How to Register a Sole Proprietorship (Živnost) in Czechia (Czech Republic)

Starting as an independent contractor in Czechia is appealing for its simplicity, clarity, and the relatively low barriers to getting started. The process of setting up as a sole proprietor, known locally as Živnost or osoba samostatně výdělečně činná (OSVČ), is generally quick and efficient. There is still paperwork to manage, particularly registrations with social and health authorities, but the administration is far less burdensome than forming a limited company.

Key challenges include acquiring the correct trade licence type and registering with multiple authorities in quick succession. However, the pay-off is flexibility, autonomy, and simplified accounting and reporting.

Disclaimer: This article is for informational purposes only and is not a substitute for legal advice. Please always check official sources or seek professional guidance before taking action.

What is a sole proprietorship in Czechia?

A Živnost, or OSVČ, is the Czech equivalent of a sole proprietorship. It is the simplest way for one person to run a business without forming a company. Depending on the context, it may also be referred to as a sole trader, self-employed worker, or independent contractor—but all of these describe the same structure: an individual legally operating a business in their own name.

How does a sole proprietorship (živnost) work in Czechia?

Živnost vs. alternative business structures in Czechia

When considering a živnost, it helps to compare it with other common business structures—most often a limited liability company (s.r.o.)—to see which fits your needs best.

Step-by-step: How to register a sole proprietorship in Czechia (Czech Republic)

Step 1: Check your eligibility

You must be at least 18 years old, legally capable (an adult with full mental capacity to act independently), have a clean criminal record, and have no outstanding debts to the tax authority, social security, or health insurance system. EU/EEA/Swiss nationals can register freely without a visa or permit, though they must register their residence if staying longer than 30 days. Non-EU nationals must first secure a long-term visa or residence permit before applying for a trade licence.

Step 2: Choose your business name

Most activities fall under a “free trade” licence, but regulated professions (like electricians or hairdressers) require proof of qualifications, and a few sensitive activities need special government approval.

Step 3: Gather required documents

You’ll need:

• A completed Unified Registration Form (Jednotný registrační formulář, JRF) (available via the Trade Licensing Portal)
• Proof of identity (passport; for foreigners, visa/residence permit)
• Clear criminal record certificate (translated into Czech and notarized, if foreign)
• Proof of legal address (consent from the property owner; extract from land registry if required)
• Proof of professional qualification (if applicable)

Step 4: Register with the Trade Licensing Office (Živnostenský úřad)

Submit the JRF either in person or online via the Trade Licensing Portal. The standard fee is around CZK 1,000. Within 5 days, you’ll receive an entry in the trade register (formerly a license, now a digital extract).

Step 5: Pay registration fees and contributions

The trade licence registration fee is typically CZK 1,000. If registering through a public point (Czech POINT), an extra CZK 50 may apply.

Step 6: Complete post-registration obligations

Once registered, you will be automatically connected to the Czech tax administration, so there is no need to apply separately for a tax identification number (DIČ) unless you also become a VAT payer. Within 15 days, you must notify the District Social Security Administration (ČSSZ) if your business is your main activity; for a secondary activity, the reporting rules are more flexible. You must also inform your health insurance company within 8 days of registration.

From the start, you are required to issue invoices that meet Czech accounting and tax standards, keep proper records of income and expenses, and file an annual income tax return along with annual reports to the social security and health authorities. If you become VAT-registered, you must also include VAT details on invoices and submit regular VAT returns.

Financial and tax obligations for sole proprietors in Czechia

You are responsible for:

• Income tax (daň z příjmů): Sole proprietors (OSVČ) are taxed as individuals. Profits are declared in the personal tax return and taxed progressively: 15% up to CZK 1,676,052 and 23% on income above that threshold. Tax returns are filed annually with the Czech Tax Administration.
• VAT (DPH): As of 2025, VAT registration rules have changed. If your turnover exceeds CZK 2,000,000 in a calendar year, registration is mandatory from the start of the next calendar year. If turnover exceeds CZK 2,536,500, registration becomes immediately mandatory from the following day. The standard VAT rate is 21%, with reduced rates of 12%. VAT returns are usually filed monthly or quarterly.
• Social security contributions (sociální pojištění): You must make monthly advance contributions to the District Social Security Administration (ČSSZ). The amount is calculated from a percentage of profits, with minimum contributions set annually.
• Health insurance contributions (zdravotní pojištění): You must register with your chosen health insurance company and pay monthly contributions. The amount is also based on profits, subject to annual minimums.
• Record-keeping (účetnictví/evidence): OSVČ must keep proper records of income and expenses and issue invoices that comply with Czech law. Accounting documents and invoices must generally be kept for 5 years, while financial statements (if applicable) must be retained for 10 years.
• Tax allowances (daňové slevy a paušály): Sole proprietors can deduct actual expenses or opt for a lump-sum expense deduction (výdajový paušál). This allows a fixed percentage of income to be deducted without receipts—80% (up to CZK 1.6 million), 60% (up to CZK 1.2 million), 40% (up to CZK 800,000), or 30% (up to CZK 600,000)—depending on the type of activity. The higher 80% rate is available for craft trades and farming, where operating costs are assumed to be proportionally high. There is also a separate flat-rate tax regime (paušální daň) that combines income tax and insurance contributions into one monthly payment. Additional allowances and tax credits (e.g., for children) may also apply.

Launch your contracting career and stay compliant with Deel

Registering a sole proprietorship gives you independence, but it also means handling taxes, invoices, and records on your own. Deel’s all-in-one platform helps you manage obligations without the stress. With Deel, you can:

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FAQs

What is the minimum capital required to start a živnost in Czechia?
None—sole proprietorships require no minimum capital.

Do živnostníci need to register for VAT/GST?
Yes, once gross turnover exceeds CZK 2,000,000 in any rolling 12-month period. You may also register voluntarily if beneficial.

How much are the standard monthly or annual contributions?
Main activity requires monthly health and social insurance payments, regardless of income; secondary activity may result in symbolic or zero contributions in the first year.

Can a živnostník hire employees?
Yes—a Živnostník can hire employees. They must register as an employer with ČSSZ and the employee’s health insurer, and are responsible for paying both the employee and employer contributions.

How long does it take to register as a živnost in Czechia?
Typically, within 5 days after applying to the trade office.

Can foreign nationals register as živnost in Czechia?
Yes, if they have a business visa or residence permit. Some qualifications and language requirements apply.

Do živnostníci need a separate business bank account?
Not mandatory—but highly recommended for transparency and accounting clarity.

What happens if I stop working as a živnostník?
You must formally deregister with the trade office and notify the tax, social security, and health insurance authorities of cessation.

Are there any government incentives or reduced rates for new živnostníci?
Not currently indicated in official 2025 sources; no broad incentives found.

Can I use Deel as a živnostník to get paid by international clients?
Yes. Deel enables živnostníci and freelancers to receive international payments in multiple currencies, with low fees and transparent exchange rates.

Does Deel generate compliant invoices for živnostníci?
Absolutely. Deel auto-generates legally compliant invoices, helping you stay aligned with Czech tax rules.

Can Deel help me with taxes as a sole proprietor in Czechia?
Yes. Deel provides downloadable tax reports and payment records you can use for filings, simplifying compliance (though not a replacement for a tax advisor).

Does Deel offer contracts for freelancers and živnostníci?
Yes. Deel offers locally compliant contract templates to help you work professionally with clients.

Can I access benefits through Deel as a živnostník?
Yes. Deel offers optional perks such as health insurance and retirement plans, giving freelancers access to traditionally employee-only benefits.