This article explains everything you want to know about Czech Trade License. From what it is a Trade License, to how to get a Czech Trade License, what documents are needed and how long it takes, to the basics tax rules applying to Czech Trade License holders. Read on!
What is a trade license in the Czech Republic?
Trade license in the Czech Republic is basically a license (piece of paper) allowing you to earn money as a freelancer or small business owner. You could technically run even a big business under the trade license but if running a big business is your plan, setting up an s.r.o. (llc) might be a better option for you.
The main specific of Czech trade license is that it is attached to your (personal) name – the business works and dies with you. You can not choose a name for the business (the trade license will always be in your own name only), you can not have multiple shareholders etc.
On the other hand, getting a trade license is a pretty straightforward process with low cost. Also taxation of freelancers if significantly lower than taxation of s.r.o.s. You can also start with a trade license and later on switch to s.r.o. if wanted or needed.
How to get Czech trade license?
Getting a Czech trade license is generally a pretty straightforward process, as long as you know where to go, what documents to bring and what to do after you get the trade license.
We have seen cases where people tried to get trade license on their own and it worked out perfectly. We have also seen cases where people tried to get Czech trade license on their own, spent too much time and effort going back and forth due to incorrect documentation and eventually gave up and came to us for help. We have also seen cases where people though everything went well just to find out a year later that they forgot to get registered with the social security or health care and ended up owing them over 35 000 CZK.
So, if you want to try to get a Czech trade license on your own, hopefully this article will give you enough info to be able to do that with no expensive mistakes. If you prefer someone taking care of everything on your behalf making sure all legal obligations are met and making sure there will be no future surprises, just fill in the form below and get in touch. The article continues under the form.
The first step when you want to get a Czech trade license is to prepare all the required documents (see below), in the form the trade license office needs them. You then take the documents to any Czech Trade License Office and submit them. If everything goes well, you collect the original trade license document and can proceed with registrations to social security, tax office and health care.
We describe all these steps in details below.
What documents are needed to get a Czech trade license?
The documents required may vary based on the type of trade license you want to get – qualified or unqualified. If possible, we recommend starting with the unqualified trade license since you do not need to prove any education or qualification to get one. On the other hand, some fields of business require the qualified one by default (i.e. restaurant business, massages, tattoos artists etc.). Please check our list of 82 unqualified trades you can add to your Czech trade license.
In all cases, you will need the below documents, qualified trade license would require extra documents on top of these:
– passport/EU ID + a valid long-term visa or residence permit – visa or residence permit is not needed for EU citizens,
– list of trades you want to include into your trade license,
– criminal check from the country of origin – it is not needed in case of EU citizens, PR holders and one type of students,
– proof of business address – we describe business address proof in details here,
– administrative fee – see more details below,
– Power of Attorney – we take care of getting the trade license and all subsequent registrations (social, health, income tax) on behalf of our clients, based on Power of Attorney.
How long does it take to get a trade license in the Czech Republic?
As for how long it takes to get a Czech trade license, let us go a bit deeper that just the official timeline for trade license office.
The first step that takes time is collecting all the required documents. If you are an EU citizen, permanent residence holder in the Czech Republic or one type of a student, you do not need to get the criminal check which basically means you can start the process right away with no delays.
If you are a non-EU citizens and you do not have a PR yet, you will have to get a criminal check from the country of your origin. That might need to be apostilled/superlegalized and for sure officially translated into Czech. Depending on the country of your origin, this can take days to weeks to prepare.
The business address depends on your situation. In some cases, you might be able to use your lease agreement, in some cases your landlord signs a special consent, in some case you can go for a virtual business address. Read more about the business address here.
Once you have all the documents ready, you take them to any Czech Trade License Office during their opening hours (usually just Mondays and Wednesday but depends on the concrete branch). They generally issue the trade license within a week.
How much does it cost to get a Czech trade license?
Regarding the cost of Czech trade license, let’s dive a bit deeper into that as well.
The general fee to the trade license office is 1 000 CZK per trade license. You might pay additional fees if you are getting the qualified trade license.
If you need the criminal check from the country of your origin, you need to count with the cost of that and with the cost of translations as well.
If you want to use our service to make sure everything is done as smoothly as possible and you will not encounter any problems now or in the future, we charge one fixed fee. Fill in the form below and we’ll be happy to answer any questions you might have about our services or the trade license in general. The article continues under the form.
What to do after you got your Czech trade license?
Getting the actual trade license is not the end of the process, more of a start actually. You now have to get registered with the Tax Office, Social Security Office and if this applies to you then as well with one of the Health Care Companies. Trade License Office will often tell you that they will inform these offices about your trade license so that you do not have to do anything. Unfortunately, this is only (partial anyway) true for Czech citizens.
If you leave this step to the trade license office, you might easily end up forgetting about that, never getting registered and finding yourself owning tens of thousands of CZK to the Czech government. We highly recommend getting yourself registered yourself, do not leave it to the trade license office.
How to pay taxes as a Czech trade license holder?
Getting registered with the above mentioned authorities is still not the end either. You then need to wait for them to send you registration letters with all your registration details. It would be your tax number from the Tax Office, your social security number and payment instructions from the Social Security Office and your health insurance number from some Public Health Insurance company – you might ned to find the payment details on their website though. Our clients get a nice shiny pdf with all the instructions and we explain everything – how to pay, where, how much etc.
The social security and health care must be paid on monthly basis. Generally speaking, you pay the minimum required amounts until you do your first taxes in the Czech Republic (due in March). After that, the monthly payments are recalculated and either increased slightly (the minimum payment increases every year) or more based on your declared yearly income.
Income tax is generally paid only once a year.
Since there is more into taxation matters (it depends on where your clients will be from. if they are private or companies, how high will be your yearly revenue etc.), we might write another article about this topic specifically or, if you get in touch, we will be happy to connect you with the accountant/tax adviser we work with to discuss taxes in more details.
Hopefully this article about Czech trade license was helpful to you and you feel more confident about going through the Czech trade license process. If you have any questions or want us to take care of everything on your behalf, just fill in one of the forms on this page and we’ll get in touch in 24 hours.
Yours, Move To Prague relocation experts