Prostitution in night clubs and privates is not legal but let' s say tolerated!
Privates are illegal, it's a totally "underground business" without any registration and can be closed anytime (you probably noticed that privates are changing addresses, names and phone numbers very often). Privates are of course monitored by police. Privates using foreign girls (non-EU) or suspected of human traffic (usually in the hands of mobs also involved in drugs trafficking, large money laundry...) are targeted by police. Others are +/- tolerated.
Night clubs are registred business, they officially exist. They require a business licence delivred by local administrations. They are checked by police and other administrations like health/hygenic, social, labor, firemen dpt... They pay VAT and taxes on profits (even if a lot of cash transactions probably don't appear in the accounting
). Officially girls are registred as bartenders, waitresses or dancers/artists. Night clubs are not selling sex but renting rooms to prostitutes and their clients
In fact no third party can be involved in the business between a girl and a client and no third party can make a profit from a prostitution transaction.
Prostitution (without a third party involved) is not illegal in CZ but the girl must declare all incomes and pay tax! No girl is doing that, it's all "black money".
For years now politicians are talking about legalization of prostitution in CZ, not really for a better protection of prostitutes (and their clients) but because of the huge amount of money lost every year by the Tresor and other administrations (health and social registration monthly fees are only paid by - let's say most of - the girls working in certain night clubs. Girls working in privates, in the street, freelance on internet or for escort agencies do not).