Sole proprietorship or company in Czech Republic: tax comparison
Taxes and contributions for a sole proprietor under each available system and for your own company, for a resident of the chosen country with the same profit.
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Form
Self-employed, 60% flat expenses
Sole proprietorOsoba samostatně výdělečně činná — výdaje procentem z příjmů (60 %)
Instead of actual costs, 60% of income is deducted (max CZK 1,200,000); income tax, pension and health insurance are paid on the rest.
Conditions
60% applies to trades other than crafts (IT services and consulting are a free trade); the CZK 1,200,000 expense cap is reached at CZK 2,000,000 of income.
Tax 15% (23% on the base above CZK 1,762,812), base rounded down to CZK 100, minus the taxpayer credit of CZK 30,840.
Pension insurance 29.2% of 55% of profit (minimum base CZK 17,139 a month, maximum CZK 2,350,416 a year) and health insurance 13.5% of 50% of profit (minimum base CZK 24,484 a month); these premiums do not reduce tax.
VAT registration is required from the next year once turnover exceeds CZK 2,000,000 in a year (or from the next day above CZK 2,536,500); VAT is not included in the calculation.
Sole proprietorOsoba samostatně výdělečně činná v paušálním režimu (paušální daň)
One monthly payment instead of income tax, pension and health insurance and returns: in 2026 band I is CZK 9,162, band II CZK 16,745, band III CZK 27,139 a month.
Conditions
Income limits for activities with the 60% flat expense rate (if at least 75% of income): band I up to CZK 1,500,000, band II up to CZK 2,000,000, band III up to CZK 2,000,000; for any activity: band I up to CZK 1,000,000, band II up to CZK 1,500,000.
You may not be a VAT payer, have employment income (other than income taxed at a special withholding rate) or other income above CZK 50,000; the band is chosen by 10 January.
The 2026 amounts reflect the reduction of the minimum pension insurance base by Act No. 90/2026 Coll., retroactive to 1 January 2026 (band I was previously CZK 9,984).
Sole proprietorOsoba samostatně výdělečně činná — skutečné výdaje (daňová evidence)
Tax and insurance are based on profit (income minus documented expenses); worthwhile if expenses exceed 60% of income.
Conditions
Tax records (daňová evidence) and documents for every expense are required; no income limit.
Tax 15% (23% on the base above CZK 1,762,812), base rounded down to CZK 100, minus the taxpayer credit of CZK 30,840.
Pension insurance 29.2% of 55% of profit (minimum base CZK 17,139 a month, maximum CZK 2,350,416 a year) and health insurance 13.5% of 50% of profit (minimum base CZK 24,484 a month); these premiums do not reduce tax.
VAT registration is required from the next year once turnover exceeds CZK 2,000,000 in a year (or from the next day above CZK 2,536,500); VAT is not included in the calculation.
The company pays 21% corporate income tax (base rounded down to CZK 1,000); 15% is withheld from dividends.
Conditions
An owner without salary or a remunerated director contract pays no insurance through the company. If they have no other cover (employment, self-employment, state), they must pay health insurance themselves as a person without taxable income, on the minimum wage; not included in the calculation.
VAT registration is required from the next year once turnover exceeds CZK 2,000,000 in a year (or from the next day above CZK 2,536,500); VAT is not included in the calculation.
Business activity: IT and consulting services for business clients (companies and entrepreneurs)
One owner who is a Czech tax resident, no employees, no other income, no children; full year 2026; amounts in CZK.
Self-employment is the main activity and not in the first years after starting (minimum pension base 35% of the average wage, not 25%); no voluntary sickness insurance; only the basic taxpayer credit.
IT services and consulting are a free trade, so the flat expense rate is 60%; for the flat-rate tax the lowest band allowed for that income is chosen.
VAT is not included. For the s.r.o.: the owner takes no salary; profit after tax is either fully paid out as dividends or kept in the company; the owner's health insurance as a person without taxable income is not included.
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