To operate legally with a Trade license and avoid future debts or misunderstandings, it's important to register with various authorities in several steps. Below, we have listed the necessary steps for trade license registration in the Czech Republic.
Step 1: Trade License Registration
Your first step is to register your Czech trade license and activate your IČO( business registration number). You will receive the business registration confirmation with your IČO number and once your IČO number is activated, you can start invoicing your clients immediately. However, completing the next steps is important to avoid debts and penalties from authorities.
Step 2: Social Tax Registration
Following the activation of your ICO number, you must apply for social tax registration. This registration generates your social tax number, which is necessary for making social tax payments and filing income tax reports next year for the current tax year. After successful official registration, you will receive the social tax registration confirmation with your social tax number.
Step 3: Health Insurance Registration
Health insurance is mandatory for most trade license holders. After obtaining your social security number, register for health insurance to receive your insurance certificate and generate your health insurance number.
After the registration, you'll receive a Temporary Health Insurance Certificate, which has the same value as a valid plastic medical insurance card, allowing you to access all healthcare services and hospitals.
Step 4: EHIC Card For EU Citizens
Once you have your insurance number, order your European Health Insurance Card (EHIC). This card is valid throughout the EU and provides comprehensive coverage in the Czech Republic under the Czech trade license, accepted across the country
Note: If you have family members living in the Czech Republic, you should also register them under your health insurance.
Step 5: Payment Instructions
As a trade license holder with the main source of income, it's important to pay both social and health insurance contribution deposits in your first year of registration. Make sure you pay these monthly deposits on time to avoid penalties. Missing or late payments also can complicate your income tax report and contributions recalculations.
Step 6: Income Tax Office Registration
Next, you should register for income tax with the financial tax office and generate your Tax Identification Number (TIN).
Starting from 1.1.2024, DIČ (Tax Identification Number) registration is not mandatory. That is why Tax office employees might deny registering your Income Tax and generating your DIC (TIN number). However, having a DIČ is important for foreigners to pay income tax and file tax reports in the Czech Republic.
Failure to obtain a TIN/DIC number can complicate your tax paperwork in the future. Therefore, it's important to negotiate with the tax office, explaining the importance of having the DIC number for foreigners and proposing to them to arrange your Czech Tax number voluntarily.
After successful official registration, you will receive the income tax registration confirmation with your Income Tax number.
Step 7: VAT Registration
You should register for Light VAT only if you are working with an EU-registered company. Once you invoice a company registered in the EU but not in Czechia, you should register for VAT and begin submitting monthly VAT reports.
You will be invoicing with 0% VAT and will not pay any VAT to Czech authorities, but you must do so every month. VAT registration is important l for maintaining clear accounting and taxation records and avoiding penalties.
After the registration, you will receive the VAT registration confirmation with your VAT number
The penalty for not registering on time and failing to submit monthly VAT reports can be up to CZK 500,000.
Get Support From Pexpats
If you have any questions or require assistance, feel free to contact us. We're here to help you with the complete registration process for your trade license, VAT registrations, monthly VAT reports, and yearly income tax reports.