The Civil Code does not use the term “self-employed person” (in Czech abbreviated as OSVČ) but rather uses the term “entrepreneur”, which is defined as follows: “A person who, on his own account and responsibility, independently carries out a gainful activity in the form of a trade or in a similar manner with the intention to do so consistently for profit is considered, with regard to this activity, to be an entrepreneur.”
Self-employed person (OSVČ) is a term used in the Czech legislation on income tax, social security and health insurance to refer to an individual who has completed compulsory school attendance, attained the age of at least 15 years and earns income from business or other independent gainful activities. The State pension Act stipulates explicitly that self-employment includes “the performance of artistic or other creative activities on the basis of copyright relationships, with the exception of activities the income from which constitutes a separate base for calculating individual income tax subject to a special tax rate under a separate statute” (such exceptions include authors’ incomes from contributions to newspapers, magazines and radio or television generated from sources in the territory of the Czech Republic; these incomes constitute a separate tax base subject to a special tax rate provided that they are generated from the exploitation or granting of rights of industrial or other intellectual property, copyrights and neighbouring rights, including incomes from the publication, reproduction and distribution of literary and other works at one’s own expense and that the sum of these incomes from the same payer does not exceed CZK 10,000 in a calendar month).
Self-employed artists are artists who pursue their gainful activities independently (i.e. their activities do not have the elements of “dependent work”). Artists operating as self-employed persons are not entitled to any protection under the labour law.
Self-employment activities carried out outside the Czech Republic are regarded as self-employment carried out in the Czech Republic provided that they are performed on the basis of a permit or licence granted under the legislation of the Czech Republic.
However, it may not always be easy to distinguish whether a particular activity constitutes dependent work or self-employment. There nevertheless exist the following statutory criteria defining the elements of “dependent work” (see Employee) as well as the elements of business or self-employment, which are the following:
- Independence: Independence is an element that distinguishes self-employment from employment most of all. It means that the self-employed person decides on his/her activities and their organisation independently. An activity carried out in a dependent/subordinate position, particularly an activity carried out for a single person who determines and controls the essential components of its performance, cannot be regarded as self-employment. If it is found out that an activity is not carried out independently, it does not constitute self-employment at all. An independent artist does not decide on his/her activities according to the instructions and orders of “superiors” but on his/her own.
- Systematic character: A one-off or random activity cannot be regarded as systematic, even if it showed other elements of self-employment. Seasonal activity is not in conflict with the requirement of systematic character. Depending on the circumstances, a one-off activity may be regarded as systematic if it is repeated during a certain period.
- In one’s own name: The requirement to conduct the activity in one’s own name is met if the artist does not carry out the activity on behalf of the person for whom he/she works but in his/her own name.
- Own liability: The requirement of conducting the activity at one’s own liability expresses the “business risk”. The artist is liable for his/her obligations to the amount of all of his/her assets.
- Achievement of profit: An intention to achieve a profit is sufficient to constitute an element of self-employment. It is not decisive whether a profit is actually achieved or for what purposes the achieved profit will be used.
The distinction between dependent work and self-employment is, therefore, based solely on the assessment of the elements distinguishing dependent work from self-employment. The material principle is applied here, which means that the formal name of the agreement or of the parties to the agreement or certain formal provisions in the agreement are irrelevant; the only decisive criterion is the actual content of the rights and obligations established and the manner in which the respective activity is actually carried out.