What you need to know about the 2026 Czech ESOP reform

Hey startup friends, we’re back.

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‍We’ve refreshed our newsletter into Founder’s Edge, where we share clear, practical guidance on the legal and operational decisions that shape your company. No heavy language, just insights you can actually use.

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Each month, we focus on one topic every founder runs into, from hiring and equity to fundraising and compliance. And what better way to start than with Czechia’s new ESOP regime, one of the biggest changes founders will deal with this year.

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TL;DR for busy founders

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1. Starting in 2026, Czech startups can offer real equity. There are now two options: phantom shares or qualified stock options.
2. The new ESOP rules make qualified stock options simpler, more tax-friendly, and better aligned with global standards.
3. Employees can use the new options, but contractors must stick to phantom shares.
4. Curious how they compare? For side-by-side overview, click here.

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What you need to know about the 2026 Czech ESOP reform

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Setting up an ESOP in Czechia used to be a nightmare. Most startups went with phantom shares, which felt more like “fake” equity. That’s finally changing. Starting in 2026, you can offer real equity with value. Here’s what that means for your startup.

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Your move

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The new regime is clear: employees get qualified options, contractors stay on phantom shares.

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• For employees: Qualified stock options are now a real thing. This means clean cap tables, no payroll tax surprises, and equity that aligns with global standards.
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• For contractors: Phantom shares are still your go-to. Contractors can’t access qualified options, but you can run both plans side-by-side, all managed in one platform.
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Want a quick comparison of the two plans? Click here.

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Steps to follow

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To put this into practice, follow these steps:

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1. Check eligibility: Make sure your company has a Czech presence, employees hold less than 5% of shares, and vesting runs at least three years with a one-year cliff.
2. Get approvals in place: You’ll need board or general meeting approval. Don’t forget updates to your shareholder agreement or by-laws. Without this, your plan won’t be valid.
3. Sort out valuation: Every company must prove fair market value under the new rules.  It’s ideal if the law includes a clear “safe harbour” model, like in the UK’s EMI scheme, so startups can rely on a straightforward standard.
4. Grant & report: Once you have approval and valuation, you can grant options. You must report each grant to the tax office within 20 days after the month ends. Want to go digital? See our ESOP platform for easy equity management.
5. Communicate with your team: Clarity matters. This is real equity, taxed at sale, with no payroll surprises. If the team doesn’t understand the value, you lose half the impact.
6. Keep the plan clean: Track every grant, vesting schedule, and buyback. Report changes, like strike price or option amounts, to the tax office.
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Want a deeper dive? Read our deep dive blog post here.

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Watch out for this

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⛶ Qualified options are only for employees, contractors need to stay on phantom.

⛶ The benefit applies to Czech employees, so cross-border teams need a hybrid setup.

⛶ Your valuation must be current. Anything older than 12 months won’t hold up.

⛶ The strike price must meet or exceed fair market value (FMV), otherwise it’ll be taxed as salary.

⛶ At exit, employees pay tax on their gain, so set expectations with investors early.

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Thanks for reading the first edition of Founder's Edge. This one’s all about the ESOP reform. If you’re interested, we have the perfect solution to help you set it up smoothly, just reach out.

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