A practical guide to trade licences, self-employment and business in Czechia

OSVČ taxes

OSVČ lump-sum expense allowances 2026

A lump-sum expense allowance means that instead of calculating and documenting actual costs, you deduct a fixed percentage from your income, as set by law. The rate depends on the type of activity: 80% for craft trades, 60% for unqualified, regulated and permit (concession) trades, 40% for liberal professions, 30% for rental. No invoices or receipts need to be kept.

80% craft trades (max 1.6 mil.) 60% unqualified trade (max 1.2 mil.) 40% liberal prof. (max 800 thousand) 30% rental (max 600 thousand)
OSVČ tax return Flat-rate tax 2026

Allowance rates, caps and type of activity 2026

AllowanceType of activityCap (max. expenses)
80%Agricultural production, forestry and water management; craft trades1,600,000 Kč
60%Other trade-licence business — unqualified, regulated and permit (concession) trades (excluding craft trades)1,200,000 Kč
40%Other independent activity — liberal professions, copyright, intellectual property, independent occupation800,000 Kč
30%Rental of property included in business assets600,000 Kč

The caps are calculated from income of 2,000,000 Kč (cap = percentage × 2 mil. Kč). For income above 2 mil. Kč the allowance no longer increases expenses. Neither the rates nor the caps change for 2026 compared with 2025. Legal basis: § 7(7) of Act No. 586/1992 Coll. (ZDP, the Income Tax Act). Source: the Tax Administration (Finanční správa), Fakturoid, Kurzy.cz — verified 2026.

Worked examples: how the allowance reduces the tax base

  1. Craft trader, 80% allowance — income 900,000 Kč Lump-sum expenses 80% = 720,000 Kč (below the 1.6 mil. cap). Tax base: 900,000 − 720,000 = 180,000 Kč. Tax of 15% = 27,000 Kč → after the taxpayer credit of 30,840 Kč the tax comes to 0 Kč. → detail
  2. Unqualified trade, 60% allowance — income 1,200,000 Kč Lump-sum expenses 60% = 720,000 Kč (below the 1.2 mil. cap). Tax base: 1,200,000 − 720,000 = 480,000 Kč. Tax of 15% = 72,000 Kč − taxpayer credit of 30,840 Kč = 41,160 Kč. → detail
  3. Liberal profession, 40% allowance — income 2,500,000 Kč A 40% allowance would be 1,000,000 Kč, but the 800,000 Kč cap applies → 800,000 Kč is claimed. Tax base: 2,500,000 − 800,000 = 1,700,000 Kč (below the 1,762,812 Kč threshold → all at 15%). Tax of 15% = 255,000 Kč − taxpayer credit of 30,840 Kč = 224,160 Kč.

The allowance cannot be combined with actual expenses — but credits and the bonus can

For a single type of income you use either the allowance or actual (documented) expenses — not both at once. The allowance already covers all costs, including paid social and health insurance contributions, so alongside it you cannot claim any further expenses or depreciation. Unlike the flat-rate tax, however, in an ordinary tax return with a lump-sum expense allowance you can deduct tax credits (the taxpayer credit of 30,840 Kč, the spouse credit, the disability credit) as well as the child tax bonus — which is why it tends to be advantageous for families. More in the OSVČ tax return. Source: § 7(7) of the ZDP (Income Tax Act), the Tax Administration (Finanční správa) — verified 2026.

Frequently asked questions about lump-sum expense allowances

Which allowance applies to IT, a courier and a hairdresser?
IT and programming fall under an unqualified trade (the field of Software provision, IT consultancy), so a 60% allowance with a cap of 1,200,000 Kč applies. A courier and food delivery is likewise an unqualified trade → 60%. A hairdresser operates a craft trade and therefore has an 80% allowance with a cap of 1,600,000 Kč.
What is the difference between a lump-sum expense allowance and the flat-rate tax?
A lump-sum expense allowance is a way of claiming expenses as a percentage of income in an ordinary tax return — you then calculate the tax and insurance yourself and can claim credits and bonuses. The flat-rate tax, by contrast, is one fixed monthly payment that includes the tax and both insurances, no tax return is filed, but credits and the bonus cannot be claimed.
Can I combine lump-sum and actual expenses?
No. For a single type of income under § 7 you use either the allowance or actual expenses — never both at the same time. If you have several types of activity with different allowances (e.g. a craft trade and an unqualified trade), each is calculated separately at its own rate and the resulting expenses are added together.
When does the allowance pay off compared with actual expenses?
The allowance pays off when your actual expenses are lower than the percentage allowance — typically with services, IT, consulting or a craft without major inputs. With high documented costs (purchase of goods, materials, employees) actual expenses tend to be more advantageous.
Are paid insurance contributions added on top of the allowance?
No. Social and health insurance contributions for an OSVČ are not a tax-deductible expense, and the allowance already covers them. Alongside the allowance you cannot claim any further costs — not depreciation, rent or insurance contributions paid.
Do the allowance caps apply in 2026 as well?
Yes. The caps remain 1,600,000 Kč (80%), 1,200,000 Kč (60%), 800,000 Kč (40%) and 600,000 Kč (30%). They are calculated from income of 2,000,000 Kč; for income above this threshold the allowance no longer increases expenses. Neither the rates nor the caps change compared with 2025.

Related articles on OSVČ taxes