Self-employment on parental leave: what you can and cannot do
Self-employment on parental leave: what you can and cannot do
Parental leave does not have to mean the end of your business activities. Many parents want or need to earn an income while caring for a child — whether to keep their business alive or to boost the family budget. The good news is that running a business while on parental leave is perfectly legal in the Czech Republic, and there is no cap on how much you can earn. There are, however, rules you need to follow to keep your allowance and avoid paying more in contributions than necessary.
In this article, we look at the current rules for 2026 — how much the parental allowance is, under what conditions you can run a business, how childcare arrangements work, and what your obligations are towards the social security administration and your health insurance fund.
Parental allowance in 2026: a quick overview
Before getting into the rules around self-employment, let's recap the current parameters of the parental allowance.
Parental allowance 2026 — key figures
Total amount:
- One child: 350,000 CZK
- Multiples (twins or more): 700,000 CZK (new from 1 January 2026, previously 525,000 CZK)
Maximum monthly draw:
- Parents with higher previous income: up to 60,000 CZK/month (one child) or 120,000 CZK/month (multiples)
- Parents with no previous income or low income: max. 15,000 CZK/month (one child) or 30,000 CZK/month (multiples)
Draw period: Up to the child's 4th birthday
Who decides the draw rate: The parent chooses their own monthly benefit amount (within limits set by their previous income)
Source: MPSV — Parental Allowance
Important change in 2026
From 1 January 2026, the parental allowance for multiple births increases from 525,000 CZK to 700,000 CZK. The amount for parents of a single child remains at 350,000 CZK. The increase also applies to parents who were still receiving the allowance as of 1 January 2026 and had not yet used it up.
Can you run a business on parental leave? Absolutely yes
Unlike maternity benefit (PPM), where you are not allowed to personally carry out self-employed activity, the parental allowance places no restrictions on earnings whatsoever. You can earn as much as you like and your allowance will not be reduced or withdrawn.
The key rule
Running a business on parental leave has no effect on the amount or entitlement of the parental allowance. You can earn any amount — 10,000 CZK or 100,000 CZK a month — and the parental allowance will continue to be paid unchanged.
The only condition relates to ensuring childcare when the child is under 2 years old.
The childcare condition: daycare attendance rules
Although there is no cap on earnings, the law does set a condition regarding full-time personal care of the child. The rules differ depending on the child's age:
📊Conditions for child attendance at a facility
Change in the limit from 2024
The previous limit of 92 hours per month for children under 2 was increased to 120 hours per month from 2024. This change significantly improved the situation for self-employed parents — 120 hours equates to roughly 6 hours a day over 20 working days, which covers most typical situations.
If the child exceeds the 120-hour limit in a given month, you lose entitlement to the parental allowance for that entire month.
OSVČ on parental leave = secondary activity
If you are receiving the parental allowance and running a business at the same time, your business activity is automatically treated as a secondary self-employed activity. This is very advantageous, as secondary activity comes with lower contributions.
Why it counts as secondary activity
The Pension Insurance Act (No. 155/1995 Coll.) states that a person carrying out secondary activity includes, among others, someone who:
- personally cares for a child under 4 years of age, or
- receives the parental allowance
Satisfying either one of these conditions is sufficient. In practice, a parent on parental leave typically meets both.
Childcare up to age 4 vs. up to age 10
For the purposes of secondary activity status, the following are recognised:
- Care for a child under 4 years of age — the standard condition
- Care for a child under 10 years of age who is dependent on the care of another person (long-term unfavourable health condition)
The parental allowance is paid until the child's 4th birthday. However, if you have a child aged 4–10 with a disability, you may still qualify for secondary activity status on grounds of caregiving.
Social insurance on parental leave
As an OSVČ on secondary activity due to parental leave, you enjoy the same benefits as other OSVČ on secondary activity — a threshold amount and the possibility of zero contributions.
The threshold amount and advance payments
Social insurance for OSVČ on parental leave 2026
Threshold amount: 117,521 CZK per year (pro-rated if you are self-employed for only part of the year)
If your tax base does NOT exceed the threshold:
- You pay no social insurance whatsoever
- You pay no advance payments
If your tax base EXCEEDS the threshold:
- You pay contributions on the full base
- From the following month, advance payments of at least 1,574 CZK/month
In the first year of self-employment on secondary activity:
- No advance payments at all (regardless of income level)
- Settlement takes place after submitting the annual statement for that year
Source: ČSSZ — Self-employment at a glance
Pension insurance and parental leave
The period of caring for a child under 4 years old counts, subject to the relevant conditions, as a substitute insurance period that is included in your pension insurance record. This applies even if you are paying no social insurance as an OSVČ on secondary activity (i.e. you are below the threshold amount).
