Abolition of the limit for exemption of income from the sale of securities and business shares
One of the key Senate amendments was the reintroduction of the CZK 40 million limit on exempt income when the time test for holding securities (3 years) and business shares (5 years) is met, effective from January 1, 2026. The limit will therefore only apply to income of this type realized (received) in 2025.
The CZK 40 million limit will remain in place only for income from the sale of crypto assets held for at least 3 years.
Qualified employee options
We have provided detailed information about the new tax regime for employee share and option plans here. Compared to the given article, the deadline for deferred taxation is to be extended from 10 to 15 years. Furthermore, the change in tax residency as the moment for deferred taxation is being abolished, as it caused interpretation problems in practice.
In the already relatively confusing system of taxation of employee shares, recent changes will add a third tax regime targeting so-called qualified employers (primarily start-ups). A fundamental change will be that income from the exercise of qualified employee options will no longer be considered income from dependent activity, but rather "other income." In essence, this means that such income will not be subject to social security and health insurance contributions.
The regime will be available from January 1, 2026, subject to specific conditions such as a written contract with certain requirements, the size of the employer or group (turnover and assets) and field of business, the maximum amount of the employee's share and the minimum amount of their regular remuneration, the length of employment before the option is granted, or the minimum period after which the option can be exercised. The regime will be conditional on notification of its use to the tax administrator.
Income from the acquisition of a business share based on the exercise of a qualified option will be considered realized in the year of its sale or in the year in which 15 years have elapsed since its acquisition.
Abolition of withholding tax on income from dependent activity and its impact
From January 1, 2026, withholding tax on the income of members of legal entities (e.g., executives) who are tax non-residents will be abolished. They will now be subject to progressive taxation in the same way as Czech executives.
If, in total for the tax period, they exceed the limit for progressive taxation, foreign executives who are tax non-residents will be required to file a tax return in the Czech Republic (until now, they had the option to file a return if they voluntarily decided to do so and were EU/EEA residents).
Furthermore, withholding tax on small earnings (in 2025, these are agreements on work performed up to CZK 11,500 per month and other forms of employment relationships up to CZK 4,500 per month) will be abolished from January 1, 2027.
However, in response to public demand, the amended version of the amendment introduces a new feature whereby small earnings newly taxed by advance tax will not automatically give rise to an obligation to file a tax return. As a result, the regime will be quite similar to the current practice for individuals with small employment earnings, including the possibility of including these small earnings in their tax returns.
Similarly, the minor employment earnings described above will not be considered a violation of the conditions for flat-rate tax within the given limits and will therefore not result in entrepreneurs being required to file a tax return (the taxpayer's tax under the flat-rate regime will be equal to the flat-rate tax, provided that the other conditions are met).
New definition of a low-emission vehicle for the purposes of employee benefit taxation
If an employer allows the use of a motor vehicle provided by them for private purposes, the employee receives non-monetary taxable income. This is calculated as a certain percentage of the purchase price of the vehicle, including VAT. For so-called low-emission vehicles, this is 0.5% per month.
From January 1, 2026, the definition of a low-emission vehicle will be amended, with only the vehicle category (M1, M2, N1) and the emission limit, which must not exceed 50 g/km, being tested. Compliance with the 80% emission limit criterion under European Union regulations will therefore no longer be examined.
Clarification of the application of the exemption for "leisure" benefits
It is proposed to specify the use of income exemptions in the form of employee benefits such as admission to sports facilities, cultural events and performances, use of healthcare facilities or similarly usable points on benefit cards only for benefits exceeding the scope of wages for work. The proposed amendment responds to judgments of the Supreme Administrative Court and aims to prevent practices where employers transferred part of the salary for work to the category of benefits (so-called salary swap), thereby essentially achieving exemption of wages in kind. For employers who have traditionally provided the listed benefits in addition to wages (entitlement to which arises, for example, simply by virtue of the existence of an employment relationship), the amendment does not change anything.
We will be happy to discuss the impact of these changes on your tax obligations with you.