Flat-rate tax 2027: is switching worth it for OSVČ, or should you stick with expense allowances?

What you pay as an OSVČ: the basis the decision rests on

As an OSVČ, you pay three separate items:

1. personal income tax
2. social security contributions
3. and health insurance contributions

Each one has its own calculation, its own advance payments, and its own deadlines, which is exactly why the system can feel confusing at first glance.

Flat-rate tax merges all three into a single monthly advance payment and replaces the tax return with a simplified notification.

Expense allowances, meaning 60 or 80 percent depending on the type of activity, are something entirely different: they are simply a way of calculating your tax base, while social security and health insurance are still paid separately and a regular tax return is still filed. These two terms are commonly confused, and clearing that up is the first thing worth doing before comparing anything else.

How the flat-rate tax works and who it makes sense for

An OSVČ can enter the flat-rate regime with an annual turnover of up to CZK 2 million. The system further splits taxpayers into three bands based on income level and the type of activity: for 2026, the monthly advance payment is CZK 9,984 in band one, CZK 16,745 in band two, and CZK 27,139 in band three.

The 2027 amounts get published in a similar way around the turn of the year, so it is worth checking them again before deciding. The advance payment is due by the 20th of each month and replaces both the tax advance and the social and health insurance advances.

Flat-rate tax vs. expense allowances vs. actual expenses

Which option pays off depends mainly on your cost structure and personal situation. IT consultants or freelancers with minimal running costs, such as a laptop, software, and coworking space, usually come out ahead with flat-rate tax or a high expense allowance, since their real costs are low and the allowance ends up delivering the bigger saving. Tradespeople or small e-shops with high real costs for materials, storage, or shipping often save more by tracking actual expenses instead, since those costs typically exceed the allowance.

A specific group worth mentioning is OSVČ with children or a mortgage who want to claim the child tax credit, the spousal tax credit tied to caring for a child under three, or the mortgage interest deduction: none of these can be claimed under the flat-rate regime, so staying with the classic system, despite the extra paperwork, often makes more financial sense.

What to watch out for

1. The deadline to opt in or out is fixed and usually falls around January 10 of the given year, with the exact date depending on which day of the week it lands on. A notification submitted after the deadline is invalid and cannot be reversed, so there is no room to leave it until the last moment.
2. If you exceed the turnover limit during the year, the system automatically removes you from the flat-rate regime, which is why turnover needs to be tracked continuously rather than only at year-end.
3. The decision also applies for the entire calendar year. It cannot be changed partway through, even if it turns out halfway through the year that the other option would have worked out better.

The right choice between flat-rate tax, expense allowances, and actual expenses depends on the specific structure of your income and costs, so general advice does not really work here. At CATO, we calculate which regime will genuinely save you the most time and money for 2027, and help you file the notification on time.

I want to calculate whether the flat-rate tax is worth it for me