Payments and levies for self-employed workers in 2026: taxes, social security, health and flat-rate tax

Are you dealing with a tax situation, an audit from the tax office or unsure about your business setup? Take advantage of our tax legal advice and we will go through the specific risks and solutions with you.

Main and secondary gainful activities

As a self-employed person, you can work as a main or secondary earner. In the case of a main activity, this is de facto “full-time” work, similar to employment. If you set up your business in this way, you must pay at least the minimum social security and health insurance contributions from the first month of your business. However, if you expect an income of tens of thousands or hundreds of thousands, it is worth paying higher amounts right from the start, or at least putting money aside so that you are not surprised by high arrears later.

If we evaluate the business purely from the point of view of paying taxes, it is worthwhile to have the business as a secondary activity, i.e. rather as a supplementary income. According to the law, self-employment is considered secondary if:

• you are an employee (and your employer pays the insurance premiums for you). It is not necessary to be employed full-time,
• you are a student under the age of 26,
• you are entitled to maternity leave or parental allowance, or you are caring for someone who is dependent on the care of others,
• receive an old-age pension or disability pension,
• you are performing military service in the armed forces of the Czech Republic.

If you have set up your business as a secondary activity, your compulsory payments and levies will be reduced quite significantly, or you can avoid paying them altogether.

Tax obligations

As a self-employed person, you are required to pay taxes on your income and file a tax return each year. However, you don’t pay everything that lands in your account, only the difference between your income and expenses. The income tax rate is 15% (or 23% for the part of the tax base exceeding 36 times the average wage). As for expenses, you can either keep all receipts and invoices and claim the actual expenses, or the law offers you the option of choosing a flat-rate expense.

Another option for those who run a main business is to apply the so-called flat tax, which we will look at in more detail below.

Income from:

• the exercise of an independent profession,
• rental of property,
• sole proprietorship,
• agricultural production, forestry and water management,
• the use or grant of copyright,
• any other business with entrepreneurial authorisation.

Expenditure lump sum

Lump sum expenses are sometimes confused with a flat rate tax, but this is quite different. A flat-rate expenditure replaces the complicated overview and calculation of individual actual expenses (which, on the other hand, are worthwhile if the actual expenses exceed the flat-rate ones, for example, when goods are resold). Instead of collecting receipts, you can choose one of the following rates depending on the type of business:

• 80% of income applies to craft trades, agriculture and forestry;
• 60% of income for other trades(free, tied and licensed);
• 40 % of income from activities for which you do not have a trade licence (for example, income from copyright or freelance activities and businesses under special legislation).

If your expenditure exceeds your income, this is a loss, by which the tax base is then reduced in future tax periods.

Flat tax

The flat-rate tax can be applied by businesses from 2021. It is mainly sought by those who want to simplify their lives with administration and get rid of tax returns. It’s worthwhile for people who don’t usually deal much with deductible items like mortgage interest, gifts or pensions on their tax return, don’t claim child tax credits and so on.

The flat-rate scheme is that you register and then pay the same tax payment each month as set by the state. You then do not have to fill in tax returns, insurance and social security reports the following year and you cannot incur any annual arrears. Does this sound like an ideal situation? There are some disadvantages, after all. You must keep an eye on your income, as you must not exceed an annual income of CZK 2,000,000. But not everyone can do that. A bigger complication arises when you have to prove your income, for example, for the purposes of a mortgage or other loan. Normally, entrepreneurs do this through a tax return, but you do not file it in the flat-rate regime. So you may not get along with some banks at all, while with others you may have to find alternative ways of proving your income.

There are also three flat-rate tax bands, namely CZK 9,984 per month, CZK 16,745 per month and CZK 27,139 per month. The amount is then payable by the 20th day of the calendar month for which the advance is paid.

A flat tax can save a business time, but not always money. If you are dealing with higher incomes, combining business and employment, applying for a mortgage or getting a check from the tax office, it pays to check the implications in advance. As part of our tax legal advice, we can help you to assess whether a flat rate tax, a flat rate expense or a traditional tax return is better for you.

Example from our law practice

We were approached by a client, a freelance graphic designer, who had switched to a flat rate scheme for ease of administration. However, after a year, he applied for a mortgage and the bank wanted him to provide proof of income in a way that he could not easily meet under the flat-rate scheme. At the same time, it turned out that he was missing out on some tax advantages because of his family situation. We reviewed his contracts, income and planned housing finance with him and recommended a change of set-up from the next tax year. This gave the client a basis for the bank and prevented the simplified scheme from ultimately complicating his housing finance.

Health insurance advances in 2026

For health insurance, the minimum deposit has increased to CZK 3,306 in 2026. The amount will always change as soon as the January payment is made. However, if you pay more than the legal minimum, you don’t have to worry about anything until your tax return. If you forget to change the amount of the minimum deposit at the bank, the health insurance staff will usually notify you of the underpayment.

Self-employed people who work as a sideline do not pay the minimum health insurance advance. Simply submit an income and expenditure statement to your health insurance company once a year and then, if necessary, pay the premium at once according to your actual income.

Social security contributions in 2026

Social insurance contributions for 2026 are set at a minimum of CZK 5,720. For social insurance, the advances change in the month in which you submit your statement for the year, usually in April. Either you set your new minimum advance payments higher or those calculated on the basis of the income and expenditure statement you submitted last year. As with health insurance, if you’re already paying more than the minimum, you don’t need to worry about anything.

For self-employed persons who carry out secondary activities, the minimum advance payment for social insurance will rise to CZK 1,574 in 2026. However, if they are starting a business, they pay no advance for the first year.

Summary

Payments and levies for self-employed workers depend mainly on whether you run your business as a main or a secondary activity. For the main activity you have to count on regular minimum payments for health and social insurance. For a secondary activity, the burden is usually lower and in some situations, you don’t have to pay the advance payments right from the start.

Income tax for self-employed persons is not calculated on the total income, but on the tax base. This can be reduced either by your actual expenses or by a flat-rate expense allowance. For some entrepreneurs, a flat-rate tax is advantageous because it combines tax, social security and health insurance into one monthly payment. On the other hand, it may not be suitable for those who claim allowances, deductions or need to easily prove income to the bank.

Therefore, the most important thing is to look not only at the amount of your monthly payments, but also at the overall impact on your business, family situation, credit plans and potential tax risks. For more complex cases, it pays to have the setup checked upfront, as additional corrections are often more expensive and administratively challenging.