liable for defects in goods, must allow returns within 14 days (except for custom-made goods) and provide clear and complete information to customers. They are also protected as the author of their original works, but must not interfere with the rights of others – using someone else’s designs, logos or photographs without a licence can lead to serious problems. The sooner the creator sets up the sale legally correctly, the less risk of penalties and litigation they run in the future.
Yes, but only if the sale is truly occasional – i.e. a one-off or spur-of-the-moment sale with no intention of continuing. Once you sell consistently, have a steady supply, take orders throughout the year, or plan for further production, the activity already meets the characteristics of a business. In this case, a trade licence is compulsory regardless of the amount of earnings. The amount of “just a few thousand a month” is not decisive from the point of view of the law.
It depends on what kind of income is involved. In the case of genuinely occasional income outside the business, up to CZK 50,000 per year is exempt from tax and is not included in the return. But if you sell as a business, the income is always taxable – even if it is less than CZK 50,000 – and you usually have to file a tax return. The limit therefore does not protect the business, but only incidental sales.
Yes, for most products. When selling online, consumers have the right to return goods within 14 days without giving a reason. The only exceptions are products made to order, for example with a specific name or customisation. For this exception to apply, it must be clearly stated in advance in the description of the goods. For defects in the goods, you are then liable as standard for a period of 24 months.
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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.
Doing business in the Czech Republic means more than just having a trade or issuing invoices. Entrepreneurship is a continuous gainful activity carried out independently, on one's own account and responsibility, with the intention of making a profit. This definition is based on the Civil Code and is accompanied by extensive Supreme Court case law. Whether you are drawing up contracts or just preparing a business website for the time being, this article will tell you when the law considers you an entrepreneur, how to start a business and what legal form to choose to protect your assets and reputation.
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