What every freelancer in Czechia needs to know before Monday’s deadline

As 2026 begins, Czech self-employed workers face a fundamental shift toward digital compliance and higher mandatory contributions. With a critical decision deadline just days away and new rules already in effect, freelancers and entrepreneurs must act quickly to avoid penalties and optimize their tax positions.

Self-employed workers have until Monday, Jan. 12, to make a choice that will define their entire tax year: join or leave the Flat-Rate Tax (Paušální daň) regime. Miss this deadline, and you’re locked into your current tax method until 2027, according to the Czech Financial Administration.

For those in the first income band—earning up to CZK 1 million annually—the flat-rate system now costs CZK 9,984 monthly, covering income tax, health insurance, and social insurance in one payment. While the convenience of a single transfer appeals to many, it comes with a significant trade-off: you forfeit all tax deductions for children, mortgages, and life insurance.

The decision hinges on your personal circumstances. Freelancers with minimal expenses (under 20 percent of income), no dependents, and no mortgage will find the flat-rate system’s administrative simplicity worth the cost.

However, those with children, a mortgage interest deduction, or unstable income should consider carefully before abandoning the traditional 60/40 expense method, where tax bonuses and deductions can often reduce liability to zero, despite the burden of annual tax returns and detailed record-keeping.

The most significant financial impact for 2026 is the increase in minimum social insurance contributions. Under current law, the monthly minimum increases to CZK 5,720—a rise driven by a higher assessment base, which shifts from 35 percent to 40 percent of the average wage.

But there’s uncertainty. The incoming government has pledged to cap this increase at CZK 5,005 through new legislation, though the amendment wasn’t finalized before Jan. 1. Tax advisors recommend paying the higher legal amount of CZK 5,720 in January to avoid compliance issues. Any overpayment will be automatically credited to your account or refunded once the legislation passes.

New entrepreneurs get some relief. Those in their first three years of business still qualify for a reduced social insurance rate of CZK 3,575 monthly, a “newcomer” discount designed to ease the burden on startups.

Combined with health insurance of CZK 3,306, minimum monthly contributions for established OSVČ total CZK 9,026—or potentially CZK 8,311 if the proposed government refund materializes.

The era of physical forms ended on Jan. 1. All communication with health insurance companies and the Czech Social Security Administration (ČSSZ) must now be conducted exclusively through digital channels. Paper submissions sent by post or dropped in collection boxes will be rejected, which may result in penalties for improper filing.

The transition requires three critical elements. First, a Data Box (Datová schránka) is now mandatory for all OSVČ—activate yours immediately at mojedatovaschranka.cz if you haven’t already.

Second, annual reports (Přehledy) must be submitted in XML format via Data Box or through your insurer’s online portal; simply sending a PDF is no longer sufficient.

Third, you’ll need verified access to the ČSSZ web portal for social insurance as well your health insurer’s portal, such as Moje VZP, where interactive forms automatically generate the required XML files.

The shift eliminates the option of last-minute paper filing that many self-employed workers relied on in previous years. Without proper digital infrastructure in place, you risk missing deadlines you can’t physically deliver your way out of.

Amid the increased costs and compliance burden, two changes offer genuine financial opportunities.

The first is a windfall for entrepreneurs planning to exit their businesses. The CZK 40 million cap on tax-exempt income from selling company shares has been abolished. If you meet the holding period requirements—five years for companies, three years for shares—100 percent of your profit is now tax-free, regardless of whether you sell for 5 million or 500 million crowns.

The unlimited exemption represents a dramatic shift in how business exits are taxed, though it’s worth noting that crypto assets remain subject to the CZK 40 million cap.

The second change benefits those approaching retirement. The minimum old-age pension rises to CZK 9,800 monthly, and workers with 45 or more years of contributions receive a new “loyalty” benefit from the Czech Ministry of Labour and Social Affairs: the penalty for early retirement is cut in half, from 1.5 percent to 0.75 percent per 90-day period.

While most freelancers focus on immediate tax concerns, these pension improvements reward long-term contributors and acknowledge the challenges of extended working lives.