The Czech Chamber of Deputies has approved, for the second time, changes in legislation concerning employee stock options (ESOP), which have long been requested by Czech startups. The new rules bring significant relaxation of the conditions for option programs, including an exemption from social and health insurance contributions. One of the most important changes is the exemption of employee stock options from social and health insurance, which significantly reduces the tax burden for companies. The growth in the value of the shares will now only be subject to income tax, not insurance contributions. Taxation will now only apply upon the sale of the shares. These changes are designed to reduce the tax burden and make Czech startups more competitive in the global market. The conditions will apply from the beginning of next year, provided the proposal is signed by the president.

Another significant update is the limitation for companies with a turnover exceeding 2.5 billion CZK, which will not be able to use the new conditions. Option programs will also not be available to banks, insurance companies, or firms operating in tax consultancy. Furthermore, employees must meet income requirements, with a salary at least 1.2 times the minimum wage.

The new legislation is aimed at supporting the development of small and medium-sized businesses in the Czech Republic and bringing them closer to the conditions in Western Europe and the USA. This step could prevent Czech startups from moving abroad. According to experts, this is also one of the key steps toward creating a strong and stable startup ecosystem, which will support not only innovation but also employment growth.

The next step, which the Ministry of Industry and Trade is working on, is a comprehensive startup law, which is expected to bring further changes to support business activity in this sector.

Source: E15.cz

Prepared by the team CzechTrade Scandinavia.