Flat Tax in the Czech Republic for 2026: What Entrepreneurs Need to Know

In 2026, the flat tax for sole proprietors in the Czech Republic will increase slightly (only in the first income bracket) to CZK 9,984. The amounts in the second and third brackets will remain unchanged at CZK 16,745 and CZK 27,139 respectively. All other conditions of the flat tax regime will stay the same.

How the Flat Tax System Works

Since 2021, Czech entrepreneurs can opt for a flat tax regime, which simplifies their obligations by combining income tax, social security, and health insurance into one monthly payment. As of 2025, the system is divided into three brackets based on annual income and deductible expense types.

First Bracket: Applies to entrepreneurs with income up to CZK 1 million, regardless of the type of activity. It also includes those earning up to CZK 1.5 million if at least 75% of their income qualifies for 60% or 80% flat-rate expenses. For those with 80% flat-rate deductible expenses, the limit increases to CZK 2 million. In 2026, the monthly flat tax for this group will rise to CZK 9,984.

Second Bracket: Available to those whose income from self-employment did not exceed CZK 1.5 million in the previous year. Entrepreneurs with income up to CZK 2 million can also qualify if 75% of their income is subject to 60% or 80% flat-rate expenses. The flat tax remains CZK 16,745 per month.

Third Bracket: Designed for all entrepreneurs whose annual income does not exceed CZK 2 million and who meet the general entry conditions for the lump sum regime. The monthly flat tax in this category stays at CZK 27,139.

Flat Tax Increase in the First Bracket Only

In 2026, self-employed individuals will pay updated monthly advances for social and health insurance, which will affect the flat tax as well. The change, however, applies only to the first tax bracket, where the monthly payment will rise to CZK 9,984 (this includes CZK 6,578 for social security, CZK 3,306 for health insurance, and CZK 100 for income tax).

The monthly amounts in the second and third brackets will remain unchanged at CZK 16,745 and CZK 27,139, respectively.

Who Can Use the Flat Tax Regime?

The flat tax regime is voluntary but not universally accessible. Since 2023, it has been available only to sole proprietors whose annual income does not exceed CZK 2 million. However, VAT payers, including those registered voluntarily, or entrepreneurs who are required to register for VAT (with the exception of those only subject to identification obligations) cannot use the flat tax system.

You Cannot Choose Your Tax Bracket Freely

Entrepreneurs who wish to switch to the flat tax regime cannot choose their preferred tax bracket arbitrarily: it must reflect their actual income from the previous tax year, not projected income for the upcoming one.

For example, if your income in 2025 was CZK 1.3 million and you qualify for a 40% flat expense deduction, you will still fall into the second bracket in 2026, even if you expect to earn less than CZK 1 million that year.

Deadline to Switch to the Flat Tax Regime

If you plan to switch to the flat tax system in 2026, you must submit a notification to the tax office, no need to inform your health insurance company or the Czech Social Security Administration (ČSSZ) separately, as they receive this information automatically.

Once the statutory conditions are met, the switch takes effect from January 1 of the given year. For new entrepreneurs, the flat tax status applies from the first day of the month in which they begin business activities.

The notification deadline is the tenth day of the relevant tax period. Since January 10, 2026, falls on a Saturday, the deadline is extended to Monday, January 12, 2026.

Already Using the Flat Tax System?

If you’re already enrolled in the flat tax system and still meet the eligibility criteria next year, there’s no need to resubmit a notification. However, if your income has risen and places you in a higher tax bracket, you must submit a notification to update your selected bracket.

In this case, you’ll need to calculate your tax and social/health insurance contributions according to the new bracket and pay the difference by the standard tax return deadline.

How to Submit a Notification

You can notify the tax office of your entry into (or change within) the flat tax system in several ways:

• Electronically – required if you have a statutory data mailbox (datová schránka).
• By mail – sent to your local tax office.
• In person – delivered directly to the tax office reception desk.

Your notification must include the standard identification and contact information, as well as details about:

• your entry into the flat tax system,
• your pension insurance status,
• and your public health insurance status.

Flat Tax Payment Deadline

Flat tax is paid into a general personal tax account and is due by the 20th of the advance payment period (calendar month) for which the advance is made. The prefix for the general personal tax account is 2866.

If you are switching to the flat tax regime, make sure to pay all advance payments of social insurance premiums for 2025.

What are the responsibilities of the flat tax regime?

A taxpayer in the flat tax regime is not required to file a tax return or reports on social insurance contributions, but a sole proprietor must maintain certain income records.

There may be situations where the taxpayer is required to file a personal income tax return: for example, if their tax liability is not covered by the flat tax, if income from self-employment exceeds CZK 2,000,000, or if the taxpayer has received income from a dependent activity, or has become a VAT payer or a participant in a v.o.s.

The Financial Administration therefore recommends continuing to maintain records to the extent necessary to allow the taxpayer to meet these obligations, if needed (in case of failure to meet the conditions and related obligations for determining income tax and social security contributions). At a minimum, records must be kept for income relevant to VAT registration.

Furthermore, from 2023 onward, the law explicitly states that certain sole proprietors must keep records of income from self-employment in order to confirm the amount of decisive income for the selected flat tax band. This applies especially to those who have income from activities for which expenses are calculated as a percentage of income at different rates.

What if you no longer meet the conditions?

If you find that you no longer meet the conditions for the flat tax regime (for example, if your income exceeds CZK 1 million), you must notify the tax office within 15 days. In such cases, you will also be required to submit a tax return and reports on income and expenses at the end of the tax period. These documents must include a calculation of your income tax and social security contributions.

If you’re unsure whether the flat tax system is still right for you, or need help navigating these changes, 360WEDO’s experts are here to help: from consulting on eligibility to filing assistance and beyond.

Source:

https://www.podnikatel.cz/clanky/pausalni-dan-osvc-vzroste-v-roce-2026-jen-v-prvnim-pasmu-a-to-skoro-na-10-tisic