The trends in the labor market in the Czech Republic have changed remarkably over the years. The economic development, business incentives by the government, and skilled human capital have appealed plentiful foreign direct investment to the country. Today, the Czech Republic has the lowest unemployment in recent years. The unemployment of the total labor force in 2019 was estimated at around 2.5 per cent, which is also the lowest unemployment rate in all of Europe according to the ILO estimate. In 2019, Czechia has experienced another milestone in the labor market with the number of job vacancies reaching all-time highest of 350564 in August 2019.
In a country of many opportunities, people often consider freelancing rather than working for a company. Although there are some downsides to freelancing with the changing market trends, you may find numerous advantages of self-employment.
Have you always been an official employee? Did you get used to sick days, paid holidays, bonuses, company benefits, high social security, maternity, retirement, and other social benefits?
With freelancing, you can nearly forget about such things. To be self-employed means taking full responsibility for your own income. If you would like to become a freelancer in the Czech Republic, you will need to obtain a ́Živnostenské oprávnění ́ which means trade license/business license. It is a frequent choice for jobs like software developers, English teachers, translators, copywriters, designers, musicians and startup owners.
Social security is at the lowest rate by your self-employment. There are many possible reasons for self-employment and higher monthly income can be one of them due to low taxes. Opposed to having a regular job with a work permit, self-employed individuals do not give %34 of their income to the government and the social administration. They only need to have to pay for the health and social insurance (approx. 4.000CZK / 160 Euro) every month and %15 income tax. The amount of total income tax will be counted from the annual closing.
Being a freelancer self-employed is not only beneficial from a financial point of view it also offers you a great amount of flexibility. As self-employed, you can manage your working days/hours on your own. It always depends on the agreement with the business partner, but he can no longer behave as your employer and he has no longer full power on you. Also, you are much appreciated as you can stop working with anyone from day to day without explanation and this can bring quite a risk for them (as for you too). But the reasons for self-employment are changing from person to person. The main reasons for self-employment are to be able to manage your own time and not and do not report to your boss. You are your own boss. You become an independent contractor or service provider and you make all decisions based on your needs and priorities.
No matter Czech or another citizen, everyone has the right to become self-employed. So how to become self-employed legally in the Czech Republic and start your business in Prague?
The steps needed to be taken to become a freelancer depend on your country of origin and current visa status. It is easier to obtain a business license when you are a Czech or EU citizen. EU citizens may obtain the license in 3-5 business days even without having their temporary residence certificate. You need to register at a Trade Office across the Czech Republic, choose your subject of business, pay a fee of 1.000 CZK and you can immediately start running your business. Your duties start once you register at the Trade Office as well as for Social and Health Insurance.
For people from non-EU countries, it is very important that they already hold a long-term visa or residence permit. It is a simple process if you hold a residence permit already and you would like to obtain a business license too. After collecting the required documents you need to register at the Trade License Office. If everything is okay with the documents you will get the free trade licence (OSVČ) in 3-5 business days, which will be valid for as long as your visa is valid.
See also: Self-employment in the Czech Republic
If you do not have any valid visa, you better get prepared for the long process. You have to add all documents such as accommodation confirmation, seat location consent, bank report, proof of future projects and others. You have to apply in your country of origin or another country than the Czech Republic and get well prepared for an interview. You may get your free trade licence (OSVČ) even if you do not hold any visa but it won’t be active. In order to activate the license and start freelancing legally, you will need a residence permit
YeYe Agency had designed a customized online software system (www.yedesk.com) which enables the freelancers to manage their operation while they are abroad. The system allows the freelancers to track the official process of their company such as invoicing, bookkeeping, taxes and the communication between the local authorities. On top of this, freelancers can get in contact with their account manager from Yeye agency through the ‘Yedesk’ system and solve all their issues while they are home-office.
Yeye Agency continues to help young businesses and entrepreneurs with freelancer (self-employment) licenses and can become your “self-employed guide”, support you during the whole process. We are helping businesses to reach their target markets by providing tailor-made business development services.