How to do business in finance with an ID number: trades, CNB, taxes, and what to watch out for

Are you planning to start a business as a self-employed financial advisor or insurance broker? We will guide you through the necessary authorizations, obligations towards the Czech National Bank, and tax and contribution settings—all in a clear manner and without unnecessary paperwork.

Financial advisor vs. insurance broker: what is the difference?

In practice, the two terms are often confused, but the law makes a clear distinction between them. And this is essential for choosing the right license to operate, whether you are planning to provide general financial advice or do business in the insurance industry.

Self-employed financial advisor – scope of services and responsibility

Once they have met the requirements, financial advisors can offer many financial products and services:

• insurance,
• mortgages and other loans (typically a mortgage advisor),
• investment products,
• supplementary pension savings,
• financial planning, and long-term advice.

Such activities of a financial advisor fall within the scope of regulated financial intermediation. This means that if they negotiate or recommend a specific product, they must be registered with the CNB (usually as a tied agent of a licensed company) and have the appropriate professional qualifications depending on the products they offer (insurance, loans, investments, etc.).

As a financial advisor, however , you can also perform many activities that are not regulated, such as educating clients, preparing financial plans, analyses, online content, networking, or acquisition activities. All you need for these activities is a free trade license.

Insurance broker and business in the insurance industry

An insurance broker only offers insurance. They can arrange life and non-life insurance products (such as property insurance, compulsory liability insurance, accident insurance), but their scope of activity is narrower than that of a financial advisor.

Here, too, the law requires:

• registration with the CNB,
• a professional exam for insurance distribution,
• connection to an insurance company or independent intermediary (typically brokers) if you are starting out as a tied agent.

Business in finance: when a trade license is sufficient and when you need to register with the CNB

Most business activities in Czechia are governed by the Trade Licensing Act. However, in finance, it works a little differently.

If you want to advise people on money, negotiate products, or help with financial planning, you are entering an area that is also subject to special laws (e.g., the Insurance and Reinsurance Distribution Act) and supervision by the Czech National Bank (ČNB). This will help you distinguish between what you can do with a free trade license and where the law requires professional exams and registration.

The basic principle is simple:

• Activities without arranging regulated financial products = free trade.
• Distribution of insurance, loans, mortgages, or investment products = registration with the CNB.

However, this does not mean that you can do without a free trade license. As a financial advisor and insurance broker, you still need it – for example, for consulting, marketing, education, acquisition activities, or administration that take place outside of regulated products.

A free trade license (typically field no. 60 – "Advisory and consulting activities..." and no. 47 – "Trade and service intermediation") will therefore cover everything that does not lead to the recommendation or negotiation of a specific product within the framework of financial consulting.

To make this clearer, below you will find a table that breaks down what you can do as a self-employed person with only a free trade license and where the law requires registration with the CNB.

How to set up a trade for business in finance?

Whether you take the CNB qualification exam on your own or with the support of a licensed company, you will need a free trade license. To register, follow these steps:

Place of business and virtual headquarters of advisors and intermediaries

You must enter your place of business in the Trade Register, i.e., the address where the authorities can reach you and where your mail is delivered. You have four options for where to locate your place of business:

1. Permanent residence – free and simple, but you will be publishing your home address.
2. Your own office/property – professional, but financially demanding.
3. Rented office – looks good, but requires rent and the owner's consent.
4. Virtual registered office – an attractive address for a low fee, without the need for a physical office.

Why is a virtual registered office a good choice for entrepreneurs?

Taxes for self-employed persons in finance: flat-rate expenses vs. flat-rate tax

As a self-employed person, you can choose between four methods of recording income and expenses: flat-rate expenses, flat-rate tax, tax records, and accounting. We will focus more on the first two, as they are the most advantageous for start-up entrepreneurs.

Flat-rate expenses

Financial advisors and insurance brokers operating as sole traders apply flat-rate expenses in accordance with Section 7(7) of the Income Tax Act. They can thus deduct 60% of their income from sole trading – up to a maximum of CZK 1.2 million in eligible expenses.

Even if part of your activity is subject to CNB regulation, from a tax perspective it is still income from business activities, and a 60% flat-rate expense can be applied to it.

Flat-rate tax (monthly "all-in-one" flat rate)

If you want to minimize administration, the flat-rate tax combines income tax, social security, and health insurance into a single monthly amount, and you are not required to file a tax return. You can register for the flat-rate tax regime either when you start your business or by January 10 of the given year.

The flat-rate tax works in three bands, each with a different monthly payment. The choice of band depends on your income structure, and when you register , you choose which band you belong to. The income limit is CZK 2 million per year. If you exceed this limit, you will have to opt out of the flat-rate tax regime and file a tax return.

Health and social insurance for entrepreneurs in finance

How will you be covered by health and social insurance as a self-employed person? If you do not opt for the flat-rate tax regime, you pay monthly health and social insurance contributions. The amount depends on two things:

We will help you start your career in finance without any worries

Now you know what doing business in finance entails. Are you tempted to start your own business? Contact us – we will take care of setting up your business, tax records, virtual office, and long-term accounting. In the meantime, you can focus on taking care of your clients.