New Tax Regime for Employee Shares/Options (ESOP)

Veronika Machková
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On September 10, 2025, the Chamber of Deputies approved the accompanying law to the unified monthly employer reporting system. The amendment to the Income Tax Act, effective from January 1, 2026, significantly increases the attractiveness of qualified ESOPs (Employee Stock Option Plans)—primarily by introducing the “no tax before cash” principle.

What is changing?

  1. A legal framework is being introduced for so-called qualified employee stock options (ESOPs), provided certain legal conditions are met (e.g. non-transferability, a written agreement, and the right to exercise only after 3 years). Virtual plans remain outside of this regime.

  2. No payroll levies: Income from qualified ESOPs will no longer be subject to social security or health insurance contributions.

  3. Under the “no tax before cash” principle, tax liability arises only upon the sale of the shares/interests, not at the time of exercising the option.

Our law firm has been closely monitoring the developments surrounding ESOPs and will be happy to provide you with expert legal support in this area.

For more information, feel free to contact us at info@stuchlikova.com.