Pension and childcare
The period during which you personally care for a child under 4 years of age is counted towards your pension insurance record as a substitute period (at 80%). You therefore do not need to worry that your years on parental leave will count against you when it comes to your pension. The condition is that you notify the relevant OSSZ and provide evidence of childcare.
Health insurance on parental leave
The situation regarding health insurance is also favourable for parents on parental leave, because the state pays your health insurance as if you were a person receiving the parental allowance (or a person providing full-time care for a child under 7 years of age).
The state pays your health insurance
For as long as you receive the parental allowance, you are a state-insured person. The state pays your health insurance contributions to your health insurance fund on a monthly basis. However, this does not mean that as an OSVČ you pay nothing extra.
Advance payments and top-ups
📊Health insurance for OSVČ on parental leave
Important: As a secondary OSVČ, you are not required to meet the minimum assessment base for health insurance. You only pay based on your actual profit — 13.5% of 50% of your tax base.
Example: Health insurance for a self-employed parent
Situation: Mother on parental leave, business income 200,000 CZK, flat-rate expenses 60%
- Income: 200,000 CZK
- Flat-rate expenses: 120,000 CZK
- Tax base: 80,000 CZK
- Assessment base (50%): 40,000 CZK
- Health insurance: 40,000 × 13.5% = 5,400 CZK per year
The state additionally pays contributions as for a state-insured person — this happens in parallel and independently of your business activity.
Annual statements and tax return
Even as a parent on parental leave with secondary activity, you are required to file a tax return and income and expenditure statements.
Obligations
📋Annual obligations for OSVČ on parental leave
You must submit the statement even with zero income
If you were registered as an OSVČ throughout the year (i.e. you did not suspend or cancel your trade licence), you must submit statements to both ČSSZ and your health insurance fund even if you had zero income. The alternative is to suspend your trade licence for the duration of parental leave — in that case, you are not required to submit statements for the period of suspension.
Suspend your trade licence or continue on secondary activity?
Many parents wrestle with the dilemma of whether to suspend their trade licence during parental leave or keep it active. Both options have their pros and cons.
📊Suspending your trade licence vs. secondary activity on parental leave
When to suspend and when to continue?
Suspend your licence if:
- You know you will not be doing any business at all
- You want to avoid administrative tasks (statements, tax return)
- You plan to focus entirely on caring for your child
Continue on secondary activity if:
- You want to earn an income (even occasionally)
- You do not want to lose clients and contracts
- You plan to return to full-time self-employment after parental leave
Practical examples
Example 1: Graphic designer on parental leave with occasional projects
Jana receives the parental allowance for her daughter (aged 1.5 years). She occasionally takes on graphic design projects.
- Annual income: 90,000 CZK
- Flat-rate expenses 60%: 54,000 CZK
- Tax base: 36,000 CZK
Parental allowance: Unchanged — income has no effect.
Income tax: 36,000 × 15% = 5,400 CZK − taxpayer discount 30,840 CZK = 0 CZK
Social insurance: Below the threshold amount = 0 CZK
Health insurance: 36,000 × 50% × 13.5% = 2,430 CZK per year
Childcare: Daughter attends nursery 3 times a week for 4 hours = approx. 48 hours/month. Well within the 120-hour limit.
Example 2: Copywriter on parental leave with regular clients
Petr receives the parental allowance for his son (aged 2.5 years). He regularly writes copy for several companies.
- Annual income: 360,000 CZK
- Flat-rate expenses 60%: 216,000 CZK
- Tax base: 144,000 CZK
Parental allowance: Unchanged.
Income tax: 144,000 × 15% = 21,600 CZK − taxpayer discount 30,840 CZK = 0 CZK
Social insurance: Base of 144,000 CZK exceeds the threshold of 117,521 CZK. Contributions: 144,000 × 55% × 29.2% = 23,126 CZK + from the following year, advance payments of at least 1,574 CZK/month.
Health insurance: 144,000 × 50% × 13.5% = 9,720 CZK per year
Childcare: Son (aged 2.5) attends nursery with no restrictions — attendance is not monitored.
Example 3: Seamstress on parental leave making her own products
Lenka receives the parental allowance for twins (aged 3). She sews children's clothing and sells it online.
- Annual income: 280,000 CZK
- Flat-rate expenses 80% (craft trade): 224,000 CZK
- Tax base: 56,000 CZK
Parental allowance: 700,000 CZK in total (multiple birth, new from 2026). Unchanged.
