- An IT contractor working through a Czech OSVČ who invoices a business client abroad usually charges no Czech VAT on that invoice — place of supply is the customer's seat under § 9 of Act No. 235/2004 Sb., and the invoice should say the customer accounts for the tax (reverse charge).
- Providing a service with its place of supply in another EU member state makes an otherwise-unregistered OSVČ an identifikovaná osoba from the day that service is supplied (§ 6i of the VAT Act), separate from becoming a full VAT payer by turnover.
- An identified person who supplied such a service must file a monthly souhrnné hlášení (EC Sales List) within 25 days of that month's end, electronically (Financial Administration guidance) — being an identified person does not by itself require the VAT Control Statement.
- Full VAT registration (plátce) becomes mandatory once turnover for a calendar year exceeds 2,000,000 CZK (payer from 1 January the following year) or 2,536,500 CZK (payer from the next day) — § 6 of the VAT Act.
- For 2026 the three paušální daň bands' monthly advances are 9,162 CZK, 16,745 CZK and 27,139 CZK (Financial Administration) — see the decision table below for which one an IT contractor on the 60% flat-expense category can use.
Responsibility for this page rests with Ganado International s.r.o., company ID 19322119 (ARES registry entry). It is general information as of the update date above, not tax advice on your specific case — the regime that actually applies to you is assessed against your own figures.
The facts that decide your setup
These are the facts that decide how a Czech IT contractor is actually taxed — not a chronological checklist, since which of these applies depends on your client, your turnover and where you work.
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OSVČ (trade licence) registration
Most contract programming, development and IT-consulting work is registered as a volná živnost (free trade). The trade office hosts a Central Registration Point (Centrální registrační místo), so the trade notification and the social-security and health-insurance notifications can be made in one place. Since 1 January 2024 a starting OSVČ no longer has to file a separate income-tax registration.
Source: Financial Administration — starting a business (Začínáte podnikat)
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Invoicing a foreign B2B client: no Czech VAT, reverse charge wording
For an ordinary remote service to a business customer established abroad, the general place-of-supply rule puts the place of supply where that customer has its seat, not in Czechia. The Czech OSVČ therefore issues the invoice without Czech VAT and states that the customer accounts for the tax (reverse charge) — the exact wording and evidence needed depend on the client's country and status, which is why the client's VAT number and establishment should be confirmed before the first invoice.
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Becoming an identifikovaná osoba
An OSVČ who is not a VAT payer becomes an identifikovaná osoba from the day it supplies a service whose place of supply is in another EU member state under § 9(1) — the usual case for a contractor billing an EU business client. The registration application is due within 15 days of that day, and failing the registration duty can be fined up to 500,000 CZK. The status can also arrive from the other direction: receiving a service with a Czech place of supply from a supplier not established here (foreign ad platforms, SaaS subscriptions, a foreign subcontractor) may trigger it under § 6h with no minimum amount. It stays narrower than full VAT registration either way — it does not make the contractor a VAT payer on domestic sales, and identified persons do not thereby owe the VAT Control Statement.
Source: § 6i, Act No. 235/2004 Sb. (VAT Act)
Source: gov.cz — registration deadline (15 days) and the fine for missing it
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Souhrnné hlášení (EC Sales List)
An identified person (or VAT payer) who supplied a service with its place of supply in another member state to a VAT-registered business there files a souhrnné hlášení for that month, listing the customer and the value of the supply. It is filed only for months in which such a supply actually happened, only electronically, and it is separate from — and in addition to — any income-tax filing.
Source: § 102, Act No. 235/2004 Sb. (VAT Act)
Source: Financial Administration — filing the souhrnné hlášení
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VAT registration by turnover (becoming a plátce)
Turnover above 2,000,000 CZK in a calendar year makes registration mandatory, effective from 1 January of the following year. Turnover above 2,536,500 CZK in a calendar year triggers registration from the day after that threshold is crossed. Foreign B2B invoices under reverse charge still count toward this Czech turnover figure.
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Paušální daň 2026 — three bands, one changed mid-year
Pásmo I (income up to 1,000,000 CZK, or up to 1,500,000 CZK if at least 75% of it qualifies for the 60% or 80% flat-expense category) now pays 9,162 CZK a month — 100 CZK income tax, 5,756 CZK pension insurance and 3,306 CZK health insurance — down from 9,984 CZK before 1 July 2026. Pásmo II is 16,745 CZK a month (4,963 + 8,191 + 3,591) for income up to 1,500,000 CZK, or up to 2,000,000 CZK on the same 75% test. Pásmo III is 27,139 CZK a month (9,320 + 12,527 + 5,292) up to 2,000,000 CZK with no expense-category condition. The regime replaces the income-tax return and the social/health advances with one fixed monthly payment; it is not open to a VAT payer (plátce), and it does not remove identified-person obligations, which are assessed separately.
