Most Common Questions About Czech Trade License

In this article, we answer the most common questions about Trade License in the Czech Republic. If you have some other questions please check other articles we have written about this topic or contact us and we’ll be happy to answer them.

 Czech trade license allows you to earn money in the Czech Republic, as well as outside of the Czech Republic (though additional rules might apply) as a contractor.

 ICO is an abbreviation of Identifikační Číslo Organizace which basically means your business number. If you are a trade license holder, this is your trade license number. If you own a limited liability company (s.r.o. in Czech), this is your company’s business number.

 ICO always has 8 digits, often listed as three digits in the front, space, two digits, space and three digits again – for example 060 78 192. You can find it listed in other forms as well though (i.e. all digits together with no spaces). It does not really change or influence anything.

 ICO is used to identify a concrete business which means every business has a unique ICO and hence you can easily identify the business just based on the number.

This is slightly tricky question. The official administrative fee for a trade license in the Czech Republic is 1 000 CZK (can be increased for specific trades). That is not the only cost related to the trade license though. You should also consider the following costs:

 One of the requirements for the trade license (read more in this article) is a clean criminal record. Since EU criminal databases are connected, EU citizens do not have to present a physical criminal check to the trade license office. The same applies to non-EU permanent residence permit holders.

Most other foreigners must present a fresh, original criminal check from the country of origin to get the trade license. This criminal check also must be apostilled/superlegalized and officially translated into Czech before you can use it for the trade license process. The cost of the whole procedure can be couple thousand CZK depending on the country.

 When you hire us to get the trade license for you, we also take care of the translations.

 Another document required for the trade license is a business address. If you own a property, you’re in the best position from this perspective – you can use the property you own. If you are renting, it can get fairly complicated depending on your situation. Some landlords do not agree with you using their property for your business address. Another complication is if the property is owned by more people or by a housing cooperative.

 Getting a virtual business address might be the easiest solution in many cases. So you need to count the cost of the virtual address to the total cost of trade license as well.

 We provide our clients with a virtual business address as part of our Trade License Assistance.

Some people do not realize this but you should also calculate the cost of your time spent setting up the trade license. Obtaining a trade license is relatively simple process (compared to say visa processes), it still includes a lot of steps that might make obtaining the trade license not exactly straightforward:

– collecting all the required documents, in the form the trade license office will accept them – a criminal check that is one day older than the law allows, a consent with the business address that is missing a signature, that can all mean you will have to visit the same office multiple times,

– submitting the documents to the trade license office – if you are lucky you’ll meet a nice, helpful and English speaking officer at the trade license office, if you are not lucky, they will do everything possible not to have to deal with you,

– collection of the trade license – the trade license is not done within one day, you usually submit the documents one day and collect the actual trade license say a week later,

– all the subsequent registrations – once the trade license is activated, you also need to get yourself registered with the tax office, social security office and the health care office (if that applies in your case). This basically means starting from point 1 for each of the offices – they all require some documents to be collected and submitted to them, plus they have certain amount of time to process your applications,

– data box set up – every freelancer in the Czech Republic gets automatically assigned a data box. Since it is your official way of communicating with the Czech government from now on, you must make sure you get the data box set up properly.

 If you spend 20 hours researching the topics, running from an office to an office trying to figure out everything on your own, it is 20 hours you could have spent in a different way (i.e. actually earning money or doing other things you like). It might be more cost effective to pay someone to get the trade license for you.

A lot of out clients actually prefer having us taking care of everything so they do not need to spend their own time and effort. Using our assistance to get you the trade license also makes the process smoother and more time-effective, and limits a chance of making mistakes that could cost you unnecessary time or money.

Get in touch if you have any questions about the trade license process or you would like us to take care of everything on your behalf.

The exact taxation of a trade license holder in the Czech Republic may vary based on your particular situation. What matters most is your nationality and visa/residence type you are holding in the Czech Republic, the business you are in, the tax scheme you choose (standard tax vs flat tax) etc.

 Generally speaking though, freelancers pay the following in the Czech Republic:

 1. Income Tax

 Income tax for freelancers in the Czech Republic is generally 15% of your net income (gross income minus expenses). There are also different tax deductions you can use (i.e. 30 000 CZK per person) so most people do not end up paying the actual 15% but less.

 2. Social Security

 Social security is mandatory for everyone, regardless of your nationality or visa or residence permit type in the Czech Republic. Social security is paid on monthly basis. You start with the minimum deposits the first year, and this amount is adjusted based on your real income when you do your first Czech Tax return.

 3. Health Care

 Health care generally works like the social security (monthly deposits, recalculation along with your taxes) with one crucial difference. Not all foreigners can contribute to (and benefit from) the public health care system. In general, the monthly payments for health care apply to all EU citizens and permanent residence permit holders. If you are a Third country national (outside of the EU) and you are not holding a permanent residence permit, get in touch with us to discuss your situation.