Income tax: 56,000 × 15% = 8,400 CZK − taxpayer discount 30,840 CZK = 0 CZK
Social insurance: Below the threshold amount = 0 CZK
Health insurance: 56,000 × 50% × 13.5% = 3,780 CZK per year
Comparison of three self-employed parents
| | Jana | Petr | Lenka | |---|---|---|---| | Income | 90,000 CZK | 360,000 CZK | 280,000 CZK | | Flat-rate expenses | 60% | 60% | 80% | | Income tax | 0 CZK | 0 CZK | 0 CZK | | Social insurance | 0 CZK | 23,126 CZK | 0 CZK | | Health insurance | 2,430 CZK | 9,720 CZK | 3,780 CZK | | Total | 2,430 CZK | 32,846 CZK | 3,780 CZK | | Parental allowance | Retained | Retained | Retained |
Transitioning from maternity benefit to parental leave — what to watch out for
If you were receiving maternity benefit (PPM) as an OSVČ, the rules change when you transition to the parental allowance:
During maternity benefit (PPM)
- You cannot personally carry out self-employed activity
- You can have employees or a cooperating person
After switching to the parental allowance
- You can run a business with no earnings cap
- Your activity becomes a secondary activity
Timing of the transition
Maternity benefit (PPM) is paid for 28 weeks (37 weeks for multiple births). Once it ends, you transition to the parental allowance. In practice, this typically happens when the child is around 6–7 months old. From that point on, you can start running your business.
If you did not pay sickness insurance as an OSVČ and were not entitled to maternity benefit, you receive the parental allowance from the child's birth — and you can run your business from the very beginning.
Cooperating person — an alternative for family businesses
If one partner is self-employed and the other is on parental leave, it is possible to make use of the cooperating person arrangement. You can transfer up to 50% of income and expenses to a cooperating spouse (with a maximum income difference of 540,000 CZK per year).
This can be advantageous for tax optimisation, since the parent on parental leave typically has a taxpayer discount that would otherwise go unused.
Cooperating person on parental leave
If the parent on parental leave acts as a cooperating person (rather than an OSVČ in their own right), their activity is also treated as secondary. Income reallocated to the cooperating person is subject to income tax and insurance contributions, but thanks to the taxpayer discount, the tax liability often works out to zero.
Frequently asked questions (FAQ)
Will my earnings affect my parental allowance?
No. The parental allowance is a state social support benefit that does not depend on the parent's current income. You can earn any amount and the allowance will continue to be paid unchanged.
Can I receive the parental allowance and be employed at the same time?
Yes. You can receive the parental allowance whether you are employed or self-employed — neither employment nor self-employment affects your entitlement. The only restriction is on children under 2 attending a facility (max. 120 hours/month).
My husband receives the parental allowance — can I claim secondary activity status as an OSVČ?
Secondary activity status based on childcare or receipt of the parental allowance is tied to the individual. If your husband is the one receiving the parental allowance, you as an OSVČ cannot claim secondary activity status on that basis. However, you may still claim secondary activity status on grounds of personally caring for a child under 4 — provided you are the one doing the caring.
What happens if the child exceeds 120 hours at nursery?
If a child under 2 attends a facility for more than 120 hours in a calendar month, you lose your entitlement to the parental allowance for that month. The allowance is not clawed back retroactively — you simply do not receive it for that particular month.
Can I opt into the flat-rate tax regime while on parental leave?
Yes, provided you meet the conditions (income up to 2,000,000 CZK, not a VAT payer, no employment income other than income taxed at source by withholding). However, under the flat-rate tax regime you pay a fixed monthly amount for social insurance regardless of your income, so secondary activity status may actually be more advantageous if your earnings are low.
Do I have to pay advance payments when self-employed on parental leave?
In the first year of secondary activity, no advance payments are required. In subsequent years, it depends on whether you exceeded the threshold amount in the previous year (social insurance) and what your actual income was (health insurance).
Can I suspend my trade licence and then reactivate it?
Yes. Both suspending and reactivating a trade licence are notified to the trade licensing office. There are no restrictions on how many times or for how long you can do this. If you suspend, you are not required to submit statements for the period of suspension.
Summary of the rules for self-employment on parental leave
📊Overview of rules for OSVČ on parental leave 2026
Conclusion
Running a business while on parental leave is entirely legal and financially advantageous. The parental allowance is not reduced even with high earnings, secondary activity status keeps your contributions low, and the state even pays your health insurance on top of that. The only thing you need to keep an eye on is the nursery attendance of children under 2 — a maximum of 120 hours per month.
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Useful links to official sources:
- MPSV — Parental Allowance
- Labour Office — Parental Allowance
- ČSSZ — Self-employment at a glance
- ČSSZ — Overview of key figures for 2026
- VZP — Health insurance payments in 2026
This article is intended as a general information overview and does not replace individual tax or legal advice. The information is accurate as of February 2026. We recommend verifying the latest details on the websites of the relevant authorities.
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