Source: Financial Administration — paušální režim bands and conditions
Source: Financial Administration — pásmo I advance reduced from 1 July 2026
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ČSSZ minimum monthly social-insurance advance
The 2026 minimum monthly advance for hlavní činnost (self-employment as your main activity) was 5,720 CZK from January and fell to 5,005 CZK from July 2026, when the minimum assessment base went from 40% to 35% of the average wage. The cut is not retroactive to January — the January-to-June difference is settled through the annual přehled. These are floors: a profitable contractor pays 29.2% of an assessment base equal to 55% of the tax base (50% before 2024), whichever is higher.
Source: ČSSZ — change to the OSVČ advance from 1 July 2026
Source: § 5b and § 7, Act No. 589/1992 Sb. (55% base, 29.2% rate)
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VZP minimum monthly health-insurance advance
The 2026 minimum monthly health-insurance assessment base is 24,483.50 CZK, giving a minimum advance of 3,306 CZK for hlavní činnost — due regardless of profit for a main-activity contractor, unlike social insurance's secondary-activity exemption. Above the floor the premium is 13.5% of an assessment base equal to 50% of the tax base.
Source: VZP — minimum OSVČ advances for 2026
Source: § 2 and § 3a, Act No. 592/1992 Sb. (13.5% rate, 50% base)
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Švarcsystém risk when a client wants you to work like an employee
Illegal work under the Employment Act is work that has the features of dependent work under § 2(1) of the Labour Code but is performed by a natural person outside an employment relationship — fixed hours set by the client, the client's equipment and direct supervision, no ability to send a substitute, and a single long-term client are the usual warning signs for an IT contractor. The Labour Inspectorate states the fine for the person performing illegal work reaches 100,000 CZK (§ 139), and for the business that allows it up to 10,000,000 CZK, with a statutory minimum of 50,000 CZK (§ 140). A full breakdown of the signs, the fines and how to structure a contract safely is on the dedicated švarcsystém page.
Source: § 5(e)(1), Act No. 435/2004 Sb. (Employment Act)
Source: State Labour Inspection Office — work without a contract, fines
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A1 certificate for on-site work in another EU state
A self-employed person who normally works in Czechia and goes to pursue a similar activity in another member state stays subject to Czech social-security legislation, provided the anticipated duration of that work does not exceed 24 months. The A1 certificate is the evidence of that determination, issued by the institution of the state whose legislation applies — it is not a tax-residence certificate and is not automatic just because a client is abroad.
Source: Article 12(2), Regulation (EC) No 883/2004 (EUR-Lex)
60% flat expenses, actual expenses, or paušální daň?
All three are legal ways to run the same OSVČ. The right one depends on your real costs, your income and whether you want one fixed monthly payment or an annual return.
| Your situation | What usually fits |
|---|---|
| Low real costs (a laptop, software subscriptions, home office) and income up to roughly 1,500,000 CZK/year | The 60% flat-expense regime (výdaje procentem z příjmů) usually wins: you deduct 60% of revenue as a notional expense with no receipts to keep, capped at 1,200,000 CZK of deducted expense (§ 7(7), Act No. 586/1992 Sb.). Most contract programming and IT-consulting work qualifies for this rate rather than the 40% rate used for royalties/IP income. |
| Real, documented costs above roughly 60% of revenue (subcontractors, hardware, a paid office, heavy travel) | Actual expenses (skutečné výdaje) can beat the flat 60% once genuine costs exceed it — but every expense needs a receipt and a business justification, and the method chosen for a year cannot be changed retroactively. |
| Income at or under a band's limit, VAT non-payer, and you want zero annual return | Paušální daň replaces the income-tax return and both insurance advances with one fixed monthly payment (pásmo I 9,162 CZK, pásmo II 16,745 CZK, pásmo III 27,139 CZK for 2026) — the trade-off is that any tax already withheld or personal-credit position is not reconciled at year-end the way a filed return would. |
| You are, or expect to become, an identifikovaná osoba from EU B2B invoices | That is compatible with all three regimes, including paušální daň — identifikovaná osoba status alone does not disqualify you. Only becoming a full VAT payer (plátce) removes paušální-daň eligibility. |
| Turnover is approaching 1,500,000–2,000,000 CZK and you use the 60% flat-expense category | Check pásmo II's extended 2,000,000 CZK limit (available when at least 75% of income qualifies for the 60% or 80% flat-expense rate) before assuming you must leave paušální daň altogether. |
| Your profit is high enough that the insurance floors no longer bind | Compare on totals, not on the headline tax: above the minimums you pay 29.2% of 55% of the tax base to ČSSZ and 13.5% of 50% of it to your health insurer, on top of 15% income tax. The worked example below shows that arithmetic for 150,000 CZK a month. |
This table names the trigger; the actual comparison for your income, expense mix and VAT/identified-person exposure should be run on your real figures before you choose or switch regimes.
What you send, what we do, when it is done
The same written-scope process as the rest of Ganado: no sales call, a fixed price before we start.
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You send
Your client's country and status (business or not), the contract start date, where you physically work, your current OSVČ/VAT/identified-person status, and roughly how many invoices a month.
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We do
Confirm the VAT/identified-person treatment for that specific client and service, set up or take over the OSVČ records, and — if it applies — prepare the identified-person registration, souhrnné hlášení and paušální-daň or income-tax regime choice.
