A Czech OSVČ can be taxed in three ways: flat-rate expenses (výdajové paušály), actual expenses (daňová evidence) or the flat tax (paušální daň). As a rule of thumb, flat-rate expenses win when your real costs are lower than the percentage the law lets you deduct, actual expenses win when your real costs are higher, and the flat tax wins when your income sits comfortably inside a band, you have no children to claim and you value never filing a tax return again.
Below: how each regime works, what you track and what you give up. Yearly amounts change every January, so for current figures use the Czech freelancer tax calculator.
The three regimes in one paragraph each
Flat-rate expenses (výdajové paušály)
You file a normal tax return but deduct a fixed percentage of income instead of proving costs. The percentage depends on the activity and has a cap. Profit is the base for income tax and both insurances.
Actual expenses (skutečné výdaje, daňová evidence)
You deduct what you really spent, backed by documents, including depreciation and business use of a car. You keep daňová evidence (tax records) and file a tax return and both insurance overviews (přehledy). More work, but no ceiling.
Flat tax (paušální daň)
One fixed monthly payment covers income tax, social and health insurance, in three bands. Stay within your band and you file no tax return and no přehledy. The price: no tax credits, no deductions and no discount for a bad year.
Flat-rate expenses: percentages and caps
The percentage is set by the kind of income, not by what you actually spend. According to BusinessInfo.cz, the categories are:
| Percentage | Typical activities | Maximum deductible expense |
|---|---|---|
| 80 % | Craft trades (řemeslné živnosti), agriculture, forestry | 1,600,000 Kč |
| 60 % | Other trade licences (most volné živnosti, including most IT work) | 1,200,000 Kč |
| 40 % | Liberal professions and other self-employment not under a trade licence (for example interpreters, expert witnesses, many creative and professional activities) | 800,000 Kč |
| 30 % | Rental of business assets or property | 600,000 Kč |
The caps correspond to 2,000,000 Kč of income; above that, every extra crown is fully taxed. The percentage follows your trade licence, not your job title. With two activities you can use a different percentage for each, but you cannot mix flat-rate and actual expenses.
The flat-rate deduction covers everything, including depreciation and wages.
Flat-rate expenses and tax credits
This is the point many older articles get wrong. There used to be years when OSVČ on flat-rate expenses could not claim the spouse credit or the child tax benefit. That restriction is gone. Today a flat-rate filer claims the basic taxpayer credit, the child tax benefit (daňové zvýhodnění na dítě, which can turn into a tax bonus paid out to you) and the spouse credit if the conditions are met (the spouse credit now requires the spouse to be caring for a child under three). This is the biggest structural difference from the flat tax, which allows none of them.
How social and health insurance work in each regime
In both expense regimes, insurance is calculated from your profit:
Social insurance: the assessment base is 55 % of profit, and the rate is 29.2 %, per ČSSZ. There is a yearly minimum base for a main activity, set as a share of the average wage, and a much lower one for a secondary activity (for example when you are also employed). A secondary activity with very low profit may not be insured at all. There is also a yearly maximum base.
Health insurance: the assessment base is 50 % of profit, and the rate is 13.5 %, per VZP. The minimum base is 50 % of the average wage per month. People who are also employees or insured by the state (students, parents on parental leave and similar) generally do not have to top up to the health minimum.
A lower profit lowers your insurance too, but only down to the minimums.
In the flat tax, the insurance is baked into the monthly payment. Band 1 is built from the minimum social and health insurance (the social part is the minimum raised by 15 %) plus a symbolic income tax. Bands 2 and 3 contain higher insurance and higher tax. You pay the same amount whatever your actual profit was, which also means your future pension is based on those fixed contributions.
Who can enter the flat tax
The Financial Administration lists the conditions. You must:
be self-employed for pension and health insurance purposes;
not be a VAT payer and not be obliged to register for VAT (being an identified person is allowed);
not be a partner in a v.o.s. or a general partner in a k.s.;
not be in insolvency proceedings;
not have employment income on the first day of the year (income taxed by withholding, such as a small DPP, is the exception);
keep other income (capital, rental and other income) within 50,000 Kč in total, apart from exempt income and income taxed by withholding;
have had income within your band's limit in the previous year.
The band limits depend on how your income splits between activities:
| Band | Any activity | 75 %+ from 80 % or 60 % activities | 75 %+ from 80 % activities |
|---|---|---|---|
| Band 1 | up to 1,000,000 Kč | up to 1,500,000 Kč | up to 2,000,000 Kč |
| Band 2 | up to 1,500,000 Kč | up to 2,000,000 Kč | up to 2,000,000 Kč |
| Band 3 | up to 2,000,000 Kč | up to 2,000,000 Kč | up to 2,000,000 Kč |
Deadline: you file the entry notice (oznámení o vstupu) by 10 January, or the next working day when 10 January falls on a weekend. A late notice is simply ineffective, and the deadline cannot be restored. If you start your business later in the year, you file before the day you start. Changing band or leaving the regime voluntarily follows the same January deadline. Data box holders must file electronically. For the current year's figures and dates, read Czech Flat Rate Tax 2027: Is It Worth It.
If income ends up above your band, file a change notice by the January deadline and pay the difference; miss it and you file a full return and přehledy.
