OSVČ (self-employed person)
OSVČOSVČ (osoba samostatně výdělečně činná) in English means a self-employed person, usually trading on a trade licence (živnostenský list). For a mortgage the bank works not from a payslip but from the tax return for the last 1–2 years, using the tax base or turnover. Flat-rate expenses mean a low declared profit and a smaller mortgage; under the flat-rate tax many banks use a share of turnover.
Example
A graphic designer has turnover of CZK 1,200,000 and claims 60 % flat-rate expenses. If the bank derives a net income of CZK 40,000 a month from his tax return, then at the usual internal DSTI threshold of 45 % he can carry payments of up to CZK 18,000. That means a loan of about CZK 3.35 m over 30 years at 5.00 %. A bank that works from turnover and arrives at CZK 60,000 will lend him roughly CZK 5.0 m.
In practice
The bank wants a filed and paid tax return, statements from the business account and often certificates of no arrears from the tax office, the Czech Social Security Administration (ČSSZ) and the health insurer. Without at least one return covering a full year of business, the choice of banks is very narrow. If you are planning a mortgage, think about declaring a higher profit a year ahead. Filing within the extended deadline and then applying with two-year-old figures works against you.
How it differs
For an employee the bank takes net pay from an income confirmation; for an OSVČ, profit from the tax return. A company director (jednatel) of an s.r.o. is usually not an OSVČ: they draw remuneration or a salary from the company plus a profit share, so the bank also looks at how the company is doing.
Frequently asked questions
What does OSVČ mean in English?
A self-employed person: osoba samostatně výdělečně činná, someone in business on their own account, usually under a trade licence (živnostenský list). Most freelancers in Czechia are OSVČ.
How does a bank count OSVČ income for a mortgage?
From your last 1–2 tax returns, usually from the tax base rather than turnover, together with statements from your business account. With flat-rate expenses the declared profit is low, so some banks count a share of turnover instead.
Can you get a mortgage on the flat-rate tax (paušální daň)?
Yes, but the assessment is harder because no tax return shows your profit. Many banks then count a fixed share of your turnover, proven by bank statements, so ask how your bank does it before you apply.
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