Czechia already runs the closest thing in the European Union to Georgia's 1% regime, and that changes the honest math on this move more than in almost any other guide in this cluster. Paušální daň, the Czech flat-rate lump-sum tax, bundles income tax, social insurance and health insurance into a single monthly payment that lands well under most people's assumption of Czech tax. A Czech freelancer sitting in the first band is closing a far smaller gap than a German or French one is. This guide works through what the paušální daň bands actually cost in 2026, whether Czech CFC rules reach a Georgian company at all, and what genuinely changes once you register the Georgian side.
What a Czech freelancer actually pays, here and there
Take a Czech IT freelancer invoicing 1,200,000 CZK a year, roughly 49,800 EUR. Under paušální daň, the flat-rate regime that has run since 2021, they register into one of three bands by turnover and pay a single fixed monthly amount that covers income tax, pension insurance and health insurance together - no separate filings, no separate rates. For 2026, the official scheme is set out by Finanční správa: Band 1 covers turnover up to 1,000,000 CZK (extended to 1,500,000 CZK for freelancers whose income mostly falls under the 60% or 80% expense-rate categories, which covers a lot of IT and creative work) at 9,984 CZK a month; Band 2 covers up to 1,500,000 CZK at 16,745 CZK a month; Band 3 covers up to 2,000,000 CZK at 27,139 CZK a month.
At 1,200,000 CZK of turnover, our freelancer sits inside the extended Band 1 ceiling and pays 9,984 CZK a month, 119,808 CZK a year - roughly 10% of turnover, in full, covering everything Czechia asks for.
| Czechia (pausalni dan, Band 1) | Georgia (Small Business Status) | |
|---|---|---|
| Turnover | 1,200,000 CZK (~49,800 EUR) | Same |
| Monthly flat payment | 9,984 CZK | - |
| Annual total - income tax, social and health bundled | 119,808 CZK (~4,970 EUR) | ~12,000 CZK-equivalent (~500 EUR) |
| Effective rate | ~10% | ~1% |
Most articles comparing Czech and Georgian tax reach for the 23% top income tax rate, which overstates the gap for exactly the freelancer reading this guide. A Band 1 paušální daň payer is already inside a flat, bundled, low-bureaucracy regime that is not far in spirit from Georgia's own. The real gap for this reader is roughly 10% against 1%, not 23% against 1%. That is still a genuine saving, and it is still worth having, but a German or French freelancer reading the sibling guides in this cluster is closing a gap three to four times wider. We would rather you know that before assuming this move pays for itself the way it does for a neighbour on the standard scale rate.
Does Georgia's 1% actually apply to your income in the first place
None of the Czech math above matters until the 1% genuinely applies, which is a Georgian-side question first. Small Business Status taxes Georgian-source income, and for services that generally means work physically performed in Georgia or income earned while you are actually a Georgian tax resident - not work invoiced through a Georgian registration while sitting in Prague or Brno. We cover the mechanics in full in Georgia's 1% tax and the source test specifically in Georgian-source income rules, and neither test changes for a Czech national. Consulting, legal, medical and licensed activities are excluded from the regime regardless of where you are from, so the activity code matters as much as the passport.
What Czechia does when you leave
Czech tax residency, summarised against the Income Tax Act by PwC, turns on either of two independent tests: having a permanent home available in Czechia with a genuine intention to use it long-term, or spending 183 days or more in the country within a calendar year. The 183-day test operates retrospectively - cross the threshold and you are treated as resident from 1 January of that same year, not just from the day you passed 183. Genuinely breaking residency means closing both: no permanent home kept available, and a real day count below the threshold.
The technical point that matters most for this guide is Czech CFC rules under section 38fa of the Income Tax Act, introduced in 2019 to implement the EU's anti-avoidance directive. The rule reaches a foreign entity where a controlling taxpayer holds more than 50% of it, that entity conducts no genuine economic activity, and it is taxed at less than half the Czech rate. The part almost nobody states plainly is who can be a controlling taxpayer in the first place: Grant Thornton's own reading of the statute is explicit that the controlling entity must itself be a Czech corporate income tax payer - a Czech company, not a Czech individual. An individual Czech tax resident is simply not in the position of a controlling entity under this rule, regardless of how much of a foreign company they personally own or control. That means neither a Georgian Individual Entrepreneur nor a Georgian LLC held directly by a Czech individual falls inside section 38fa at all - a meaningfully cleaner position than several other guides in this cluster, where the IE-versus-LLC choice genuinely changes the CFC answer.
Czechia does not maintain its own separate blacklist of low-tax jurisdictions - it applies the EU's own list of non-cooperative jurisdictions, ten countries as of the February 2026 update, none of them Georgia and none of them ever having included Georgia. The treaty between Czechia and Georgia was signed in 2006 and is confirmed in force on Georgia's Ministry of Finance treaty list, giving a standard tie-breaker article - see Georgia's double tax treaties for how that actually gets claimed.
Once you deregister your Czech trade licence (živnostenský list) and exit paušální daň or the standard OSVČ system, the monthly payment simply stops - there is no ongoing Czech social insurance tail once the registration is genuinely closed.
The steps, in order
- Confirm your activity qualifies for Small Business Status. Consulting, legal, medical and licensed activities are excluded outright - check your Georgian activity code before registering anything.
- Register the Georgian structure. In person, an Individual Entrepreneur with Small Business Status typically takes a few days; under power of attorney through remote company registration, two to three weeks.
- Decide whether to keep or close the Czech trade licence, since your paušální daň or standard OSVČ obligations continue until it is formally deregistered.
- Give up the permanent home test on the Czech side, or accept you remain Czech tax resident regardless of where you register a business.
- Track your day count if you are not closing the Czech home outright, since 183 days resets you to resident from 1 January of that year.
