Employee Stock Option Plans again

Deferred taxation

We discussed this option in detail in our article here. As a reminder, from January 1, 2024, employers were required to tax non-monetary income related to participation in ESOPs at times defined by law (so-called deferred taxation), including social and health insurance contributions (the deadline for taxation and contributions was unified from July 1, 2024).  

From January 1, 2026, the moment of taxation will no longer be considered to be when an employee or employer ceases to be a Czech tax resident. There will also be a shift in the latest moment of taxation from the current 10 years from the moment of acquisition of a share or option to 15 years.

New old rules

From April 1, 2025, deferred taxation has become an option for employers rather than an obligation (more here), i.e., employers can decide whether to tax non-monetary benefits received by employees in the month in which they acquired the shares or interests (regime valid until the end of 2023), or defer taxation until one of the specified statutory moments occurs (regime valid from 2024).

“Qualified” concept

From January 1, 2026, a new concept of ESOP taxation will apply to entities that meet the legal definitions of a "qualified employer" and a "qualified employee." The terms "qualified employee option" and "qualified business share" will also be introduced. 

What is so revolutionary about this concept? If the legal conditions are met, income from the exercise of qualified employee options by a qualified employee will not be treated as income from dependent activity, but as other income, and as such will be subject only to income tax and not to social and health insurance contributions. At the same time, however, the time test for the exemption of income from the sale of securities or shares acquired in this way cannot be applied.

If you would like to analyse this topic in more detail, please contact us. We have extensive experience in implementing or revising these employee benefits and will be happy to assist you.