One of the most common questions we get is if you can get a trade license on top of your employment in the Czech Republic. Or said in a different way, if you can be both employed and self-employed. The short answer is yes, but there are a few factors to consider here. This article walks you through everything in details.
Understanding Employment vs. Self-Employment in the Czech Republic
In the Czech Republic, there are distinct differences between being employed and being self-employed. Employment typically involves an employer covering your social security, income tax, and healthcare costs. As an employee, you enjoy benefits such as paid vacation, sick leave, and a degree of job security. Your employer takes care of most administrative responsibilities, and you are generally tied to one company, which simplifies your financial obligations and tax filing.
Self-employment, however, places these responsibilities on your shoulders. As a self-employed individual, you must manage your social security, healthcare, and income tax payments independently. This status comes with increased flexibility, allowing you to work with multiple clients or companies. However, it also means you forgo the protections and benefits associated with traditional employment, such as paid time off, unemployment benefits, and sometimes even access to certain social security benefits. The trade-off for this flexibility is the added burden of administrative tasks and financial management.
Combining Employment and Self-Employment
In the Czech Republic, it is entirely possible to combine both employment and self-employment. This is an attractive option for those who wish to explore entrepreneurial ventures or freelance opportunities while maintaining the stability of a traditional job. To do this, you can apply for a trade license on top of your existing employee card, blue card or any other visa or residence permit you might have.
When you combine these two statuses, your full-time job remains your primary activity, while self-employment is considered secondary. This distinction is important, particularly in terms of financial obligations. During your first year of combining employment with self-employment, you are typically exempt from paying monthly charges associated with your self-employed income (such as the social security and health care). However, from the second year onward, you might need to manage these payments, adding to your overall financial responsibilities. This obligation depends on the level of income you made through your trade license though.
How does this Influence your Immigration Status?
If you are a non-EU citizen, you must be careful when making any changes in general. This especially applies if the changes concern your purpose of stay in the Czech Republic.
The thing is you always have to fulfill the purpose of your stay to keep your visa or residence permit. This means that if you for example have an employee card or a blue card, you can get a trade license on top of these, but you have to keep your employment as well.
If you leave the job, your employee card or a blue card will be canceled after some amount of time, since you would not be fulfilling the purpose of your stay. Purpose of stay in case of employee cards or blue cards is employment and if you leave your job, you are not employed anymore.
Navigating the Tax Landscape
Tax obligations differ significantly between employees and self-employed individuals. When you are solely employed, your employer handles your tax filings, ensuring that everything is in order and that your tax obligations are met. This system is convenient, especially for those who prefer not to deal with the complexities of tax law.
However, if you are self-employed or combine employment with self-employment, the responsibility for filing taxes falls on you. This requires a thorough understanding of the Czech tax system and the ability to accurately report income from both sources. Combining these incomes into a single tax return can be complex, and it is crucial to ensure that all income is reported accurately to avoid penalties.
This dual status requires careful financial planning and attention to detail, especially when it comes to fulfilling your tax obligations. If you’re considering this path, it might be wise to seek professional advice to ensure that you meet all legal requirements while maximizing your financial benefits.
Contact us if you have any questions about combining employment and self-employment in the Czech Republic, related taxes or anything else 🙂 We’ll be happy to hear from you!