EET 2.0 and the flat tax
EET 2.0 starts on 1 January 2027 and covers payments taken in person (cash, card, QR at the counter), not bank transfers. Band 1 flat tax payers with self-employment income up to 1,000,000 Kč a year can opt into "EET OFF" and skip sales records by paying a monthly surcharge on top of the flat tax (1,400 Kč when the law was passed), as described on the official eet.gov.cz site. If all your clients pay by bank transfer, this does not concern you.
Record keeping in each regime
Flat-rate expenses: a record of income received and of receivables still open at the end of the year. No need to keep cost receipts for income tax. If you are a VAT payer, you also keep full VAT records.
Actual expenses: full daňová evidence (income, expenses, assets with depreciation, liabilities), backed by documents, plus a tax return and both přehledy.
Flat tax: no tax return or přehledy, but keep income records to prove you stayed inside your band.
Decision table
| Regime | Best when | What you must track | What you give up |
|---|---|---|---|
| Flat-rate expenses | Real costs are below your percentage; you have children or a spouse to claim | Income, open receivables, VAT records if a VAT payer | Deductions above the percentage and the cap |
| Actual expenses | Real costs are above your percentage (subcontractors, stock, equipment, a business car) | Full daňová evidence with every document, assets and depreciation | Simplicity: more admin, more room for mistakes |
| Flat tax | Income is safely inside a band, costs are low, no credits to claim, not a VAT payer | Income, to prove you stayed in the band | All credits and deductions; any benefit from a weak year; pension contributions tied to your real profit |
A worked example (illustrative numbers)
The numbers below are round and illustrative. They ignore yearly minimums, maximums and credits, which change every year, and use the 15 % income tax rate. Use the tax calculator for a real comparison.
Take a developer on a free trade licence (60 %) with 1,000,000 Kč of income.
| Item | Flat-rate 60 % | Actual, costs 100,000 Kč | Actual, costs 700,000 Kč |
|---|---|---|---|
| Profit | 400,000 Kč | 900,000 Kč | 300,000 Kč |
| Income tax (15 %, before credits) | 60,000 Kč | 135,000 Kč | 45,000 Kč |
| Social (29.2 % of 55 %) | 64,240 Kč | 144,540 Kč | 48,180 Kč |
| Health (13.5 % of 50 %) | 27,000 Kč | 60,750 Kč | 20,250 Kč |
| Total before credits | 151,240 Kč | 340,290 Kč | 113,430 Kč |
What this shows:
With low real costs, flat-rate expenses win by a wide margin.
With high real costs, actual expenses win, though yearly insurance minimums may narrow the gap at low profits.
The flat tax for this person would be twelve band 1 payments (at least 75 % of income comes from a 60 % activity, so band 1 reaches 1,500,000 Kč). Whether that beats 151,240 Kč depends on the current band 1 amount and on credits. The basic taxpayer credit and especially the child tax benefit reduce only the flat-rate expense column. An analysis on BusinessInfo.cz put the rough break-even at around 700,000 Kč of income for the 60 % percentage and around 450,000 Kč for 40 %, before child credits.
When an s.r.o. becomes the better comparison
Once your profit grows well beyond the flat-rate caps, you want to keep money in the business, or you need limited liability, the honest comparison is no longer paušál vs paušální daň but OSVČ vs s.r.o. A company pays corporate income tax, then withholding tax on dividends, and it must keep double-entry accounting, which usually means paying an accountant. Run both sides in the OSVČ vs s.r.o. calculator before you decide.
Verdict: who should choose what
Low costs, children to claim: flat-rate expenses. The child tax benefit is worth more than the flat tax's simplicity.
Low costs, no credits, income inside a band, not a VAT payer: compare with the flat tax. Above the break-even it is usually cheaper and certainly simpler.
High real costs: actual expenses, and keep proper records from day one.
VAT payer: the flat tax is not available; choose between flat-rate and actual expenses.
Income above 2,000,000 Kč: flat tax is out and the caps bite; look at actual expenses or an s.r.o.
This article explains general rules and is not tax advice. Other income, employment, children or VAT can change the answer, so check with a tax adviser before filing a notice you cannot take back.
FAQ
Which is better, flat-rate expenses or the flat tax?
Without children or other credits, and with income comfortably inside a band, the flat tax is usually cheaper above roughly 700,000 Kč of income on the 60 % percentage. With children, flat-rate expenses often win because the child tax benefit is only available there.
What is the deadline to register for paušální daň?
By 10 January, or the next working day if it falls on a weekend. A late notice is ineffective. New businesses file before they start.
Can I claim the child tax benefit with flat-rate expenses?
Yes. The old restriction no longer applies. With the flat tax you cannot claim it at all.
Can a VAT payer use paušální daň?
No. A VAT payer, or anyone obliged to register for VAT, cannot enter the flat tax. An identified person can. Keep an eye on the VAT threshold if you are growing.
Do I have to keep receipts with flat-rate expenses?
Not for income tax. You record income and open receivables; VAT payers still keep VAT documents.
MoneySky compares all three regimes side by side from your real income, with rates stored per tax year, and prepares the tax return and přehledy from the same ledger. To see your own numbers, the 14-day trial needs no card.