Running a Business in Retirement: Benefits, Obligations, and Tax Breaks

Retirement today certainly doesn't mean you have to put your feet up and stop doing what you love. Thousands of Czech seniors are actively running businesses — whether because they genuinely enjoy their work, want to improve their financial situation, or simply don't want to lose touch with their field. And the state is supportive of this: self-employed retirees are entitled to significant reductions on both insurance contributions and taxes.

In this detailed guide, you'll find everything you need to know about running a business in retirement in 2026 — from registration and calculating contributions to the new 6.5% social insurance discount that has been in effect since 2025.

Why Run a Business in Retirement: The Key Benefits

Running a business in retirement has several important advantages over employment — and over giving up work entirely.

1. Secondary Self-Employment and Lower Contributions

As a recipient of an old-age pension, you automatically fall into the category of secondary self-employed activity. This is an absolutely crucial advantage, because secondary self-employment means significantly lower social and health insurance contributions. You don't need to worry about whether you have a job or any other qualifying reason — simply receiving an old-age pension is sufficient grounds.

2. No Income Cap

Unlike some social benefits, an old-age pension comes with no earnings limit whatsoever. You can earn as much as you like without anyone reducing or suspending your pension. This is a fundamental difference from an early retirement pension, for example, where restrictions do apply.

3. The New 6.5% Social Insurance Discount

From 1 January 2025, working retirees are entitled to a discount on pension insurance contributions of 6.5% of the assessment base. This discount was introduced by Act No. 417/2024 Coll. and represents a significant financial saving.

4. An Active Lifestyle and Social Contact

Academic studies confirm that people who stay active in retirement have better cognitive function, a lower risk of depression, and an overall higher quality of life. Running a business gives your days meaningful structure and keeps you connected to the world around you.

How to Start a Business as a Retiree: Step by Step

The process of starting a business in retirement is essentially no different from starting one at any other stage of life, but it's important to correctly establish your secondary self-employment status.

Important: Notifying the OSSZ of Your Secondary Activity Status

A key step is documenting your grounds for secondary self-employment with the OSSZ. As a retiree, you do this by submitting your pension award decision. If you fail to do so, the OSSZ may reclassify your activity as primary self-employment, which means higher minimum advance payments.

Social Insurance for Self-Employed Retirees

Social insurance is the area where retirees gain the greatest advantages. Let's look at it in detail.

Secondary Self-Employment and the Threshold Amount

As an OSVČ carrying out secondary self-employment, you are only required to participate in pension insurance if your tax base exceeds the threshold amount.

The 6.5% Insurance Discount — New from 2025

From 1 January 2025, a brand-new insurance discount applies to working retirees, including the self-employed. This discount was introduced by Act No. 417/2024 Coll.

Conditions for receiving the discount:

• You have reached retirement age
• You are entitled to receive your old-age pension in full
• You meet the condition for at least one complete calendar month within the calendar year

How the discount works:

• The standard pension insurance contribution rate for the self-employed is 29.2% of the assessment base
• With the discount applied, you pay only 22.7% of the assessment base
• The discount therefore amounts to 6.5 percentage points

How to Claim the Discount

Self-employed individuals claim the discount on their income and expenditure statement for the relevant calendar year. If you meet the conditions, you can also pay reduced advance payments during the year — calculated using the 22.7% rate instead of 29.2%.

Health Insurance for Self-Employed Retirees

The situation with health insurance differs from social insurance — retirees have advantages here too, but the system works differently.

The State Pays Health Insurance for Retirees

For recipients of an old-age pension, health insurance is paid by the state. This is the default position and starting a business does not change it. However, once you start running a business, you also become liable to pay contributions on your self-employment income.

Calculating Health Insurance Contributions

As an OSVČ in secondary self-employment, you pay health insurance on your actual income. The minimum assessment base does not apply to you — this is a significant advantage compared to primary self-employment.

Health Insurance Advance Payments

In the first year of secondary self-employment, you do not pay advance payments towards health insurance. After the first year, advance payments are calculated based on your actual income. If your income is low, your advance payments will be low too — no minimum applies to you.

Income Tax and Tax Breaks for Retirees

The Basic Principle of Taxation

Self-employment income is taxed at the standard 15% income tax rate. You have the option to choose between:

• Flat-rate expenses — a percentage of income (40%, 60%, or 80% depending on the type of activity)
• Actual expenses — you keep full tax records and claim real costs

The Taxpayer Discount

Every taxpayer is entitled to the basic taxpayer tax credit of CZK 30,840 per year. You can claim this in full regardless of how many months you were in business.

When You Don't Need to File a Tax Return

If your annual self-employment income is below CZK 50,000 and you have no other income that requires filing, you do not need to submit a tax return. However, you must always submit an income and expenditure statement to both the OSSZ and your health insurance provider.

