The flat-rate regime — what entrepreneurs simply call the „flat-rate tax“ (paušální daň) — lets sole traders and other self-employed people (OSVČ) simplify their taxes and contributions into a single payment. Instead of filing a tax return and reports for the social security and health insurance authorities once a year, you pay one flat monthly amount. It combines income tax, social insurance and health insurance in one, and most of the year-end paperwork falls away.

Before we get to the bands and figures, it helps to separate two things that are often confused. The flat-rate tax is this monthly flat-rate regime. Flat-rate expenses (the percentage expense allowance) are something else — a way of claiming expenses as a fixed percentage of income in your ordinary tax return instead of real receipts. They sound similar, but they are two distinct tools, and this article keeps them strictly apart.

Flat-rate tax versus flat-rate expenses

The difference matters. With flat-rate expenses you still file a tax return and the reports for the insurance authorities — you simply deduct a fixed percentage from your income (for example 80, 60 or 40 % depending on the activity) instead of collecting receipts. You are still taxed on your real profit; you just do not document the expenses. We cover this regime in detail in our article on sole-trader taxes.

With the flat-rate tax, by contrast, your actual profit does not come into it at all. You register for the regime, fall into a band according to your income, and pay a fixed monthly amount — regardless of exactly how much you earn within that band. In exchange for certainty and peace of mind you give up the ability to claim tax reliefs (for a spouse or children, say) and deductions. That is precisely why it does not suit everyone.

Conditions for entering the flat-rate regime

Not everyone can join the flat-rate regime. The Income Tax Act ties it to several conditions you must meet at the same time:

  • You are self-employed (a sole trader or other self-employment) and not a VAT payer, nor obliged to register for VAT.
  • Your income from self-employment in the previous year did not exceed CZK 2 million.
  • You are not a partner in a general commercial partnership or a general partner in a limited partnership.
  • You are not in insolvency and do not carry on an activity that would exclude you from the regime.

The link to not being a VAT payer is key: the moment you cross the turnover threshold for compulsory VAT registration, you no longer belong in the flat-rate regime. How VAT works for a small business is covered in a separate article. You need to register for the regime by 10 January of the given year (or, when starting out, together with the notice of commencing your activity).

Three bands by income level

Since 2023 the flat-rate tax is not a single amount but three bands. Which one you fall into depends on the size and nature of your income. The first band is for income up to CZK 1 million (or up to CZK 1.5 or 2 million if most of it consists of income carrying a high expense allowance). The second band covers income up to CZK 1.5 million and the third band up to CZK 2 million.

The monthly amounts for 2026 are CZK 9,162 in the first band, CZK 16,745 in the second and CZK 27,139 in the third. The first-band amount actually changed during the year — an amendment lowered it from the original CZK 9,984 as of July 2026, retroactively to January, so entrepreneurs ended up with an overpayment for the first half of the year. The figures change from year to year, so always check the current amount at financnisprava.cz. The advance is due by the 20th of each month. Most of the amount is contributions — the income tax itself is only a small part; you will find more on the minimum in our article on minimum contributions for the self-employed.

Who benefits and who does not

The flat-rate tax pays off above all for an entrepreneur with higher real income and low actual expenses, who values calm and does not want to deal with bookkeeping or a tax return. For example: a programmer or consultant earning around CZK 1.2 million with minimal costs, in the first or second band, will usually pay less than under ordinary taxation — and save dozens of hours of admin.

By contrast, it does not pay off for someone who could bring their tax down to almost nothing through reliefs (for children, or a spouse without income) and deductions — in the flat-rate regime those benefits are lost. It also tends to be unfavourable at low income, where you would otherwise pay only the minimum, or with high real expenses. The calculation is individual, and it is worth doing before you sign up.

With choosing the right tax regime, working out whether the flat-rate tax pays off for you, and keeping your accounts, you can rely on Wellbens.

Conclusion

For the right entrepreneur the flat-rate tax is an elegant simplification — one monthly payment instead of a return, reports and year-end stress. But it is not automatically the cheapest route: anyone who draws on reliefs and deductions, or has high expenses, is usually better off under the ordinary regime. And do not forget the difference between the flat-rate tax and flat-rate expenses — they are two different tools. The key is to know your own numbers and decide by them, not by impression.

Frequently asked questions

What is the difference between the flat-rate tax and flat-rate expenses?

The flat-rate tax is a monthly flat-rate regime in which a self-employed person pays one fixed amount covering income tax, social insurance and health insurance, and files no tax return. Flat-rate expenses, by contrast, are a percentage expense allowance you claim in your ordinary tax return instead of real receipts. With flat-rate expenses you still file a return and are taxed on your real profit; you simply do not document the expenses. They are two distinct tools that, despite the similar name, cannot be used interchangeably.

What are the conditions for entering the flat-rate regime in 2026?

You can enter the flat-rate regime if you are self-employed, are not a VAT payer, and your income from self-employment in the previous year did not exceed CZK 2 million. You must not be a partner in a general commercial partnership or a general partner in a limited partnership, and you must not be in insolvency. You generally need to register by 10 January of the given year, or together with the notice of commencing your activity when starting out. The link to not being a VAT payer is key — once you cross the turnover threshold for compulsory registration, you no longer qualify.

Who does the flat-rate tax pay off for?

It pays off most for an entrepreneur with higher income and low actual expenses, who does not want to deal with bookkeeping or a return and values the certainty of a fixed payment. It does not pay off for someone who could reduce their tax almost to zero through reliefs and deductions (for children, or a spouse without income) — in the flat-rate regime those benefits go unused. It also tends to be unfavourable at very low income or with high real expenses. It is always worth doing an individual calculation before signing up.