Setting Up a Sole Trader in Czech Republic

Numerous investors from abroad consider that the sole proprietorship (the trade license as it is known) is the suitable form for doing business in the Czech Republic. The registration procedure involves the physical person who wants to set up the activities in this country by using his/her own name. In legal terms, a person can establish the operations as a sole trader only starting with the age of 18. Our Czech lawyers can help business persons register as sole traders and can explain the taxation matters which are different for those related to large companies.

Steps involved in a sole proprietorship in Czech Republic

Registering as a sole trader in the Czech Republic may take approximately five days once the documents are filed with the Trade Licensing Office (živnostenský úřad). One must comply with the provisions stipulated by the Trade Licensing Act (Act No. 455/1991 Coll.) for performing business activities as sole proprietorships. Here are the requirements for sole trader incorporation in Czech Republic:

•    provide personal information;

•    offer details about the business address;

•    provide a photo and information about the residency in Czech Republic;

•    offer information about the criminal record;

•    the list of selected trades;

•    submit the necessary forms.

The legal matters of a sole proprietorship must be fully understood, alongside with the conditions imposed. Our attorneys in Czech Republic can offer the necessary legal assistance on request. If you want to open a business in another country, such as Gibraltar, our lawyers can put youin touch with our local partners.

Taxes for sole traders in Czech Republic

Sole proprietors in Czech Republic are subject to a different kind of taxation. One should know that sole traders in the Czech Republic need to pay public health insurance advances and they also need to register with the social insurance system and receive the certificate of social security. As for the direct taxes, these are issued from the taxable profits which will be deductible. VAT registration is mandatory once turnover exceeds CZK 2 million in a calendar year; voluntary registration is possible if you have business costs for which you want to claim this tax. To correctly calculate the deductible taxes, it is suggested to hire an accountant and keep the records of the financial operations as a sole trader in the Czech Republic. We mention that the income tax for sole proprietorships in Czech Republic is set at 15% (23% on income above CZK 1,762,812 in 2026), and a flat-rate tax regime (paušální daň) is also available.

Benefits of sole traders in Czech Republic

This form of business can be easily registered, and it is subject to less bureaucracy. Moreover, foreigners who want to activate as sole traders in Czech Republic do not need a work permit, but non-EU nationals need a long-term visa or residence permit for business purposes. After 5 years of continuous legal residence, the foreign owner can apply for settlement in the Czech Republic. We also mention that the accounting structure comprising the tax reports are streamlined for sole traders in this country.

If you want to know more about the legislation that oversees the sole traders, we invite you to contact our law firm in Czech Republic.