Flat-rate tax for self-employed persons in a nutshell: conditions, bands and amounts

The flat tax promises less administration for businesses from 2021 - but it will only pay off for some. The following lines will help you find out if you are one of them. You'll also find out how much to pay for each band, all the terms and conditions, deadlines and how to sign up for the flat rate tax.

What is a flat-rate tax?

The flat-rate scheme is a special way of paying tax that self-employed people can enter voluntarily. They then pay one monthly amount, which includes income tax and compulsory social security and health insurance contributions.

Sole traders with a flat-rate tax no longer make separate compulsory payments because they pay them as part of the flat-rate - and in most cases they do not even file tax returns and statements. This gets rid of the hassle of paperwork.

However, you can't claim expense allowances or tax credits under the flat-rate scheme. Therefore, consider carefully when switching to a flat-rate tax, as it will only save money for some sole traders - typically those who earn around CZK 700,000-2,000,000 per year and are able to take advantage of a minimum of tax credits.

Who can use the flat tax?

To enter the flat-rate tax scheme, you must meet the following conditions:

Flat tax amounts and bands

The amount of flat tax for self-employed persons varies from year to year - it is based on the current average wage. Initially, it took the form of one fixed amount that was common to all taxpayers, but at the beginning of 2023 an amendment to the law came into force which introduced 3 bands of flat tax.

The main criterion for entry into each band is the amount of business income for the previous year. However, the field of business activity also plays a role. The conditions of the tax bands are summarised in the table below. To enter the relevant band, you only need to meet at least one of the conditions in the row.

Your tax band is based on your annual income for the previous tax year.

• If you exceed the limits for your chosen band during the year, you must notify the tax authorities using a special form. The tax office will then tell you how much tax you have to pay.
• If, on the other hand, you earn less and qualify for a lower band, the procedure is similar. You will then notify the office of the different amount of tax and get back the overpayment.

We will add that the flat-rate tax band cannot be changed during the year. The adjustment can only be made within the deadline for entering the flat-rate scheme (i.e. by 10 January of the year).

If you know which band you belong to, you can easily deduce the amount of your monthly advance:

Overview of monthly lump sum amounts in 2025

Consider other factors too

• As a self-employed person, do you have children and a non-working spouse? Then the flat-rate tax scheme may not be the most appropriate, as you would lose the benefit for the children and possibly the spouse's allowance.
• Are you a sole trader and planning a mortgage? Beware that with a flat tax you cannot reliably prove your income to the bank because you are not filing a return (banks often use a reducing factor for these clients).
• Do you have health problems and expect not to be able to work full time until your normal retirement age? In that case, a flat tax is also well worth considering.
• Are you a sole trader with no family or health problems and own a home? Then a flat tax is the ideal choice.

How do I sign up for a flat tax?

Applying for the flat rate scheme is easy. As long as you meet the legal conditions, you just need to notify the tax office in time. The fastest way to do this is via Mojedane.cz - in the Personal Income Tax section you will find the form Notification of entry into the flat-rate scheme.

The deadline for signing up for the flat-rate tax is always by 10 January (if you want to use it from 2025, sign up by 10 January 2025). You cannot enter during the year - the only exception is for sole traders who are just starting their business. They can file a notice up to the day they start their business, i.e. they typically do this at the same time as setting up the business.

How, where and when to pay the flat rate tax?

Once you have registered, you will start making monthly payments of the flat-rate tax (see the table above for the amounts) to the local tax office. You can find the account numbers of the regional offices in our guide: how to pay the tax. The amount is always due by the 20th day of the month for which you pay the lump sum.

Flat-rate tax and tax returns

You usually don't have to file a tax return under the flat-rate scheme. The exception is if you breach one or more of the criteria for entering the flat-rate scheme during the tax year.

So, for example, if you earn more than CZK 2 million in a year from your business, you will not have to file a tax return. Read how to file a tax return under the flat-rate tax regime.

Don't forget that if you have become a partner in a limited company, general partner in a limited company or a VAT payer, or if your income exceeds CZK 2 million in a year, you must opt out of the flat-rate tax after submitting your tax return.

Don't be on your own when it comes to administration

Do you need help with your taxes and bookkeeping, or are you just considering setting up a business? Our specialists will be happy to help you. Just leave them a message in the form below.