Qualified Employee Options.

The qualified employee option regime under § 6a of the Income Tax Act (effective 1 January 2026) is the first genuinely modern equity compensation framework in Czech history. It delivers two things that no previous Czech ESOP structure could: (i) deferral of all income tax until the employee actually sells the shares, and (ii) complete exemption from social security and health insurance levies.

The mechanics work as follows: the employer grants the employee a written, non-transferable option promise (opční příslib), notifies the tax office within the calendar month of grant, and the employee waits a minimum of three years before exercising. On exercise, the employee acquires real shares. When those shares are eventually sold, the gain is taxed as other income under § 10 — not as employment income. Social and health insurance do not apply.

Subject to several conditions. The employer must not exceed CZK 2.5 billion in annual turnover or CZK 2 billion in total assets (measured at group level). The option must be granted only to employees in a dependent employment relationship — not to contractors or external advisors. Each employee’s total option allocation (including shares already held) must not exceed 5% of the registered capital. The employment must continue for at least 12 months between grant and exercise, and the employee must earn a minimum monthly base salary of 1.2 times the statutory minimum wage.

Early exercise is possible if a qualified exit event occurs — meaning a transfer of at least 67% of the company’s participation to an unrelated third party — or if the company completes an IPO.