Employee stock option plans: GFD information for 2024 and 2025 taxable periods
The GFD has recently issued its information for employers and employees in connection with employee income from the acquisition of a share in a business corporation or an option to acquire such a share under employee stock and option plans in the taxable period of 2024 and 2025.
We informed you about the approved wording of the amendment in the March Tax and Legal Update. Under the amendment, unless an employer has notified the tax administrator that they have chosen the postponed taxation, their employees’ income from stock option plans received before the effective date of the amendment would be taxable in the second month after the amendment’s effective date or would be a taxable income of the 2025 taxable period.
Given that the Ministry of Finance and the originally proposed wording of the amendment had already assumed last year that income received in 2024 could be taxed using the same method of taxation as was applicable until the end of 2023 – i.e. the related income from employment would be taxable in the month of acquisition of the share or transferable option – some employers have been determining the taxable moment of the employees’ income in 2024 as per the wording in effect in 2023.
The GFD has now formally acknowledged this approach in the published information and confirmed that for the 2024 taxable period and for the portion of the 2025 taxable period before the amendment’s effective date, the financial administration shall accept the taxation of employees’ income from stock option plans according to the legislation in effect until 31 December 2023.
The financial administration will also accept this approach where the taxation takes place within a tax return. According to the information, an individual (employee) will be able to choose whether to include the income from employee stock option plans received in 2024 in their 2025 tax return (assuming the employer did not choose postponed taxation) or to include it in the 2024 tax return in accordance with the amendment.
Neither the Czech Social Security Administration nor the health insurance companies have commented on the matter to date.