The benefit an employee receives when acquiring an ownership interest or option for less than its value is treated as employment income in Czechia. If the employer notifies the tax authority in time that it intends to use deferred taxation, the income is taxed only upon the first of the statutory events, such as termination of employment, transfer of the ownership interest or exercise of the option, and no later than 15 years after acquisition. From 1 January 2026, companies meeting the statutory requirements, particularly the turnover and asset thresholds, may also grant qualified employee options. Income from their exercise is taxed as other income only when the ownership interest is sold, and no later than 15 years after exercise. Have a tax adviser check the tax calculation.
A Czech company wants to incentivise key people with an ownership interest in the company or an option to acquire one, and employees want to know when they will pay tax on it. Under the Czech Income Taxes Act (Act No. 586/1992 Sb.), an employee’s income also includes the amount by which the price they paid for a benefit provided by their employer falls below its value under the asset valuation rules or the price at which the employer offers it to others (Section 6(3)). This is treated as employment income. When it is taxed depends on whether the employer uses deferred taxation and, from 2026, whether it is a qualified employee option.
Deferred taxation of an ownership interest or option
Deferral applies to the acquisition of an ownership interest in the business corporation that is the employer, its parent company, subsidiary or an entity linked by capital, as well as an option to acquire such an interest (Section 6(14)). An ownership interest means a member’s participation in a business corporation, including a shareholder’s participation (Section 31 and Section 256(1) of Act No. 90/2012 Sb.). Deferral applies to anyone receiving employment income from the company, including managing directors and members of other corporate bodies (Section 6(1), letters a) to c)). The income is treated as income for the month in which the first of the following events occurs:
- the employee ceases to perform activities for the employer, its parent company, subsidiary, an entity linked by capital or a legal successor,
- the employer enters liquidation,
- the ownership interest or option is transferred or passes to another person,
- the employee exercises the option,
- the ownership interest is exchanged in a way that changes the aggregate nominal value of the employee’s interests,
- 15 years have elapsed since the ownership interest or option was acquired.
If the value of the ownership interest falls by the time of that event, the income may be reduced by the difference between its value at acquisition and its value at the event, with both values determined under the asset valuation rules. For this purpose, the value at the event is increased by the after-tax amounts of profit distributions received and other payments from the interest specified by law (Section 6(15)). The employee must notify the employer if the ownership interest or option is transferred or passes to another person, by the end of the month in which this occurred (Section 6(16)). However, deferral is not automatic:
The following quotation is reproduced in its original language:
Postup podle odstavců 14 až 16 a § 38j odst. 2 písm. f) bodu 8 se použije, pouze pokud zaměstnavatel oznámí správci daně záměr použít tento postup do 20. dne kalendářního měsíce následujícího po kalendářním měsíci, ve kterém zaměstnanec nabyl podíl nebo opci podle odstavce 14.
What changed from 1 January 2026
Amending Act No. 360/2025 Sb. extended the maximum deferral period from 10 to 15 years and removed the employer or employee ceasing to be Czech tax resident as a triggering event. Its transitional provisions retain the previous wording only for tax periods and calendar months beginning before 1 January 2026 (Article VII, points 1 and 2). They contain no special rule for ownership interests and options acquired earlier. Their wording therefore indicates that the 15-year period also applies to those interests and options for tax periods from 2026. The Czech Financial Administration takes the same view for 2026.
Qualified employee options
From the same date, the Act also recognises qualified employee options (Section 6a). A qualified employee option is a non-transferable promise of the right to acquire an ownership interest, granted by an employer free of charge under a written agreement and notified to the tax authority. The interest may be acquired no earlier than after 3 years, with earlier acquisition permitted only if an interest representing at least 67 % of the registered capital of the employer or its controlling entity is transferred to an unrelated person, or if the shares are admitted to public trading. The employer’s annual turnover, according to its latest approved financial statements before the option is granted, must not exceed CZK 2,5 billion, and its assets must not exceed CZK 2 billion; these limits also apply to the group as a whole.
Neither the employer nor any member of its group may be, for example, a bank, insurance company, lawyer, auditor or tax adviser. The interests the employee has acquired or may acquire in this way must not exceed 5 % at the time the option is granted. Between the grant and exercise of the option, the employee must work for the company for at least 12 months, and their other employment income must total at least 1,2 times the monthly minimum wage applicable when the option was granted for each month worked.
Income from exercising such an option or from its cash settlement is treated as other income rather than employment income (Section 6(3) and Section 10(1), letter q)). Where the option is exercised, the income is taxed in the tax period in which the employee sells the acquired interest, and no later than the period in which 15 years have elapsed since exercise (Section 10(1), letter q)). A subsequent sale of that interest is not exempt even after the holding period has elapsed (Section 4(1), letter q), point 5 and letter u)).
How to structure an employee plan
Which regime is advantageous depends on the company’s size, the price of the ownership interest and the planned sale. Have a tax adviser check the tax and contribution calculations. Through our ESOPs and employee equity service, we prepare the agreements, vesting rules and corporate steps to match the chosen tax regime and ensure that the employer does not miss the notification deadline for the tax authority. The Slovak regime is explained in the question how employee shares and ownership interests are taxed, while a cash alternative without transferring an ownership interest is covered in the question what phantom shares are.
This answer provides general information on the law as at 3 October 2026. It does not constitute legal services or replace an assessment of an individual case. The details of your situation may differ. Book a consultation to discuss them.
