Throughout the year, you are required to keep all documents for tax records, including income documents, invoices, and expense records that will be used to calculate your taxable income. By the end of March of the following year after starting your business, you must file your annual tax return for the previous tax period, through which you pay a 15% income tax. You also sort out your financial contributions by providing a statement of your income and expenses to the District Social Security Administration and a statement of the money you earn that's subject to taxes to the health insurance company. When using a tax advisor, the deadline is extended to early July of the following year (in 2023, the deadline is set for July 3, 2023).


Flat Tax


The flat tax is a significant administrative simplification because it covers all three contributions (health insurance, social insurance, and income tax) in one form and with a single monthly payment to the tax office. If you opt for the flat tax, you do not need to submit an individual income tax return or provide statements of income and expenses to the health insurance company or OSSZ. On the Ministry of Finance's website, you can find a calculator (in the Czech language) to determine if the flat tax is advantageous for you. You can apply for it using this form.


Registration and Payment of VAT (Value Added Tax)


Entrepreneurs whose turnover exceeds two million Czech koruna within the last twelve months are obliged to become VAT payers. VAT payers are required to regularly record their transactions, show VAT on their invoices, and pay this tax to the state.


Additional Obligations for Entrepreneurs


If you employ workers, you must comply with employee rights, such as minimum wages, vacations, working hours, and other labor laws. You are also responsible for ensuring that employees have the professional qualifications required for their roles (if the respective industry demands it) and knowledge of safety and hygiene regulations. Furthermore, you must be able to demonstrate the integrity of your employees.


If you sell goods or provide services to end consumers, you must comply with consumer protection laws and provide them with essential information about your products or services.


If you process the personal data of customers or employees, you must comply with data protection laws and secure this data from misuse.


If you conduct your business based on a trade license, you must fulfill a series of additional obligations. You can find a summary of these obligations in the article on the obligations of tradesmen.


Information Sources:

- Website of the Financial Administration of the Czech Republic

- Metropole všech - Entrepreneurship

- - Health and Social Insurance (Czech language)

- - VAT (Value Added Tax) (Czech language)