OSVČ vs. s.r.o.

Is a Limited Liability Company (s.r.o.) Worth It for Me?

Short answer: roughly up to 1.5 million Kč of profit per year, operating as a self-employed person (OSVČ) is usually simpler and cheaper. Above this threshold, a limited liability company (s.r.o.) starts to pay off — but the decision also depends on liability, reinvestment of profit and the number of partners, not just the numbers.

OSVČ up to ~1.5 million Kč profit s.r.o. above ~1.5–2 million Kč corporate tax 21 % + 15 % withholding effectively ~32.85 %

Calculate in the calculator Full comparison

Why there is no single magic number

The threshold at which a limited liability company (s.r.o.) becomes worthwhile cannot be set by a single number. It depends on the ratio of income to expenses, on how much money you actually need to withdraw and how much you can leave in the company, and on tax credits.

The main difference lies in the logic of taxation: a self-employed person (OSVČ) pays tax on the entire profit at a rate of 15 % (and 23 % above the threshold of 1,762,812 Kč per year), and on top of that pays social and health insurance on it. An s.r.o. taxes profit at 21 %, but the second layer of tax (a 15 % withholding tax) falls due only when you actually distribute the profit. Undistributed profit remains in the company taxed at "only" 21 % and can be reinvested. A detailed breakdown is available in OSVČ taxes.

Model comparison of net income by profit level

Profit up to ~600,000 Kč per year OSVČ clearly wins — flat-rate tax or lump-sum expense allowances are often sufficient, administration is minimal and the money is immediately available to you.
Profit ~600,000 – 1.5 million Kč per year Still usually OSVČ. A 15 % tax plus insurance contributions tends to be more advantageous than the double taxation of an s.r.o. (21 % + 15 %), if you withdraw the entire profit.
Profit ~1.5–2 million Kč per year The grey zone. The decision depends on how much money you withdraw versus how much you leave in the company, on liability and the number of partners. Getting the figures checked by an adviser is worthwhile. → detail
Profit above ~2 million Kč and reinvestment An s.r.o. often comes out better — undistributed profit is taxed at only 21 %, you pay no withholding tax or insurance contributions on it, and you can optimise costs.
Regardless of profit: high risk or multiple partners For sectors with high liabilities or multiple partners, an s.r.o. may make sense even at lower profit — owing to limited liability and clearly defined ownership shares.

Effective taxation of profit: OSVČ vs. s.r.o.

Item	OSVČ (trade licence)	s.r.o.
Tax on profit	15 % up to 1,762,812 Kč/year, above this threshold 23 %	21 % corporate income tax
Second level of taxation on withdrawal	none — profit is directly the income of the self-employed person (OSVČ)	15 % withholding tax on the share of profit
Social + health insurance	yes, on the assessment base (rates 29.2 % + 13.5 %)	not payable on the share of profit
Effective taxation of distributed profit	depending on the amount of profit and the regime	~32.85 % (21 % + 15 % of the remainder)
Withdrawing money	freely, the money is immediately yours	managing director's salary / share of profit (formalised)

Model calculation for an s.r.o.: from 100 Kč of profit → 21 % corporate income tax = 21 Kč → 79 Kč to distribute → 15 % withholding tax on 79 Kč = 11.85 Kč → ~67.15 Kč in hand, i.e. an effective burden on distributed profit of ~32.85 %. For a self-employed person (OSVČ) the effective burden varies according to the amount of profit and the regime (flat-rate tax / lump-sum expense allowances / actual expenses). Rates verified as of 2026 (Tax Administration — Finanční správa); it is advisable to verify the amounts with a tax adviser before making any decision.

What is your priority?

Simplicity and immediately available money

OSVČ (trade licence)

You need: low administrative burden, money immediately at your disposal and no formalities around paying out profit

OSVČ taxes

Limited liability, reinvestment, image and selling the company

s.r.o.

You need: protection of personal assets, the ability to retain profit in the company, a stronger professional profile and a business with saleable value

Costs of setting up an s.r.o.

Five decision dimensions to help you choose

1) Liability — a self-employed person (OSVČ) is liable with their entire personal assets, whereas an s.r.o. partner, once their contribution is paid up, is in principle not liable for the company's debts (§ 132 et seq. of the Business Corporations Act – ZOK). 2) Profit — up to ~1.5 million Kč usually OSVČ, above that often an s.r.o. 3) Reinvestment vs. withdrawal — do you leave profit in the company (s.r.o.) or withdraw it immediately (OSVČ)? 4) Number of partners — multiple partners are best accommodated by an s.r.o. with clearly defined ownership shares. 5) Image — for large B2B contracts and a plan to sell the company in the future, an s.r.o. wins out.

Frequently asked questions

At what level of profit does an s.r.o. become worthwhile?

There is no single magic number, but as a guide: up to roughly 1.5 million Kč of profit per year, being a self-employed person (OSVČ) tends to be more advantageous, and above ~1.5–2 million Kč an s.r.o. starts to pay off. It depends mainly on how much money you actually withdraw and how much you leave in the company.

Can I have OSVČ status and an s.r.o. at the same time?

Yes. You can operate as a self-employed person (OSVČ) and at the same time be a partner or managing director of an s.r.o. Each structure has its own tax and insurance obligations, which are assessed independently.

How do I pay myself money from an s.r.o.?

In three ways: through the managing director's salary or remuneration (a tax-deductible cost for the company, but subject to levies), through a share of profit (15 % withholding tax, without social and health insurance), or through a combination of the two. A share of profit may only be paid out after the financial statements have been approved by the general meeting.

Why is an effective tax rate of 32.85 % mentioned in connection with an s.r.o.?

Because profit is taxed twice: first at 21 % corporate income tax, and then, from what remains, a further 15 % withholding tax is deducted when the share is paid out to the partner. From 100 Kč of profit, roughly 67 Kč is therefore left in hand.

Do I have to pay insurance contributions on the distributed profit of an s.r.o.?

No. No social or health insurance is payable on a share of profit — contributions are paid only on the managing director's salary or remuneration. This is one of the reasons why an s.r.o. often pays off at higher profit levels.

Is it worth switching to an s.r.o. if I reinvest profit back into the company?

Often yes. Undistributed profit remains in the s.r.o. taxed at only 21 %, you pay no withholding tax or insurance contributions on it and you can continue to invest it. As a self-employed person (OSVČ) you pay tax and insurance contributions on the entire profit regardless of whether you withdraw it.

Calculate your break-even point

Enter the expected profit and how much you want to pay yourself — the calculator will compute your net income under both structures and find the point at which an s.r.o. becomes worthwhile for you.

OSVČ vs. s.r.o. calculator