What this page is for
One annual income runs through both structures so you can see side by side what a sole trader keeps and what the owner of an s.r.o. keeps. It is input into the decision to change legal form, not preparation of a return.
Free tool
OSVČ or s.r.o.?
The same income, run through both structures. The sole trader side compares every expense regime; the company side models corporate income tax, a director salary and a dividend distribution.
Worked example: 1 200 000 CZK of income in 2026
As an OSVČ
Tax Comparison
40% Expense Deduction
- Gross income
- 1 200 000 Kč
- Expenses
- 480 000 Kč
- Tax base
- 720 000 Kč
- Social insurance base
- 396 000 Kč
- Health insurance base
- 360 000 Kč
- Income tax
- 77 160 Kč
- Tax credit
- -30 840 Kč
- Social insurance
- 115 632 Kč
- Health insurance
- 48 600 Kč
- Total Tax
- 241 392 Kč
- Net Income
- 958 608 Kč
- Effective Tax Rate
- 20.12%
60% Expense Deduction
- Gross income
- 1 200 000 Kč
- Expenses
- 720 000 Kč
- Tax base
- 480 000 Kč
- Social insurance base
- 264 000 Kč
- Health insurance base
- 293 808 Kč
- Income tax
- 41 160 Kč
- Tax credit
- -30 840 Kč
- Social insurance
- 77 088 Kč
- Health insurance
- 39 665 Kč
- Total Tax
- 157 913 Kč
- Net Income
- 1 042 087 Kč
- Effective Tax Rate
- 13.16%
80% Expense Deduction
- Gross income
- 1 200 000 Kč
- Expenses
- 960 000 Kč
- Tax base
- 240 000 Kč
- Social insurance base
- 205 668 Kč
- Health insurance base
- 293 808 Kč
- Income tax
- 5 160 Kč
- Tax credit
- -30 840 Kč
- Social insurance
- 60 056 Kč
- Health insurance
- 39 665 Kč
- Total Tax
- 104 881 Kč
- Net Income
- 1 095 119 Kč
- Effective Tax Rate
- 8.74%
Flat Rate Taxband 2
- Gross income
- 1 200 000 Kč
- Tax base
- 1 200 000 Kč
- Income tax
- 59 556 Kč
- Social insurance
- 98 292 Kč
- Health insurance
- 43 092 Kč
- Total Tax
- 200 940 Kč
- Net Income
- 999 060 Kč
- Effective Tax Rate
- 16.74%
As an s.r.o.
Tax Comparison
Company (retain profit)
- Gross income
- 1 200 000 Kč
- Expenses
- 401 400 Kč
- Director gross salary
- 300 000 Kč
- Employer salary cost
- 401 400 Kč
- Income tax
- 14 160 Kč
- Tax credit
- -30 840 Kč
- Social insurance
- 21 300 Kč
- Health insurance
- 13 500 Kč
- Director net salary
- 251 040 Kč
- Corporate profit
- 798 600 Kč
- Corporate income tax
- 167 580 Kč
- After-tax profit
- 631 020 Kč
- Total Tax
- 317 940 Kč
- Owner total net
- 251 040 Kč
- Effective Tax Rate
- 26.5%
MoneySky does not run payroll. The director's monthly tax advances, the ČSSZ and health insurer reports and the annual payroll filings stay with your accountant.
Company (distribute dividend)
- Gross income
- 1 200 000 Kč
- Expenses
- 401 400 Kč
- Director gross salary
- 300 000 Kč
- Employer salary cost
- 401 400 Kč
- Income tax
- 14 160 Kč
- Tax credit
- -30 840 Kč
- Social insurance
- 21 300 Kč
- Health insurance
- 13 500 Kč
- Director net salary
- 251 040 Kč
- Corporate profit
- 798 600 Kč
- Corporate income tax
- 167 580 Kč
- After-tax profit
- 631 020 Kč
- Dividend withholding
- 94 653 Kč
- Net dividend
- 536 367 Kč
- Total Tax
- 412 593 Kč
- Owner total net
- 787 407 Kč
- Effective Tax Rate
- 34.38%
MoneySky does not run payroll. The director's monthly tax advances, the ČSSZ and health insurer reports and the annual payroll filings stay with your accountant.
Monthly director salary ceiling
74 738 Kč
The highest gross monthly salary this income could fund before the profit runs out. Above that figure no profit is left to pay corporate income tax on or to distribute as a dividend.
Disclaimer
This calculator provides estimates for informational purposes only. Consult a tax advisor for your specific situation.
What you put in
Annual income, the tax year, optionally your actual expenses, and the gross monthly director salary. Without expenses the sole trader side compares only the flat-rate bands and paušální daň. Fill them in and the actual-expenses regime appears, with the same amount reducing company profit.
The director salary matters most
A director salary is deductible for the company but attracts payroll taxes and builds pension entitlement. Paying nothing minimises tax in the short term and leaves gaps in your social insurance record, which is why the salary is an input rather than a fixed assumption. Below the result you also see the most the company could afford each month.
What the numbers do not include
Running an s.r.o. carries costs a calculator cannot model: accounting, an audit above certain thresholds, and the administrative overhead of a legal entity. Treat the tax difference as one input into the decision, not the whole of it.
Frequently asked questions
- At what income does an s.r.o. start to make sense?
- There is no single figure. It depends on how much you take out versus retain, whether you can use a high flat-rate expense band as an OSVČ, and how much you value limited liability. Run your own numbers here rather than trusting a rule of thumb.
- Does the comparison include dividend withholding?
- Yes. When a distribution is modelled, corporate income tax is applied to the profit first and withholding tax to the dividend afterwards, so the owner figure is what actually reaches you.
- Can I keep the profit in the company instead?
- Yes, and the retained scenario is shown alongside the distributed one. Retaining defers the withholding tax rather than removing it.