Employee stock and option plans: notifying tax administrator of taxation postponement
The amendment to the Income Tax Act under which the taxation of an employee’s income from share and option plans can only be postponed if the employer notifies the tax administrator of this choice, became effective from 1 April 2025. The General Financial Directorate (GFD) has now issued a (non-obligatory) template form: "Notice of postponement of taxation of employee's income".
We wrote in detail about the amendment in the Tax and Legal Update at the beginning of March.
The amendment introduces the possibility to postpone the taxation of income acquired by employees under employee stock and option plans, subject to notifying a tax administrator of this choice. This applies not only to income acquired after the amendment’s effective date (i.e. after 1 April 2025) but also to income acquired by employees before the amendment entered into effect.
For income acquired after 1 April 2025, the choice to postpone the taxation must be reported by the 20th day of the calendar month following the calendar month in which the employee acquired the income. The related social security and health insurance contributions shall then be postponed accordingly.
If the employer does not notify the tax administrator of the choice to postpone taxation, the income becomes taxable in the month of acquisition of the shares or convertible options, or in the calendar year (in line with the taxation regime in force until the end of 2023).
For shares and options acquired between 1 January 2024 and 31 March 2025, employers must notify the tax administrator of their choice to postpone taxation by 2 June 2025 (i.e. within months of the amendment’s effective date).
Czech employers shall notify their local competent tax authority; for foreign entities (e.g. a foreign parent company) not registered for taxes in the Czech Republic, the tax authority for the Ústí nad Labem Region shall be the relevant tax authority.