If you are an employer rewarding your employees by RSUś or an employee who owns Employee Shares, you should be aware that as of 1st January 2024, the taxation changed.

The main changes are as follows:

1. Postponement of the moment of taxation (originally taxed on acquisition)\
2. Adjustment of the value of Employee Shares at the time of taxation if there is an reduction of the value since acquisition

1. Postponement of the moment of taxation

The aim is to help smaller companies, start-ups and employees postpone the moment of taxation in the future when the employee has enough money to pay taxes and insurance, rather than the moment on acquisition.

An employee who has acquired an Employee Shares from an employer or company from group of companies will newly tax it at the first of the following moments:

-the moment at which the employee ceases to perform activities for the employer
-the moment that employer enters into liquidation
-the moment at which employer or employee ceases to be tax resident of the Czech Republic
-the moment of transfer of the share (e.g. sale) or transferable option
-the moment of excercise of the transferable option
-the moment of an exchange of shares in which the total nominal value of the employee's  shares changes
-the moment of expiration of 10 year´s period from acquisition of the share or transferable option

At the time of taxation, the employer will withhold tax and insurance as part of the monthly payroll processing.

Also new is that an employee must notify the employer when the Employee Shares are transferred (e.g. sold).

The above changes apply not only to the acquisition of Employee Stock from his or her legal employer, but also to the acquisition of Employee Stock by a parent, subsidiary or otherwise equity-linked employer.
Shares acquired in such way may have a different tax treatment, with the tax liability passing to the employee. He must tax such income on his tax return.

2. Adjustment of the value of Employee Shares to be taxed when the value is reduced    between the time of itś acquisition and the time of it´s taxation.

The reason is to deal with situations where there is a high risk that the company will not do well (smaller companies and start-ups) and the value of the Employee Share will be reduced in the future or the company will be wound up.

So if the value of the Employee Share is reduced between the time of acquisition and the time of taxation, the value to be taxed is also lowered.

Example:
1.) If the value of the Employee Share is 500 at acquisition and 450 at the moment of taxation, then the employee's taxable income will be 450.

2.) If the pre-sale value of the Employee Share is reduced to 450 and at the same time the employee receives a dividend of 10, then the value of the Employee Share would be 460 at the time of taxation.

If the value of the Employee Share increases between acquisition and the time of taxation, e.g. from 500 to 600, then the taxable income will be 500 - the original value of the Employee Share.

Changes applies to incomes received as of 1st January 2024, incl. Employee Plans that commenced before that date (i.e. 2023 grant) and in 2024 the Employee Shares were vested.

Our services:

4000 CZK for Income tax return incl. consideration of Employee Shares (price in 2024)