Trade licence & Freelancing

Trade licence, Zivno, freelancing.... there seems to be quite a lot of confusions regarding these, so here is a short explanation of what it all means.

What is the difference?

Being a freelancer means that you have opened a trade (business) licence and that you are a business person, providing your services to clients, and invoicing for the work done. Zivno is a commonly used term in the immigration world; it is short for Živnost (Zivnostenske opravneni), which means Trade license in Czech.

Quick Czech lesson

Freelancer = živnostník/podnikatel/OSVC

Trade licence = živnostenské oprávnení (AKA živno)

Obligations of trade-licence holder:

• Filing a tax report at the beginning of the year

• Paying 15% income tax based on your income

• Paying social and health on a monthly basis (approx. 7902 CZK in 2025).

  • For those who do not have permanent residency, only social security is paid. Private health insurance is required for the whole period of stay.

• Once a year you can sign up for Tax flat-rate, meaning that monthly you pay only one amount, which already includes the tax. In such a case, you don’t have to submit a tax declaration at all. The monthly amount depends on your income and there are some limitations as to the yearly income you cannot exceed or else you need to return to the basic yearly income tax payments. This is only allowed for permanent residency holders.

• All of these should be consulted with a tax advisor/accountant.

  
  

  

  TRADE LICENCE TYPES

• There are two main types of trade licence – so called Free and Professional. Free trade licence does not require any skills/education/experience to be opened, whilst the professional does and the process is more demanding.

• The full list of the free business activities is on this website. It is only those activities mentioned on your trade licence that you can invoice. It is better to pick more rather than less. There is no limitation – you can pick as many as you wish.

MAIN FREELANCING VS. SIDE BUSINESS

• While having a trade licence, you can pick whether you wish to have it as your main activity or side business.               

• In case the trade licence business activities are your main income (you do not have any employment contracts), you pay the social and health insurance yourself.

• If the trade licence/business activities are your side income, the employer is carrying the burden of paying the social and health, and you only once a year after submitting tax declaration pay income tax (and a contribution to the health and social as well, in case you reach certain income amounts. In some cases it is better to make the monthly contributions as well if your side income is expected to be quite high, so you don't have to pay one big sum all at once).

Schwarz system:

• Being a company’s contractor (working for them as a freelancer/issuing the company invoices for your work) and not having any other clients, is oftentimes considered Schwarz system.

• Schwarz system is considered as illegal employment as in case freelancers only work for one company, go to the office 9-5, have a company laptop and a dedicated desk, it looks like an employment with the intention of the company avoiding employees taxes, social and health insurance.