Classic equity programs.

Classic equity incentive programs give employees the right to acquire, under certain conditions, real shares at a pre-agreed, fixed price (strike price). The employee becomes a shareholder with full governance rights and participates directly in the proceeds of a company sale.

The historical problem in Czech law was dry tax: income tax and levies falling due at the moment of share acquisition, before the employee could convert their equity into cash. The legislative amendment under § 6(14) ZDP (effective April 2025) introduced a deferred taxation mechanism, shifting the tax point from acquisition to a later decisive moment (share transfer, employment termination, change of tax residency, or the lapse of 10 years). However, the income remains classified as employment income, meaning social and health insurance levies still apply at the deferred moment — a structural disadvantage compared to qualified options.

For companies where the qualified option regime is unavailable (turnover above the limit, contractor-heavy workforce, sector exclusions), a well-structured classic program remains viable, particularly where a clear exit timeline exists and the parties can model the tax exposure against expected proceeds.

We structure comprehensive employee incentive programs for the largest Czech corporations.

We were the first law firm in the Czech Republic to implement employee share programs on the blockchain DLT protocol operated by the Central Securities Depository (CDCP).