Primary vs. Secondary Activities for Self-Employed Individuals: What’s the Difference, and Which Is More Profitable?

Are you planning to start your own business, or do you already have a business license? We’ll explain how to determine with certainty whether your business is your primary or secondary activity, so you pay the correct amount of contributions and aren’t caught off guard by unexpected additional payments or even penalties. We also describe the most common scenarios for transitioning between the two types of activities and the obligations to the authorities that you’ll face in the process.

What determines the type of self-employment activity?

You might be surprised to learn that the type of business is not determined by how much you earn or how many hours a day you work, but rather by whether you meet the legal requirements for a secondary activity.

If, while working under a business ID number, you also fall into one of the following categories, you can take advantage of the benefits of a self-employed side business:

While there are no distinctions between primary and secondary employment for tax purposes, different rules apply to health and social insurance, which affect the frequency and amount of contributions:

You must specify whether you are operating under a business ID for a primary or secondary activity when youregister your business. Let’s take a closer look at everything.

Taxation of Self-Employed Individuals: The Rules Apply Equally to Everyone

In terms of taxes, there is practically no difference between a primary and a secondary activity. In both cases, you are required to file a tax return (unless you are under the flat-rate tax regime), even if your income is zero.

To calculate your business tax, follow these steps:

While both groups pay taxes at the same rate, there are significant differences in insurance premium payments.

Health Insurance: When Do You (Not) Have to Pay the Minimum?

Health insurance companies do not distinguish between primary and secondary activities. Only one question matters here: Do you have to meet the minimum assessment base?

If you are running your business full-time and have no other primary source of income that would cover your health insurance, the minimum assessment base applies to you, and you must pay the minimum monthly premiums (in 2026, this is 3,306 CZK).

However, if the state pays your premiums or you pay them through employment, you do not have to meet the minimum. In your first year of business, you do not pay any monthly advance payments, and you will pay the premiums retroactively based on your actual profit. The amount of advance payments for the following year is then calculated based on the submitted reports.

The minimum assessment base does not apply to you if you are:

• An employee (and your employer pays premiums for you based on at least the minimum wage).
• A full-timestudent under 26 years of age (in the case of a university, this may also be a part-time program).
• A person providing full-time and regular care for at least one child under 7 years of age (the child’s age is the determining factor, not receipt of parental benefits).
• A recipient of an old-age or disability pension.
• A person caring for a person dependent on outside assistance.

Social Insurance: Primary vs. Secondary Activity and the Determining Amount

Unlike health insurance companies, the Czech Social Security Administration (ČSSZ) formally classifies self-employed activities as primary or secondary.

If you do not exceed this threshold, you do not have to make additional social insurance payments for that year. Furthermore, the threshold amount is proportionally reduced based on the number of months during which you actually performed the secondary activity—if you were in business for only half a year, the limit applicable to you is CZK 58,760.50.

The criteria for recognizing a secondary activity mirror those for health insurance (employment, studying until age 26, retirement). However, be aware of the difference regarding child care: for social insurance purposes, you are considered to be engaged in a secondary activity only when caring for a child under 4 years of age.

When does the transition between self-employed activities occur?

An entrepreneur’s life is dynamic, and the type of your activity can change in a single day. The most common situations for transitioning between business and self-employment are:

When transitioning to a secondary activity, you will need to provide:

• An employment contract or a confirmation from your employer
• Proof of enrollment
• Pension award decision
• Affidavit regarding child care

Common mistakes and how to avoid them?

Even minor oversights can lead to penalties or unnecessary additional payments. We most commonly encounter the following issues:

• Late notification of changes: The authorities will find out about the end of your studies or your start of employment, but if you don’t tell them in time, they will impose a penalty.
• Failure to pay advance payments for yourmain activity: Even if you’re struggling financially, paying the minimum advance payments is mandatory.
• Errors in reports: Incorrectly calculated insurance premiums can cost you dearly during a subsequent audit.

Run your business with professional support

The paperwork involved in self-employment may seem complicated at first glance, but you don’t have to handle it alone. We’d be happy to help you set up your business or prepare your self-employment tax return, including reports for the Social Security Administration and health insurance provider. Reach out to us using the contact form below and leave it to us.