With a trade license you pay income tax and social security on your profit, and health insurance if you are in Czech public health insurance. Many foreigners are not: they have commercial health insurance instead. How much you pay depends mostly on the tax method you choose.
Income tax
The tax year is the calendar year. Income tax is 15% of your tax base up to 1,762,812 CZK (2026), and 23% on the part above it. The tax base is your profit, not your revenue. Every taxpayer then gets a credit of 30,840 CZK a year off the tax, and there are more credits for children and a spouse: see tax benefits.
The 60/40 method
Most of our clients use the 60/40 method: 60% of your revenue counts as costs, without receipts, and you pay on the other 40%. Tax, social security and public health insurance together then come to about 13 to 14% of your revenue. A full year in 2026, without other income or extra tax credits:
| Revenue | Income tax | Social security | Health insurance | Total |
|---|---|---|---|---|
| 1,000,000 CZK | 29,160 | 64,240 | 39,672 (minimum) | 133,072 (13.3%) |
| 1,500,000 CZK | 59,160 | 96,360 | 40,500 | 196,020 (13.1%) |
| 2,000,000 CZK | 89,160 | 128,480 | 54,000 | 271,640 (13.6%) |
The 60% applies up to 2,000,000 CZK revenue; above that, the costs stay at 1,200,000 CZK. In your first year, social security and health insurance work a bit differently: see tax, social and health in short.
The flat-tax method
With the flat-tax method (paušální daň) you pay one monthly amount that covers all three: 9,162 CZK a month in band 1 (2026), with no tax return and no annual overviews. It is only open to people in Czech public health insurance, which rules out many foreigners with commercial health insurance. And it is not always cheaper: you lose tax credits for children and a spouse, and there are more conditions on who can use it.
Which method suits you depends on your revenue, your family and your other income. The wrong choice can easily cost tens of thousands of CZK. See the three tax methods for a full comparison, and the personal income tax return for how your other income is taxed.
VAT
You must register for full VAT when your revenue from Czech sources goes above 2,000,000 CZK in a calendar year, or 2,536,500 CZK within 12 months. Revenue from clients abroad does not count, and with mainly foreign clients the tax office usually refuses a full VAT registration. Invoicing companies in other EU countries does require a VAT-light registration; invoicing outside the EU needs no VAT registration. See VAT registration for a trade license.
