Self-employment involves a certain degree of administrative burden in the form of levies, payments and tax returns. What does all this entail and when is a flat-rate tax paid instead? What will all change for the self-employed in 2025? That’s what we look at in our article.
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.
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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:
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.
Do you want to become independent at work and adapt your work pace to your needs? Are you planning to work in an industry where employment is almost impossible? Are you looking for some extra income? In all of these cases, setting up a trade may be a good idea.
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%. 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 their main business is to apply the so-called flat-rate tax, which we will look at in more detail below.
Income from:
Find out what to do if you file the wrong tax return.
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:
If your expenditure exceeds your income, this is a loss, by which the tax base is then reduced in future tax periods.
Are you considering whether to choose a trade or a job? How about trying both? We have discussed the advantages of such a combination in our article.
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 involves registering by 10 January of the relevant year and then paying the same tax payment each month as set by the state. The following year you do not have to fill in tax returns, insurance and social security statements 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 8,716 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.
What is the Trade Register and what is it for? We have focused on all this in our article.
For health insurance, the minimum deposit will increase to CZK 3,143 in 2025. The amount changes right from the January payment, so standing orders need to be amended in this respect. 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.
Health and social security debt can build up quickly. How exactly does it work if you’re self-employed and what if your employer doesn’t pay your insurance? Find out in the next article.
Social insurance contributions are set at a minimum of CZK 4,759 for 2025. 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 the ones calculated on the basis of your income and expenditure statement for the previous 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 workers who carry out secondary activities, the minimum advance payment for social insurance will rise to CZK 1,496 in 2025. However, if they are starting a business, they will pay no advance for the first year.
Unfortunately, not every business is successful or promising. We have discussed how to dissolve a business legally, time-wise and financially in our article.
Self-employed people can run a business as a main or secondary activity, with secondary activity meaning lower or no compulsory payments and contributions. In the case of the main activity, minimum social security and health insurance contributions must be paid from the first month. Income tax is 15%, with the option of applying actual expenses or a flat-rate (80%, 60% or 40% depending on the type of activity).
The flat-rate tax, available from 2021, allows you to pay a fixed amount per month without having to file a tax return, but is limited to an annual income of up to CZK 2 million. In 2025, the minimum monthly payment for health insurance is CZK 3,143 and for social insurance CZK 4,759. Self-employed women with a secondary activity pay a minimum of CZK 1 496 in social insurance, while in the first year of business they are exempt from the advance payments.
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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.
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