How to Open a Trade License in the Czech Republic – A Guide for Foreigners
Thinking about starting your freelance work or business in the Czech Republic? Your first step is getting a trade license (živnost). For foreigners, the process might feel a little different than at home, but it’s straightforward if you know the steps.
Here’s a friendly, step-by-step guide to opening your trade license in Czechia.
What Is a Trade License?
A trade license (živnost) is an official registration that allows you to work as a self-employed person (OSVČ) or run certain types of business activities in the Czech Republic. It’s required for almost all freelance work, consulting, small businesses, and certain services.
There are two main types of trade licenses:
- Free Trade (Volná živnost): No special qualifications required. Most freelancers, IT specialists, and consultants use this.
- Regulated Trade (Vázaná nebo koncesovaná živnost): Requires specific professional qualifications, certifications, or experience. Examples include electricians, real estate agents, or certain financial services.
Most foreigners will start with a free trade license, unless their work requires special qualifications.
Benefits of Having a Trade License
- Legal compliance: You’re officially registered to earn income in Czechia.
- Access to social benefits: Self-employed people can contribute to health and social insurance.
- Ability to invoice clients: Official invoices are needed for both Czech and international clients.
- Eligibility for tax regimes: You can opt for the standard system or simplified options like flat tax.
How to Open Your Trade License
1. Check Eligibility
Foreigners must have the right to reside and work in the Czech Republic. This usually means:
- EU/EEA citizens- Can freely register as self-employed.
- Non-EU citizens- Must have a long-term residence permit allowing self-employment.
2. Choose Your Trade Type
Decide whether you need a free trade or a regulated trade. Most freelancers use free trades because they don’t require additional certificates.
3. Prepare Required Documents
Typically, you will need:
- Valid passport or national ID (for EU citizens)
- Czech residence card (for non-EU citizens)
- Criminal clearance report from Home country (ONLY for non-EU citizens)
- Completed application form from the Trade Licensing Office
- Business address proof/consent
- Proof of qualifications (only for regulated trades)
4. Decide on Your Business Address
A business address is required to open your trade license. You have a few options:
- Home address with consent– If you are renting or living somewhere that isn’t yours, you can use it as a business address if the owner gives written consent.
- Home address if you own the property– Your own home can serve as your business address.
- Virtual business address– You can use a professional virtual office address for your business. Some companies provide this for an additional fee.
Choosing a proper business address is important because it will be used for official correspondence with authorities.
5. Visit the Trade Licensing Office
Go to your local živnostenský úřad (Trade Licensing Office).
At the office, you’ll:
- Submit your application
- Receive your trade license certificate after 2-3 working days or on your Data Box ( if you have one)
6. Register with Tax and Insurance Offices
After getting your license, you must notify:
- Tax Office (Finanční úřad): Register for income tax.
- Social Insurance (ČSSZ): Register as self-employed for social contributions.
- Health Insurance Company: Register for health insurance payments.
This ensures your business is fully legal and compliant.
7. Start Your Freelance Work
Once registered, you can:
- Pay taxes monthly
- Issue invoices to clients
- Track income and expenses
You can also consider flat tax registration if you qualify, which simplifies payments and filings.
What Is an IČO Number?
IČO (Identifikační číslo osoby) is your business identification number in the Czech Republic.
Once you register a trade license (živnost), you are assigned an IČO. This number identifies you as a business entity in the Czech system, even though you are operating as an individual.
Your IČO is used for:
- Signing contracts
- Issuing invoices to clients
- Identifying you in the Trade Register
- Communication with Czech authorities related to your business activity
You can think of the IČO as your business ID, it shows who you are as a business, not how much tax you pay.
Most freelancers include their IČO on:
- Invoices
- Contracts
- Business correspondence
What Is a DIČ Number?
DIČ (Daňové identifikační číslo) is your tax identification number in the Czech Republic.
It is assigned once you are registered with the Financial Office as a taxpayer. The DIČ allows the tax authority to track and manage your tax obligations.
Your DIČ is used mainly for:
- Communication with the Financial Office
- Tax filings and tax administration
- VAT registration (if applicable)
- Official tax-related documents
Unlike the IČO, the DIČ is not always visible to clients, especially if you are not a VAT payer.
What’s the Difference?
Foreigners often mix these two up, but they serve different purposes:
- IČO > identifies you as a business
- DIČ > identifies you as a taxpayer
You will usually receive:
- An IČO when you register your trade license
- A DIČ when you register with the Financial Office
You can operate your business day to day using your IČO, but you cannot deal with Czech taxes without a DIČ.
Bottom Line
Opening a trade license in Czechia is the first step to running your freelance business legally and confidently. With a few documents, a proper business address, a trip to the Trade Licensing Office, and registering with the tax and insurance offices, you’re officially set to start working.
Being organized and following the steps carefully makes the process smooth, even for foreigners. Once your license is active, you can focus on growing your business, serving clients, and enjoying life in the Czech Republic.
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