We would like to inform you that on 26 February 2025, the Senate passed the long-awaited bill concerning the income tax regime for employee shares, stocks or options. This amendment to the Income Tax Act is expected to take effect from 1 April 2025.

The current legislation imposes an obligation on the employer (or on the taxpayer himself, if his income from employee incentive plans is not subject to taxation in Czech payroll records) to defer taxation of such income to one of the future moments defined by the law. The new legislation makes this obligation an option and leaves the choice of scheme to the employer. If the employer decides to defer taxation of this income for its employee, it must submit a notification to the tax authorities formally confirming its intention. The obligation to notify the tax authority also applies to shares or options acquired before the amendment comes into force (i.e. income arising in 2024 or in the period January-March 2025), by 1 June 2025 at the latest. If the employer does not make the notification, the income will be treated as accounted for in wages for May 2025 (even though it was earned in, for example, September 2024). The same applies to income taxed through a tax return – if a foreign employer does not file the notice for the employee, the income will be taxable for the 2025 tax year.

Taxation of income from shares acquired in 2024, which will, however, only be taxed in the 2025 tax year, brings considerable problems in practice, also with regard to the fact that some employers have already accounted for or taxed such income for the 2024 tax year. We therefore expect that the tax administration and the relevant ministries in the field of public insurance will issue methodological information clarifying their approach in the case of checks on compliance with the new rules under this statutory amendment effective from 1 April 2025.

We will continue to keep you informed of further developments and will be happy to assist you with preparing your notification to the tax authority if you wish.