Zaměstnanecké akcie (ESOP) po novele

ESOP as a Strategic Tool in 2025 and Beyond: Why Now Is the Right Time to Act?

The new legislative amendments are not just a technical correction but represent a fundamental shift in the state's economic policy. They are the result of long-standing pressure from the innovative and startup community, which has been calling for a level playing field. The goal is to support the development of a knowledge-based economy and retain talent in the Czech Republic. For companies, this means a unique opportunity to finally use this tool effectively.

At ARROWS, we have long specialized in advising corporate clients. Our experience providing services to over 150 joint-stock companies and 250 limited liability companies allows us to see legislative changes in a broader context and prepare a solution for you that is not only legally flawless but also strategically advantageous.

Key Legislative Changes: Navigating the 2025 and 2026 Amendments

Legislative developments in the area of ESOPs have gone through a turbulent period. To set them up correctly, it is crucial to understand two main phases: the regulation effective from spring 2025 and the major reform coming in 2026.

The Regime from April 2025: Optional Tax Deferral and Your Key Responsibility

While the regulation from early 2024 introduced a mandatory tax deferral, which caused confusion in practice, the amendment effective from April 1, 2025, brings a fundamental change: tax deferral is now optional. However, this flexibility shifts all responsibility to the employer. Your inaction has direct tax consequences.

If you want to take advantage of the option to defer the taxation of an employee's non-monetary income (arising from the acquisition of shares or the exercise of an option), you must actively report this fact to the locally competent tax administrator. The General Financial Directorate has even issued a non-mandatory sample form for this purpose.

It is essential to adhere to strict deadlines:

• For shares or options acquired after April 1, 2025, you must file the notification by the 20th day of the calendar month following the month of acquisition.

• For income acquired during the transitional period (January 1, 2024 – March 31, 2025), a one-off deadline of June 2, 2025, applied.

If you fail to file the notification on time, the income is automatically considered taxable in the month of acquisition. This means you are obliged to immediately withhold income tax and social security and health insurance contributions. Our Prague-based lawyers at ARROWS will not only prepare all the documentation for you but also monitor the key notification deadlines to help you avoid penalties. Contact us to ensure compliance with the new rules.

The Revolution from 2026: "Qualified ESOP" with No Contributions and Tax Only upon Sale

Starting January 1, 2026, a true revolution is coming, with the potential to place the Czech Republic among the most attractive countries for talented experts. The amendment introduces a so-called qualified employee stock option program, which is based on two pillars:

1. The "No Tax Before Cash" Principle: The employee pays income tax only when they actually sell the shares and receive cash from them. This eliminates the unfair taxation at a time when they only hold "paper" value.

2. Complete Abolition of Social Security and Health Insurance Contributions: Income from a qualified ESOP program is completely exempt from contributions, both on the employee's and the employer's side. This dramatically reduces the overall cost of the program and increases its attractiveness.

However, the use of this favorable regime is conditional on meeting clearly defined criteria. It is not a blanket measure but a targeted support for innovative companies. If you are a large corporation or operate in an excluded sector, this regime does not apply to you, and you must follow the rules effective from 2025.

Conditions for the employer (the so-called qualified employer):

• Size limits: It must be a small or medium-sized company with an annual turnover of up to CZK 2.5 billion and asset value up to CZK 2 billion.

• Excluded sectors: The regime cannot be used by banks, insurance companies, law firms, tax advisors, auditors, and certain other regulated professions.

• Reporting obligation: The use of the regime must be actively reported to the financial administration.

Conditions on the employee's side:

• Length of employment: The employee can acquire the shares no earlier than 3 years after the option is granted, and must be employed for at least 12 months between the grant and the exercise of the option.

• Minimum wage: The employee's gross monthly salary must be at least 1.2 times the minimum wage to prevent the program from being misused as a substitute for salary.

• Ownership limit: A single employee may not acquire more than 5% of the company's share capital through the program.

How to Set Up an ESOP Program Correctly? A Practical Guide for Employers

The successful implementation of an ESOP program depends not only on knowledge of the law but primarily on careful preparation and the correct setting of key parameters and contractual documentation.

