Entrepreneurship

CURRENT INFORMATION FIND ON THE SIMI SITE

The difference between employment and entrepreneurship lies in the dependence or independence of the profit-making activities. While an employee carries out the so-called dependent activity on behalf of the employer, according to the employer's instructions and under his or her responsibility, an entrepreneur carries out an independent, self-organized activity. S/he exercises it on his or her own account and under his or her own responsibility. If an entrepreneur carries out a dependent profit-making activity, e.g. s/he in reality performs work in a company, it may be a case of the so-called "švarcsystém", which is illegal work.

In the Czech territory, it is possible to work as a self-employed person (a freelancer, OSVČ), if you have a trade certificate (živnostenské oprávnění), and legal residence in the Czech Republic (either in the form of a long-stay visa or a residence permit).

You can do business only on the basis of either a notifiable trade (živnost volná) or permitted trade (živnost vázaná). Both of these trade types are trades with reporting obligation only, i.e. authorisation to engage in this trade arises when you meet the legal conditions on the day of reporting with the trade licensing office.

Before you start your business, you need to fill in a registration form that can be either picked up at your local trade licensing office according to your intended place of business and filled in with an official there, or it can be downloaded over the internet. You report your business via this form, and register for paying income tax for natural persons, social insurance (pension premiums and sick pay insurance premiums) – and (if you participate in it) for public health insurance, too.

The registration must include:

first name

last name
personal number (rodné číslo, social security number) – if you have been given one
date of birth
place of residence outside of the Czech Republic
place of residence in the Czech Republic (in case of having permission to stay)
place of doing business (name of municipality, its district, street name, house numbers (if applicable, two of them – the so-called "descriptive" and "orientative" numbers – číslo popisné a orientační), and zip code)
the subject of your business, and possibly other additional information relating to the range of your trade certificate
identification number (if one has been assigned)
duration of authorised stay (if you reside in the Czech Republic on the basis of a visa authorising you to a stay of over 90 days, or on the basis of a long-term residence permit)
if applicable, your requirement for an automatic change of your business address to the address of your place of residence.

Conditions to be met in order to work on the basis of a trade certificate:

18 years of age or more, legal capacity
clean criminal record (i.e. the fact that you have not been convicted in final judgment for intentional criminal offenses in connection with business or with the business activities you are registering or applying for, unless you have been exonerated; this is certified by a statement of criminal records),
furthermore, in the case of permitted trade, one needs to meet specific requirements to be entitled to it.

Notifiable trade (živnost volná): you must only meet the general conditions, i.e. you need to register and prove to have a clean criminal record statement.

Permitted trade (živnost vázaná): for its performance, apart from meeting the general conditions, you need to prove your professional competence.

If you are an EU member state citizen, you can prove your professional competence with a document recognizing your professional qualifications issued by a recognition authority under the law on the recognition of professional qualifications.

The fact that you are allowed to perform work on the basis of a trade certificate can be proven by a statement from the trade register, or if you do not have it yet, by an original copy of your registration notice, with a stamp showing the date on which the notification was delivered to the trade licensing office. The trade register is available online at www.rzp.cz.

Obligations: You must pay taxes and social and health insurance premiums.

You must keep accounts in a proper way, and each year by 31.3. you have to file a tax return for the previous year. As of 30.4., you must present an overview of your income and expenditures for the purposes of health insurance to your health insurance company; by the same date, your social security district administration must have received an overview of your income and expenditures – for the purposes of social insurance.

You can only perform the trades you are licensed for by your trade certificate.

Administrative fee

The fee for registering a trade is 1000,- CZK.

The first trade register statement is free of charge, each additional copy costs 20,- CZK for each side of a sheet of paper.

Changes to the data are reported to the trade office, subsequently, it informs the other authorities. Though it is better to make sure that the change was really reported.

In case you provide your services as part of your profit-making activities, it is very good for you to conclude a written contract with the person to whom you provide your services, e.g. on the provision of services. In the contract, you state the exact range of services provided, the conditions under which these services will be provided, remuneration, etc. A written agreement provides a guarantee for any potential disputes and facilitates the enforcement of rights.

Finally, always issue invoices to your clients for the services provided!!! It depends on the agreement between you and the client whether invoicing will take place monthly or as individual payments for each service provided.