As of January 1, 2024, tax for income tax purposes at the earliest of: (a) the end of the employment relationship; (b) the company enters into liquidation; (c) an individual ceases to be a Czech tax resident; (d) the transfer or sale of shares; (e) exchange of the shares where the total nominal value of the shares changes; or (f) 10 years after the date of the acquisition of the shares or award. Tax at purchase for social insurance purposes. In both instances, taxable amount is the discount at purchase.
Please contact Baker McKenzie for details.
Generally allowed, if subsidiary reimburses parent.
Written agreement strongly recommended.
Additional requirements apply if Company recharges costs of awards to executives or board members.
Reimbursement triggers social insurance contributions and withholding/reporting obligations.
No, unless the local subsidiary reimburses the parent.
Social Insurance Contribution:
Generally, no, unless the local subsidiary reimburses the parent and is required to withhold income tax.
The EU Prospectus Regulation is in effect in all European Economic Area countries, which includes all EU member states, Iceland, Liechtenstein and Norway ("EEA"). ESPP purchase rights are considered a public offering of securities for purposes of the EU Prospectus Regulation.
An EU-compliant prospectus will be required for the offer of an ESPP in any EEA member state, unless an exemption or exclusion applies. A "small offering exemption" is available if the offer is made to less than 150 persons in a member state. An "employee share scheme exemption" is available if the offer is made to existing or former employees (or directors), provided the offerees are provided with a short disclosure document that contains certain prescribed information about the offer. An exclusion for offers under a certain value threshold across the EEA may also be available.
Additional requirements may apply if relying on certain exemptions/exclusions or if a prospectus must be filed. Please contact Baker McKenzie for more information.
Generally not, provided employee signs agreement acknowledging discretionary nature of the plan.
Employee participating in ESPP must provide a payroll deduction authorization form in Czech to the local employer, authorizing it to deduct contributions from the employee's salary.
Works council notification/consultation obligations apply if subsidiary bears the costs of awards.
Also, if subsidiary bears the cost of the awards, prior approval of the subsidiary's supervisory board or board of directors is required to offer awards to executive officers or directors of the subsidiary. In addition, "performance of functions" agreement with executive officers or directors of subsidiary receiving equity should reference equity grant, be approved by shareholder of the subsidiary and be signed (in hard copy) by individual.
The EU Council Directive 2000/78/EC prohibits age discrimination. Most, if not all, countries have adopted local rules implementing this Directive, which may have an impact on design of equity and other incentive plans in the EU, particularly on age or age and service provisions which give different treatment (e.g., accelerated or continued vesting) for those meeting the criteria.
A valid basis is required to collect, process and transfer personal data.
The EU Data Protection Regulation ("GDPR") became effective in all EU/EEA countries on 25 May 2018. It introduces new requirements and increases the powers of data protection authorities, rights of data subjects and potential penalties for non-compliance. Accordingly, companies should review their approach to data privacy compliance in the context of equity plan administration and consider on which basis they may be able to rely to collect, process and transfer data.
Registration and notification requirements with local data privacy authorities may also apply.