Definition of Key Terms: Vesting, Strike Price, and Fair Market Value (FMV)

To effectively communicate and correctly set up the program, it is essential to understand three basic terms:

• Vesting (Acquiring Rights): This is the process during which an employee gradually earns the right to the promised options. It serves as a tool to retain the employee in the company. A four-year period (Vesting Period) with a one-year "cliff" (Cliff) is commonly used, where the employee gets nothing if they leave in less than a year.

• Strike Price: This is a predetermined fixed price at which the employee can buy one share in the future. This price does not change, and the employee's potential profit lies in the difference between it and the future market value of the company.

• Fair Market Value (FMV): This is the objective market value of one share at the time the option is granted to the employee. It is absolutely crucial that the Strike Price is set at the FMV level. If the price were set artificially low, the tax office could consider the difference as immediate taxable income, and the whole point of the tax deferral would be lost.

Correctly determining the FMV is the foundation of a tax-safe ESOP program. At ARROWS, we not only explain the legal requirements but also, thanks to our network of partners, connect you with experienced experts to prepare an independent valuation. Secure your legal certainty at consultation@arws.cz.

Contractual Documentation That Protects You: Good vs. Bad Leaver Clauses

The foundation of any program is high-quality legal documentation, typically a framework ESOP plan and individual option agreements with employees. A key part of these agreements are clauses that address what happens to an employee's options when they leave the company.

Two basic scenarios are distinguished:

• Good Leaver: Departure for "good" reasons (e.g., retirement, long-term illness). In such a case, the employee usually retains their already vested options.

• Bad Leaver: Departure for "bad" reasons (e.g., gross misconduct, joining a direct competitor). In this scenario, the employee typically forfeits all options, including those already vested.

Precisely drafted contractual documentation is your protection. ARROWS' lawyers have extensive experience in preparing ESOP plans and agreements that protect the company's interests while being fair and motivating for employees.

Risks and Penalties: What Mistakes to Avoid and How ARROWS Can Help

The new legislation brings huge opportunities, but also new risks. Incorrect setup or failure to comply with obligations can lead to significant penalties and the loss of all tax benefits. The following table summarizes the most common threats and shows how we can help you with them.

Risks in Implementing a "Qualified ESOP" from 2026

ESOP in an International Context: Solutions for Firms with Global Ambitions

The aim of the new legislation is to strengthen the competitiveness of Czech companies in the global talent market. Many companies today operate in international structures, which raises specific tax and legal questions. A common situation is when a Czech employee receives shares from a foreign parent company.

The key here is whether the costs of these shares are recharged to the Czech subsidiary:

• Costs are not recharged: If the foreign parent is not a tax payer in the Czech Republic, the obligation to tax the income passes to the employee, who must file a tax return. The advantage is that such income is not subject to social security and health insurance contributions.

• Costs are recharged: In this case, the income is considered income from dependent activity, and the Czech employer is obliged to tax it and pay contributions as part of the standard payroll agenda.

Thanks to our ARROWS International network, we handle cases with an international element on a daily basis and are able to provide comprehensive advice even for globally operating companies. Do you need to address ESOP in an international context? Contact our experts.

Leverage the Full Potential of ESOP with Legal Certainty

The legislative changes in 2025 and 2026 have transformed employee shares from a risky and complicated benefit into one of the most powerful strategic tools for growth and talent retention. However, success depends on a detailed knowledge of the rules and careful preparation. It is crucial to understand the differences between the optional deferral regime and the new qualified ESOP program and to choose the right approach for your company.

At ARROWS, we are ready to guide you through this process. We offer comprehensive services from initial strategic consultation and legal audit, through the preparation of all contractual documentation and handling of reporting obligations, to expert training for your management and employees. Moreover, we are happy to connect our clients if we see interesting business or investment synergies.

Don't let this opportunity slip away and don't risk costly mistakes. Our team of experts is ready to help you set up an ESOP program that will be the engine of your growth. Get in touch with us today and schedule an initial consultation.