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When it's done
You get a written reply with the scope and price, usually within 1 business day. Ongoing monthly work follows the agreed filing calendar — nothing is filed late because nobody was told about it.
Written reply, no call — usually within 1 business day.
What is billed separately
The monthly contractor package does not silently expand. These sit outside it, and each one is quoted and agreed before we start work on it:
| Identified-person registration | 1,990 CZK | Added only when your actual EU setup needs it, at the contractor-package price. The standalone identified-person service elsewhere on the site starts at from 1,990 CZK. |
|---|---|---|
| Late-period and history review | from 1,990 CZK | Initial review of registration, periods and available evidence; corrections are quoted after findings. |
| Takeover or historical cleanup | fixed quote after review | Missing periods, inconsistent records and overdue filings are reviewed before a price is confirmed. |
| A1 / cross-border work review | fixed quote after review | On-site work in another EU country is scoped separately from ordinary remote-contractor accounting once the countries and dates are known. |
| Annual return for a short engagement | 2,990 CZK | Included automatically with a full year of continuous monthly service; priced separately for a contract that does not cover a whole tax year. |
| Payroll per employee | from 490 CZK / employee | Only if you hire someone — a solo contractor never pays this line. |
Monthly OSVČ bookkeeping and the agreed VAT/identified-person filings are included in the monthly contractor fee once the scope is confirmed.
Worked example: 150,000 CZK/month, 60% flat expenses
An illustration only, for a Czech OSVČ IT contractor invoicing a single foreign B2B client 150,000 CZK a month all year, using the 60% flat-expense category and paying income tax by return (not paušální daň). Your own figures will differ — this shows the arithmetic, not a quote.
| Annual invoiced revenue (150,000 × 12) | 1,800,000 CZK |
|---|---|
| 60% flat expenses (60% of 1,800,000; cap 1,200,000 CZK not reached) | − 1,080,000 CZK |
| Tax base (1,800,000 − 1,080,000) | 720,000 CZK |
| Income tax at 15% of the tax base (before the basic personal tax credit) | 108,000 CZK |
| Social-insurance assessment base (55% of 720,000) | 396,000 CZK |
| Social insurance at 29.2% of 396,000 | 115,632 CZK |
| Health-insurance assessment base (50% of 720,000) | 360,000 CZK |
| Health insurance at 13.5% of 360,000 | 48,600 CZK |
| Tax and insurance together (108,000 + 115,632 + 48,600) | 272,232 CZK |
| Cash kept (1,800,000 − 272,232), before the personal tax credit | 1,527,768 CZK / year (127,314 CZK / month) |
The 60% figure is a notional deduction, not real spending, so it is not cash that leaves the contractor's account. At this profit the minimum advances no longer bind: the social insurance above works out at 9,636 CZK a month against the 5,005 CZK floor, and the health insurance at 4,050 CZK against 3,306 CZK. The basic personal tax credit (which reduces the 108,000 CZK tax line further) is not included, so real take-home is somewhat higher than shown. For comparison, paušální daň pásmo II at this income level costs 16,745 × 12 = 200,940 CZK a year in total — lower than the 272,232 CZK above, which is exactly why the regime choice should be run on your own credits and deductions before you commit to it.
VERIFIED
Official sources (checked 20 September 2026)
Primary statutes and the relevant authorities' own pages, as of the verification date above. Thresholds and advance amounts change over time — confirm the current figure before acting on a specific case.
- Act No. 235/2004 Sb., on Value Added Tax (§ 6, § 6i, § 9, § 102)
- Act No. 586/1992 Sb., on Income Taxes (§ 7(7) — 60% flat expenses and the 1,200,000 CZK cap)
- Act No. 589/1992 Sb., on social-security premiums (§ 5b — 55% assessment base, § 7 — 29.2% rate)
- Act No. 592/1992 Sb., on health-insurance premiums (§ 2 — 13.5% rate, § 3a — 50% assessment base)
- Act No. 435/2004 Sb., on Employment (§ 5(e)(1) — illegal work / švarcsystém)
- State Labour Inspection Office — fines for illegal work (100,000 CZK / 10,000,000 CZK, minimum 50,000 CZK)
- Regulation (EC) No 883/2004, Article 12 (posted self-employed persons, EUR-Lex)
- ČSSZ — the A1 certificate explained, in English
- gov.cz — VAT / identified-person registration: 15-day application deadline, fine up to 500,000 CZK
- Financial Administration — filing the souhrnné hlášení (25 days, electronic only)
- Financial Administration — paušální režim: 2026 bands, limits and deadlines
- Financial Administration — paušální daň pásmo I advance reduced from 1 July 2026
- ČSSZ — OSVČ minimum social-insurance advance, change from 1 July 2026
- ČSSZ — key social-security figures for 2026
- VZP — minimum OSVČ health-insurance advances for 2026
- Financial Administration — starting a business as an OSVČ
Artem Chagin, founder of Ganado International s.r.o., is responsible for this page's content.
Send your situation, get a written answer
Client country, contract dates, where you work and your current OSVČ/VAT status are enough for a first written reply.