If you're a freelancer in the Czech Republic and your income is from your trade license (živnostenský list), it's important to understand the financial responsibilities you'll have in your first year of business.
This applies if you're earning only from your trade license. If you're also working a full-time job in the Czech Republic and have income from your trade license too, please check out the next blog post for more information.
Social Tax for Freelancers in the Czech Republic
If you're a freelancer in the Czech Republic with a trade license (živnostenský list), you must pay minimum social tax deposits every month in your first year of business.
Monthly Payments
For new freelancers (those holding a trade license for the first year), the minimum monthly social tax deposit in 2025 is 3,399 CZK. For existing freelancers (those with a trade license for longer), the minimum is 4,759 CZK.
Note: This amount is mandatory, even if your income is 0 CZK.
Fixed Amount
The amount of social tax you must pay is fixed. This means, whether you make 0 CZK some months or 1 million CZK in others, you’ll still pay the same minimum deposit each month during your first year as a trade license freelancer in the Czech Republic.
Recalculations in the Second Year
This minimum deposit is for your first year only. In your second year, your social tax payment will be recalculated based on your actual income from the first year. Depending on your income, you may need to pay additional amounts for the previous year's balance.
Health Insurance for Freelancers in the Czech Republic
As a freelancer in the Czech Republic with a trade license, you are required to pay a health insurance deposit every month in your first year of business.
Monthly Payments
The minimum monthly health insurance deposit in 2025 is 3,143 CZK. This amount is mandatory, even if your income is 0 CZK.
Fixed Amount
The health insurance deposit is fixed and doesn't depend on how much you earn each month. Whether you make 0 CZK one month or 1 million CZK in another, you are still required to pay the same minimum deposit each month during your first year of business.
Recalculations in the Second Year
This minimum deposit for health insurance is applicable only for the first year. In your second year, your health insurance payment will be recalculated based on your actual income from the first year.
Depending on how much you earned in the first year, you may need to make additional payments for the previous year's balance.
How Monthly Contribution Deposits Work
In the first year of your business with a trade license in the Czech Republic, you pay a minimum monthly deposits for Czech social tax and health insurance
Once your first tax year ends, you file your income tax return, and depending on your income amount, you may pay the balance for social and health insurance.
Also, depending on your first-year income, both social and health insurance offices set up new monthly deposit amounts for the second year. These amounts are calculated assuming your income will stay similar to what you earned in the previous year.
If your income is higher in the second year, your monthly deposits won’t fully cover your contributions, and you’ll pay the balance later.If your income in the second year is lower than the first year, you’ll have overpaid, and you’ll receive a refund.
Example: You earned 2,000,000 CZK in your first year. Since you paid minimum deposits, you’ll have to pay the balance for health insurance and Czech social tax after filing your tax return.
After declaring this income, the social tax office and health insurance set new monthly deposits for your second year, assuming you will earn 2,000,000 CZK again. These deposits are higher and expected to cover the full payments.
But in the second year, you earned 1,000,000 CZK, you will have overpaid contributions through your monthly deposits. After filing taxes for the second year, you’ll get a refund, and your new deposits for the third year will be calculated based on the 1,000,000 CZK income.
Generally, based on your yearly income for the previous year, you either receive a refund or need to pay the remaining balance for social and health contributions.
Income Tax
Annual Payment
Income tax is paid to the Czech financial tax office from the income of your trade license business, and it is paid once a year. You only pay income tax after submitting an income tax declaration for the previous year.
No Monthly Payments in the First Year
In the first year of your business, you don’t pay any monthly income tax or deposits. In the second year, after submitting your income tax report, you'll pay income tax depending on your income from the previous year.
Light VAT: Working with EU Companies
If you work with EU companies, you must consider Light VAT registration.
When to Register for Light VAT? If you issue invoices to companies within the EU (but outside the Czech Republic), you should register for Light VAT and submit monthly VAT reports.
Light VAT is a 0% VAT rate for transactions with EU companies, but you still need to report these transactions.
Note: If you invoice a company based in the EU, make sure to complete your Light VAT registration within 8 days to avoid penalties.
Summary
If you're working as a freelancer in the Czech Republic with a trade license (živnostenský list), these are the main payments to keep in mind during your first year:
Social Insurance When: Monthly Amount in 2025: 3,399 CZK (for new freelancers) Note: Fixed monthly amount, even if you earn 0 CZK.
Health Insurance When: Monthly Amount in 2025: 3,143 CZK Note: Also a fixed amount each month, no matter your income.
Income Tax When: Once a year (in your second year) Amount: Based on how much you earned in year one Note: Paid after you file your tax return with the Czech tax office.
Light VAT (if needed) → When: Monthly → Amount: 0% VAT → Note: Only applies if you invoice companies in the EU (outside the Czech Republic). Must register within 8 days.
