In this article we define what a trade (živnosť) is, explain the essential features an activity must have in order to qualify as a trade, and set out which activities, by contrast, are not a trade and amount to unauthorised business activity.

Under Section 2 of Act No. 455/1991 Coll., the Trade Licensing Act, as amended, a trade is defined as a continuous activity carried out independently, in one’s own name and on one’s own responsibility, with the aim of making a profit and under the conditions laid down by law. A trade must therefore display certain characteristics, namely:

  • it is a continuous activity, not a one-off
  • it is carried out independently
  • it is conducted in one’s own name
  • it is conducted on one’s own responsibility
  • its purpose is to make a profit

All of these characteristics must be met for an activity to be regarded as a business. A trade may be operated either by a natural person or by a legal entity.

Natural person – sole trader, entrepreneur

Legal entity – a trading company, a cooperative, or other entities that carry out business activities, i.e. trades within the meaning of the Trade Licensing Act.

The Trade Licensing Act also specifies activities that are not trades; businesses perform these on the basis of an authorisation other than a trade licence. Stricter conditions apply to carrying out such activities than to operating a trade.

Under the law, the following are not considered a trade:

  • activities reserved by law to the state or to a legal entity designated by separate legislation, such as tax collection, postal services and the like
  • liberal professions under the Copyright Act – the exploitation of the results of intellectual creative work protected by law, by the authors themselves, including publishing, reproducing and distributing literary works at their own expense
  • healing practice
  • the practice of liberal professions – psychologist, veterinary surgeon, lawyer, notary, bailiff, tax adviser, licensed surveyor
  • the activities of athletes and sports professionals under Act No. 440/2015 Coll. on Sport
  • the operation of educational establishments that prepare sports professionals for their professional qualifications
  • other activities requiring a special permit issued by a specific authority rather than the Trade Licensing Office – such as banking and insurance, mining, bus, air and road haulage transport, radio and television broadcasting, electricity generation and others
  • nor is an activity considered a trade if it is contrary to public morals, even though it meets all the characteristics of a trade
  • the sale by natural persons of processed or unprocessed plant or animal products from their own small-scale growing or breeding, and the sale of forest produce. If such sales take place on more than 30 days in a calendar year, they constitute a continuous business activity – however, this is not trade-licensed business but the business of an independent farmer.
  • Activities related to renting out property

Activities connected with renting out property are likewise not regarded as a trade. Letting your own property – such as flats, houses, land or holiday cottages – is defined as a way of managing your own assets. Providing such rentals therefore does not count as trade-licensed business, and you do not need a trade licence for it. Bear in mind, however, that this income is subject to tax.

If other services connected with the rental are provided alongside it (for example cleaning the flat), the activity becomes a business and a trade licence is required.