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

Side income and IČO

Side income, or already running a business?

Have you earned a few thousand crowns outside your job and aren't sure whether you now need to find the Trade Licensing Office because of it? What decides the answer is not the amount, but how you approach the side income.
the line = regularity up to 50,000 Kč/year tax-free over the limit, everything is taxed
I want to set up a trade licence I'm not sure

The line is regularity, not 50,000 Kč

There is a widespread myth about the line between a small side income and running a trade as a business: that up to 50,000 Kč a year you simply don't need a trade licence. Unfortunately, that isn't true.

The Trade Licensing Act (§ 2 of Act No. 455/1991 Coll.) defines a business as an activity carried out regularly, independently, in one's own name, at one's own responsibility and for profit. If you meet all of these characteristics, it counts as a trade — regardless of the amount of income. If, for example, you sell handmade products regularly every week at a market, you need a trade licence even if it only brings you 15,000 Kč a year.

Where does the 50,000 Kč myth come from? From § 10(3)(a) of the Income Tax Act (Act No. 586/1992 Coll., ZDP), which exempts from tax the total of occasional (incidental) income up to 50,000 Kč a year. But this provision only deals with tax — not with whether you need a trade authorisation (živnostenské oprávnění). These are two separate questions:

  • Is the activity regular? This decides whether you must have a trade licence (the Trade Licensing Act).
  • How much did you earn? This only decides whether you pay tax on it (the Income Tax Act).

A genuinely incidental, one-off activity with no intention of repeating it does not require a trade licence, regardless of the amount. You can find the trade register at rzp.gov.cz; an overview of three legal routes without a trade licence is in the article when you don't need a trade licence.

What is your situation?

One-off help

incidental · no trade licence

You helped a neighbour, sold a few of your own products, or rented something out once — with no intention of repeating the activity. Regularity is missing here.

Stay with § 10

Recurring side income

regular · trade licence

You earn extra income from the same activity again and again and plan to keep doing so — even at a low income, this already counts as regular business.

How to set up a trade licence

I'm not sure

take the test

Not sure whether your activity meets the criteria of regularity? Take a short test instead of puzzling over legal sections.

Do I need a trade licence?

How to tax side income and when to file a tax return

If you stay within the § 10 limit of the Income Tax Act, there is nothing to deal with — the income is not shown in the tax return. But as soon as the total of all your occasional income for the year exceeds 50,000 Kč, this changes fundamentally:

  • The whole amount is taxed, not just what's over the limit — as other income under § 10 of the Income Tax Act, at a rate of 15 % (23 % above an annual tax base of 1,762,812 Kč across all income combined).
  • You may deduct only expenses that were actually incurred and documented — the lump-sum expense allowance (30/40/60/80 %) does not apply to this type of income.
  • You must file the tax return yourself, even if you would otherwise rely on your employer's annual payroll reconciliation as an employee — side income over the limit does not fit into that. The deadline is 1 April 2026 on paper, or 4 May 2026 for electronic filing, for example via the MOJE daně portal.
  • Having to file a return, however, does not mean you are self-employed (OSVČ). As long as the activity is not regular, you do not need to deal with social or health insurance on the side income. If you are already self-employed (OSVČ) (say, running a secondary activity alongside employment), you pay social insurance only once your annual profit exceeds the decisive amount of 117,521 Kč; for a main activity, the minimum advance payment in 2026 is 5,005 Kč from 1 July (5,720 Kč until 30 June), and the health insurance advance is 3,306 Kč all year round — more in the overview main vs. secondary activity.

You will find the detailed schedule and forms in the overview of OSVČ deadlines.

Frequently asked questions about side income and an IČO

How much can I earn on the side without a trade licence?
The law sets no specific amount for when a trade licence is required — what matters is the regularity of the activity, not the amount of income. For tax purposes, however, it's advantageous to stay under 50,000 Kč a year: that's the maximum total of occasional income that can be tax-exempt (§ 10(3) of the Income Tax Act). More in the overview of business without a trade licence.
Do I have to declare side income if it's under 50,000 Kč?
No. If the total of all your occasional income for the year does not exceed 50,000 Kč, it is exempt from tax and is not shown in the return at all (§ 10(3)(a) of the Income Tax Act). Once you exceed the limit, the whole amount is taxed, not just what's over the threshold.
What if I repeat the side income regularly, even though it's small?
Then it already counts as a regular activity, and therefore as a business — you need a trade licence regardless of the amount of income, even below 50,000 Kč a year. What matters is regularity and the intention to repeat the activity, not the amount. You'll find the procedure in the guide how to set up a trade licence.
How do I know I already need an IČO?
A short test can help: you answer a few questions about the nature and frequency of your activity and find out whether you meet the criteria of regularity under the Trade Licensing Act. Try the test to see if you need a trade licence — it's faster than working through the legal sections yourself.
Do I have to pay social and health insurance because of side income?
No, as long as it's genuinely occasional income under § 10 of the Income Tax Act — insurance only concerns the self-employed (OSVČ). Once side income turns into a regular secondary activity alongside employment, you pay social insurance only once annual profit exceeds 117,521 Kč — see main vs. secondary activity.

Related topics

When you don't need a trade licence

Occasional income, garden surplus and yard-sale earnings — three ways to earn legally without a trade authorisation.

Do I need a trade licence?

A short test based on your situation tells you whether your activity already meets the criteria of regularity, or whether § 10 is still enough for you.

A trade licence alongside employment

Has your side income grown into a regular activity while you're still employed? We show you how to set up a trade licence as a secondary activity alongside your job.