- Deregister the trade licence and exit paušální daň once the move is genuine, stopping the monthly payment.
- File your final Czech return covering the period you were still resident in the departure year.
- Set up Georgian monthly compliance, which runs independently of how the Czech side closes out.
Timeline and cost
The Georgian side moves quickly - a few days in person, two to three weeks remotely under power of attorney. The Czech side is procedural rather than slow: closing a trade licence and exiting paušální daň is a straightforward filing, not a multi-month process, which is part of why this particular move is comparatively low-friction relative to the rest of this cluster. The real planning time goes into deciding whether the gap is worth it at your actual turnover, not into navigating Czech bureaucracy on the way out.
We'll run your actual numbers against your paušální daň band, confirm the CFC position for an IE or an LLC, and tell you plainly whether the gap at your turnover justifies the move, before you register anything here.
See what it costs
The verdict for a Czech national
Georgia works with conditions for a Czech national, and the condition is mostly about turnover rather than legal risk. Section 38fa's CFC rules do not reach an individual at all, the treaty has a working tie-breaker, and Georgia carries no blacklist exposure on the Czech side. Legally, this is one of the cleanest guides in the cluster.
The honest caveat is the size of the prize. A Band 1 paušální daň payer is already inside a bundled, low-bureaucracy regime charging close to 10% all-in - a real gap against Georgia's 1%, but a fraction of what a German, French or Greek freelancer is closing in the sibling guides here. The case strengthens meaningfully once turnover pushes into Band 2 or Band 3, where the fixed Czech payment stays flat while turnover keeps growing and the effective rate on that extra income falls even further behind Georgia's flat 1%.
For the country whose micro-company regime has been narrowed in the opposite direction, making Georgia comparatively more attractive by the year, see moving from Romania to Georgia. Our full country-by-country guide compares the treaty position and headline trap across every country we cover, and a free consultation is the fastest way to check whether your specific band changes the conclusions above.
Key takeaways
- Paušální daň Band 1 costs 9,984 CZK a month for 2026, bundling income tax, social and health insurance into one payment - roughly 10% of turnover for a typical IT freelancer.
- The real Czech-to-Georgia gap is closer to 10% versus 1%, not 23% versus 1% - the smallest gap in this entire country cluster.
- Section 38fa CFC rules only reach Czech corporate taxpayers. An individual cannot be a controlling entity, so neither a Georgian IE nor a Georgian LLC held personally falls inside the rule.
- Czech residency breaks only once both the permanent-home test and the 183-day test fail.
- The Czechia-Georgia treaty has been in force since 2006, and Georgia has never appeared on the EU non-cooperative list Czechia applies.
- The saving grows with turnover - Band 2 and Band 3 earners have a materially stronger case than a Band 1 earner does.
Frequently asked questions
Is paušální daň really comparable to Georgia's 1% tax?
In spirit, yes - both bundle everything into one flat, low-bureaucracy payment with no itemised deductions. The rates differ a lot: Band 1 costs roughly 10% of turnover once you count income tax, social and health insurance together, against Georgia's 1%. It is still a real gap, just a much smaller one than most comparisons in this space assume.
What are the 2026 paušální daň bands?
Band 1 is 9,984 CZK a month for turnover up to 1,000,000 CZK, extendable to 1,500,000 CZK for many IT and creative freelancers. Band 2 is 16,745 CZK a month up to 1,500,000 CZK. Band 3 is 27,139 CZK a month up to 2,000,000 CZK. Each figure bundles income tax, pension insurance and health insurance into a single payment.
Do Czech CFC rules reach a Georgian company I personally control?
No. Section 38fa of the Income Tax Act requires the controlling entity to itself be a Czech corporate income tax payer - a Czech company, not a Czech individual. An individual simply cannot be a controlling entity under this rule, so a Georgian IE or an LLC held directly by a Czech person sits outside it entirely.
How is Czech tax residency broken?
Two independent tests apply: a permanent home available in Czechia with intent to use it long-term, or 183 days of presence in a calendar year. Both have to fail for residency to end - keeping an available home while spending fewer than 183 days in Czechia can still leave you resident.
Does the 183-day count work retroactively?
Yes. If you cross 183 days in a calendar year, Czech law treats you as resident from 1 January of that same year, not from the day you happened to pass the threshold. This matters for anyone splitting a transition year between both countries.
Is there a tax treaty between Czechia and Georgia?
Yes, signed in 2006 and confirmed in force on Georgia's Ministry of Finance treaty list, with a standard tie-breaker article for resolving a genuine dual-residency dispute between the two countries.
Is Georgia on any Czech tax haven blacklist?
Czechia does not run its own national blacklist - it applies the EU's list of non-cooperative jurisdictions, currently ten countries. Georgia has never appeared on that list.
Does my Czech trade licence need to stay open?
No, and it should not if you genuinely intend to stop trading from Czechia. Deregistering the trade licence (živnostenský list) and exiting paušální daň or standard OSVČ status stops the monthly payment - there is no ongoing tail once it is closed properly.
Is Georgia worth it for a Band 1 paušální daň freelancer specifically?
The saving is real but modest - roughly a 9-point gap once everything Czechia charges is bundled together. It is still worth having, particularly if you also want the flexibility of billing international clients without VAT complications, but a Band 1 earner should not expect the dramatic gap that a German or French freelancer sees in the sibling guides in this cluster.
Should a Czech national register a Georgian IE or an LLC?
Since Czech CFC rules do not reach either structure held by an individual, the choice comes down to the same factors as anywhere else - an IE for a solo freelancer, an LLC once partners or significant reinvested profit are involved. Neither carries the CFC risk that makes this choice consequential in several other countries in this cluster.