One decision that shapes your whole tax year
As an OSVČ (self-employed person) you have three ways to tax your income: the paušální daň (flat tax), flat-rate percentage expenses, and real expenses recorded in tax records. Choosing between them is not a formality — it decides how much goes to the state, how much administration you are left with, and whether you can claim tax credits or the child tax benefit at all.
The wrong choice can cost tens of thousands of crowns a year. And it is a decision you normally make once a year. This article goes through all three regimes with the 2026 numbers, and ends with a decision guide that tells you where you belong.
The three regimes in brief
Before the numbers, the underlying principle of each one:
- Flat tax — you pay one fixed amount a month covering income tax plus social security and health insurance. No tax return, no annual statements (přehledy). Maximum simplicity at the price of zero flexibility.
- Flat-rate (percentage) expenses — income tax is calculated from income reduced by a statutory percentage (80, 60, 40 or 30%). No receipts to keep; the expenses are claimed on paper.
- Real expenses — you keep tax records and claim every actual, documented cost. The most work, and the best deal for anyone whose real spending is high.
The flat tax in 2026: three bands
The flat-tax regime is for an OSVČ who is not a VAT payer and whose annual income from self-employment does not exceed CZK 2,000,000. Registration for 2026 had to be filed by 12 January 2026 — 10 January fell on a Saturday, so the deadline moved to the next working day. If you missed it, one of the other two regimes applies for this year and the flat tax is something to consider for the next one.
The flat tax has three bands. Which one you land in depends on the size of your income and on the type of activity:
| Band | Monthly payment 2026 | Per year |
|---|---|---|
| Band I | CZK 9,162 | CZK 109,944 |
| Band II | CZK 16,745 | CZK 200,940 |
| Band III | CZK 27,139 | CZK 325,668 |
Band I covers most self-employed people with income up to CZK 1,000,000, whatever the field. If your work is predominantly a craft or a licensed trade — the activities that would otherwise carry the 80% or 60% expense rate — you stay in band I at higher income too: up to CZK 1.5 million, or up to CZK 2 million for activities on the 80% rate. Bands II and III are for higher income or for activities with a lower expense rate.
Careful: From January to June 2026 band I was originally CZK 9,984 a month, against CZK 8,716 in 2025, but Amendment No. 90/2026 Coll. cut the obligation retroactively from January to CZK 9,162. The final annual obligation is therefore CZK 109,944, and the CZK 4,932 difference for the first half-year is an overpayment. Bands II and III are unchanged from 2025.
In band I the final monthly obligation of CZK 9,162 for 2026 consists of CZK 100 of income tax, CZK 5,756 of pension insurance and CZK 3,306 of health insurance. The tax component is symbolic — almost all of it is the compulsory insurance you would be paying anyway.
Flat-rate expenses: a percentage of income, no receipts
If you are not in the flat-tax regime, income tax is calculated from a tax base, which you get by deducting expenses from income. And expenses can be claimed in two ways: as a percentage, or for real.
The advantage of percentage expenses is that you neither record nor evidence a single cost. The state recognises a fixed percentage of income as an expense whatever you actually spent. The rate follows the type of activity, and each one has a ceiling:
| Rate | Type of activity | Maximum expenses |
|---|---|---|
| 80% | Craft trades, agriculture, forestry and water management | CZK 1,600,000 |
| 60% | Free, regulated and licensed trades | CZK 1,200,000 |
| 40% | Other business and the liberal professions (doctors, lawyers, tax advisers) | CZK 800,000 |
| 30% | Rental of assets held as business property | CZK 600,000 |
Each ceiling is reached at annual income of CZK 2,000,000. So a craftsman earning CZK 800,000 claims CZK 640,000 as expenses (80%) and taxes only CZK 160,000 — without a single receipt. For the many self-employed people whose real costs are low, typically services run from home where the biggest "cost" is their own time, this is the best option available.
Real expenses: for those who genuinely spend
The third route is to keep tax records and claim real, documented expenses. It pays off once your actual costs exceed the relevant expense rate.
Typically that means buying goods or materials, paying rent on business premises, employing people, paying off a lease or acquiring expensive equipment. Real expenses also allow what the flat rates cannot:
- Depreciation — a car, a machine or equipment is spread across costs over several years.
- A tax loss — if expenses exceed income, you report a loss and can deduct it in later years.
- Full control — you claim everything demonstrably connected with the business.
The price is administration: records of income and expenses, of assets and liabilities, documents to keep and depreciation to calculate. This is exactly where an app like Taxorio earns its place — it keeps the records and the source data for your return.
The three regimes compared
| Flat tax | Flat-rate expenses | Real expenses | |
|---|---|---|---|
| Administration | Minimal | Low | Higher |
| Tax return | Not filed | Filed | Filed |
| Credits and deductions | Cannot be claimed | Can be claimed | Can be claimed |
| Child tax benefit | No | Yes | Yes |
| Depreciation and losses | No | No | Yes |
| Income limit | CZK 2 million | No limit * | No limit |
| VAT payer | Not allowed | Allowed | Allowed |
* Flat-rate expenses can be used above CZK 2 million of income as well, but the expenses are calculated only up to the ceiling — above that limit the flat rate stops growing.
Which regime to choose: a decision guide
There is no universal answer, but these pointers will steer you:
- Low real costs, not a VAT payer, and no appetite for administration? Work out the flat tax. For many self-employed people with income around a million it is the cheapest and simplest option — but only if you do not want to claim credits.
- Want to claim the spouse credit, the child tax benefit or mortgage interest relief? The flat tax is not for you: it allows no credits at all. Reach for flat-rate expenses, where the credits work and the administration is still light.
- Low real costs but you do want the credits? Flat-rate expenses are the ideal compromise — simple, and the credits stay available.
- Buying goods or materials, paying rent, investing in equipment? Work out the real expenses. Once your actual costs exceed the flat rate, tax records start paying for themselves.
Tip: The point is to compare numbers, not to go by feel. Take last year's income and calculate the tax under all three regimes. For real expenses add up what you actually spent; for the flat rate apply the relevant percentage; for the flat tax take the annual payment. The gap between the best and the worst option is usually in the tens of thousands.
What to watch out for
A few things people underestimate:
- The taxpayer credit of CZK 30,840 a year. It is lost inside the flat tax; in the other regimes it reduces your tax. On low income this credit alone can bring income tax down to zero.
- The 23% rate. On a tax base above CZK 1,762,812 a year — 36 times the average wage — you pay 23% instead of 15%. This only concerns high-earning self-employed people outside the flat tax.
- The regime changes once a year. Moving between flat-rate and real expenses, and back, has its own rules and may require an adjustment to the tax base. It is not done mid-year.
- VAT registration rules the flat tax out. The moment you become a VAT payer, you drop out of the flat-tax regime.
Summary
The flat tax wins on simplicity but gives up credits and flexibility. Flat-rate expenses are an excellent middle ground for most self-employed people with low costs. Real expenses pay off where the spending is genuine. Do not decide by what a colleague does — your numbers are different.
If you want to go deeper, there are separate guides to the flat tax for the self-employed in 2026 and to flat-rate versus real expenses. And if you settle on recording real expenses, Taxorio will keep them for you — from the scanned receipt through to the source data for your tax return.
Taxorio scope: Taxorio provides invoicing and income/expense records for Czech sole traders. It is not full accounting or personalised tax advice. For an unsupported or unusual case, verify the treatment with a Czech accountant or tax adviser before filing.