Flat-Rate Tax — Is It Suitable for Retirees?

The flat-rate tax regime is a simplified system where you pay a single monthly amount covering income tax, social insurance, and health insurance. However, there's a catch for retirees:

• Under the flat-rate regime, you cannot claim the taxpayer credit or the new 6.5% discount
• If your income is low, the standard regime will be more beneficial
• Flat-rate tax tends to make sense at higher income levels, where maximum simplicity is the priority

How Running a Business Affects Your Pension

This is the question every self-employed retiree asks: will my business activity affect the amount of my pension?

Pension Recalculation

If you run a business as an old-age pensioner and pay pension insurance contributions, after 360 days of gainful activity you are entitled to an increase in the percentage component of your pension. This increase amounts to 0.4% of the calculation base for every 360 calendar days.

How to Apply for a Recalculation

You must actively apply for the pension increase — it does not happen automatically. You submit the application to the OSSZ after completing 360 days of activity that qualifies for pension insurance participation.

Early Retirement and Self-Employment — Watch Out for the Restrictions

The situation is completely different for early old-age retirement. Strict rules apply here:

• While receiving an early retirement pension, you may not carry out any gainful activity that qualifies for pension insurance participation
• If you start a business and exceed the threshold amount, payment of your early retirement pension will be suspended
• Self-employment below the threshold is theoretically possible but carries risk

Overview of Obligations for Self-Employed Retirees

Running a business in retirement involves less administration than primary self-employment, but there are still obligations you must not overlook.

Annual Obligations

1. Filing a tax return — by 1 April (or 1 May for electronic filing, or 1 July if using a tax advisor) for the previous year
2. Submitting the income and expenditure statement to the OSSZ — within one month of the tax return deadline
3. Submitting the income and expenditure statement to your health insurance provider — within one month of the tax return deadline
4. Settling any underpayment or overpayment of contributions — after submitting the statements

Ongoing Obligations

• Paying advance payments towards social and health insurance (if applicable)
• Recording income (when using flat-rate expenses) or keeping full tax records (when claiming actual expenses)
• Archiving documents for a minimum of 3 years from the end of the tax period

Practical Tips for Running a Business in Retirement

1. Start with Flat-Rate Expenses

If you're just starting out, flat-rate expenses are the simplest approach. You don't need to keep complex records and the administrative burden is minimal. Once your business is up and running and you have a clear picture of your actual costs, you can switch to claiming real expenses.

2. Consider a Data Mailbox

Since 2023, all self-employed individuals have been required to communicate with the tax authority electronically. A data mailbox makes it easier to file returns and statements, and it's free of charge.

3. Keep an Eye on the Threshold Amount

If your income fluctuates around the threshold amount (CZK 117,521 in 2026), monitor carefully whether you are likely to exceed it. Doing so triggers a requirement to pay social insurance contributions on your entire assessment base.

4. Make Use of the 6.5% Discount from the Start

If you meet the conditions for the insurance discount, notify the OSSZ and adjust your advance contribution payments during the year. You don't have to wait until the annual statement.

5. Don't Overlook Health Insurance

Even though the state pays your health insurance as a retiree, you must also pay health insurance contributions on your self-employment income on top of that. Unlike social insurance below the threshold amount, health insurance contributions are always due.

Frequently Asked Questions

Can I run a business and receive a pension at the same time?

Yes. If you receive a standard old-age pension (not an early retirement pension), you can run a business with no restriction on the amount you earn. Your pension will not be reduced.

Do I have to pay social insurance even as a retiree?

Only if your tax base exceeds the threshold amount (CZK 117,521 in 2026). Below this threshold, you pay no social insurance contributions.

How do I claim the 6.5% insurance discount?

You claim the discount on your income and expenditure statement for the relevant year. During the year, you can pay reduced advance payments (using the 22.7% rate instead of 29.2%). The condition is that you are entitled to receive your old-age pension in full.

Will running a business affect the amount of my pension?

If you pay pension insurance contributions for at least 360 days, you can apply for an increase in the percentage component of your pension of 0.4% of the calculation base.

Is the flat-rate tax regime right for me?

In most cases, the flat-rate tax regime is not advantageous for retirees, because they cannot claim either the taxpayer credit or the 6.5% discount. The standard regime with flat-rate expenses is generally the better option.

Can I run a business while on early retirement?

Only if your tax base does not exceed the threshold amount. Exceeding it triggers mandatory pension insurance participation and leads to the suspension of your early retirement pension.

Summary: Running a Business in Retirement Pays Off

Running a business in retirement offers a range of benefits — from lower contributions and the new insurance discount to the possibility of having your pension recalculated upwards. The key is to correctly establish your secondary self-employment status and to stay on top of your obligations towards the relevant authorities.