A trade license is a certificate which grants you permission to engage in the particular trade or business for which it is issued.
Trades are regulated by the Trade Licensing Act. The Trade Licensing Act identifies two types of trades:
- Declared trades, where the right to engage in a trade originates in most cases immediately after notifying the relevant Trade Licensing Office; and
- Licensed trades, where the right to engage in a trade originates after a license has been granted.
Declared trades are described in one of three ways:
- Free trades, with only general conditions stipulated for their operation.
- Craft trades, the performance of which is conditional to professional as competence stated in Sections 21 and 22 of the Trade Licensing Act; and which are primarily perceived as crafts that are traditionally considered professional activities carried out in a particular field; special expertise acquired through training and experience of a specified duration in the particular field is therefore required.
- Regulated trades,as specified in Annex No 2 of the Trade Licensing Act that requires the prescribed special qualification, and in certain cases, also a license, certificate or a similar document issued to the entrepreneur by a competent authority according to the relevant regulation.
General conditions required by the Trade Licensing Act to obtain a trade license are:
- Minimum age of 18 years
- Legal capacity
- Clear criminal record
Documents required for a free trade license:
- Valid passport or ID (for the EU citizens)
- Confirmation of the place of business
- Filed form
- Extract from the criminal record
Obligations and Taxes
Holders of a trade license are required to register with the local tax administration body, social security administration and public health care administration within 30 days of obtaining their business license.
Income tax is at the 15% rate and is paid at the end of the year.
Social charges (29.2 %) are paid monthly and in advance. The minimum charges for 2015 are 1943 CZK. (Note that some 3rd-Country Nationals who are able to prove that they pay social charges in their home country do not have to pay the social charges in CZ).
Health care taxes (13.5%) are also paid monthly and in advance; and the minimum charges for 2015 are 1,979 CZK. (3rd-Country Nationals who do not have a Permanent Residence Permit cannot enter the public health care system as they are obligated to pay commercial health insurance for the duration of their stay.)
Simple calculation is commonly used among entrepreneurs and allows that only 40% of the total revenue is taken as base for the income tax, social charges and public health care.
If you decide to use our services us we will:
- Prepare and submit your application on your behalf
- Communicate with the authorities on your behalf
- Translate foreign documents
- Assist with all inquires
- Register you with the tax office, social security and health insurance authorities
- Monitor expiry dates of your documents and inform you in advance about possible renewal
There are several ways to establish a business in the Czech Republic.
Foreign nationals can establish and run their business under the same conditions and same extent as Czechs. Foreign nationals can become an entrepreneur as well as founder or co-founder of a company, or may join an existing Czech company. Foreign companies may also operate in the Czech Republic, either by establishing a branch office registered in the Czech Republic, or by establishing a new Czech company or obtaining a trade license.
CZ Visa and Immigration can assist you with obtaining a trade license; or establishing a limited liability company or branch office registered in the Czech Republic.