Minimum Contributions and Flat Tax for Self-Employed in the Czech Republic from 2025

In 2025, a significant increase in minimum advance payments for social and health insurance for sole proprietors is planned. Compared to this year, contributions will rise by CZK 1,082 per month. Additionally, in 2025, the monthly flat tax in the most popular first tax category will increase from CZK 7,498 to CZK 8,716.

As a result, the total amount of compulsory insurance contributions next year will be CZK 7,902 instead of CZK 6,820, marking an increase of almost 16%. Specifically, the minimum advance payment for social insurance will rise by CZK 907, and the minimum advance payment for health insurance will increase by CZK 175, totaling an increase of CZK 1,082. Compulsory contributions in the Czech Republic have been increasing every year; since 2020, this has amounted to a rise of CZK 3,006 per month.

“Such a high increase in the minimum insurance premium will certainly have a noticeable impact on self-employed individuals with lower incomes. Some may need to switch to secondary activities and find at least part-time work,” notes Gabriela Ivanko, a tax consultant at Forvis Mazars.

How the Flat Tax Rate Will Increase

Since 2021, sole proprietors can fulfill all their tax obligations by making a single monthly tax payment, provided they transition to a voluntary flat tax rate.

The flat tax regime combines income tax, pension and health insurance contributions, as well as contributions to the state employment policy.

“The decision to switch to a flat tax regime is a personal matter and depends on individual circumstances; it’s essential to conduct a thorough tax calculation,” notes the tax consultant.

In practice, VAT payers cannot use the flat tax regime, nor can self-employed individuals with current income from employment who are paying advance income tax or those with taxable income from rent, capital assets, or other sources exceeding CZK 50,000. However, a sole proprietor in the flat-rate regime can earn additional income under a work agreement if 15% of income tax is deducted from the gross remuneration.

In 2025, as in 2024, there will be three flat-rate tax regimes based on the amount and type of income. In all cases, a certain income of up to two million crowns is required, which is the threshold for mandatory VAT registration.

For the most popular first flat-rate group, the monthly payment will increase to CZK 8,716 in 2025, up from CZK 7,498 in 2024.

 “The total amount in the first band consists of income tax of CZK 100, the minimum advance payment for health insurance of CZK 3,143, and 1.15 times the minimum advance payment for social security of CZK 5,473,” explained Gabriela Ivanko.

Record Number of New Entrepreneurs in the Czech Republic

A record number of new entrepreneurs entered the Czech market in the first eight months of 2024. From January to August, 55,278 people started businesses in the Czech Republic, marking the highest figure in the last five years. However, 53,746 entrepreneurs also ceased their activities during this period. As a result, there was a net increase of only 1,532 self-employed individuals in the first eight months of 2024.

“In a historical context, this is the weakest period in the last five years,” says Věra Kameníčková, an analyst at CRIF – the Czech Credit Bureau.

Half of both new and departing entrepreneurs come from just four regions. In other words, every second new or departing entrepreneur is located in Prague, the Central Bohemian Region, South Moravia, or the Moravian-Silesian Region.

In seven regions this year, the number of entrepreneurs has decreased. The fastest decline was recorded in the Karlovy Vary region, where for every 10 entrepreneurs who ended their activity, only 6 new ones were registered. In contrast, the number of self-employed individuals grew fastest in Prague; for every 10 who left, there were 14 new entrepreneurs. In both the Central Bohemian and South Moravian regions, for every 10 entrepreneurs who ceased their activities, 11 new sole proprietors were created.

If you’re looking to start a business in the Czech Republic and want to ensure everything is compliant with the law, reach out to the 360WEDO team for a consultation. We can help you with registration and provide outsourced accounting services. Rest assured, all your financial operations will be handled transparently and smoothly. Feel free to submit your request for a consultation.

https://www.idnes.cz/finance/prace-a-podnikani/minimalni-odvody-pausalni-dan-zalohy-2025.A240924_081036_podnikani_sov