Quick overview
In 2026, employee stock and stock options (ESOPs) are more likely to be taxed only at exercise/exercise (not at “vesting”), but employers are increasingly reporting to the state. Benefits are more careful not to be “otherwise designated wages” – exemptions only apply to truly non-cash benefits and within annual limits tied to average wages. It is now possible to include the interest portion of payments to a housing cooperative in the deduction for housing interest (within the limit of CZK 150,000 per household). Self-employed persons in the flat-rate regime pay CZK 9,984 per month in Band 1 and the JMHZ starts in April.
Quick checklist: what to watch out for in 2026
- ESOPs/options: when the “tax moment” will occur + whether the company will catch up with reporting (new reports).
- Benefits: don’t roll benefits into “hidden pay” and watch annual limits.
- Housing: do you want an interest deduction through the co-op? ask for a receipt/schedule of interest from the co-op.
- Lump sum scheme for self-employed: adjust standing order in band 1
- Employers: prepare payroll system at JMHZ and identification through OIC.
If you are unsure if the change affects you – typically with ESOPs, benefit limits or co-operative interest – a short consultation with our tax legal advice makes sense to set up the process and documents in a “controllable” way.
ESOPs (employee stock options) in 2026: tax deferral + more administration
As of January 1, 2026, the regime for employee stock and options has been strengthened, while a preferential regime for qualified employee options (typically targeted at smaller companies and startups) has been created. The practical impact is clear: for qualifying options, the tax can be dealt with later, linked to exercise or realisation (i.e. not at the moment the employee “gets something on paper”).
The law thus solves a classic ESOP problem: the employee has a theoretical benefit but does not have the cash to pay the tax.
Beware the other side of the coin: employers have a growing agenda. For qualified options, there is to be strings attached to reporting to the tax authorities (typically notification of the grant of the option and subsequent exercise/settlement) in conjunction with monthly reporting.
Laws most frequently referred to in practice: the Income Tax Act (Act No. 586/1992 Coll.) and related amendments effective from 1 January 2026.
In practice: What “hurts” most often with ESOPs is not the tax idea itself, but the documentation – the lack of valuation rules, unclear records of participants and unclear moments when the employee actually acquires the right and when it is exercised. If the company sets it up only when the employee leaves or is about to sell the interest, it tends to be the most expensive.
Tip for article
Employee Share Ownership Plan(ESOP) is still relatively unknown in the Czech Republic. In this article, we have discussed the advantages and disadvantages of introducing such a program and why you should consider it in your company.
Employee benefits 2026: when is it still a non-cash benefit and when is it already a salary
From 2026 onwards, there is more emphasis that the exemption only applies to genuinely non-monetary benefits that are not in the nature of wages/remuneration or income replacement. If the benefit is effectively a “disguised bonus” (redeemable for cash, tied directly to performance as remuneration, provided in lieu of part of a salary), it can become standard taxable income with all the trimmings.
The limits that are most often observed in practice
For non-cash benefits, two annual “caps” tied to average wages are in operation in 2026:
- leisure benefits (sport, culture, recreation, etc.) typically up to half of the average wage – for 2026, CZK 24,483.50,
- health benefits up to the full average wage – reported for 2026 at CZK 48 967.
Mini-tip for companies: write the internal rules so that it is clear that the benefit is an “extra” (not wage compensation) and can be documented as a specific service/good.
Are you solving a similar problem?
Not sure how to do your taxes properly so you don't get it wrong?
Do you want to be sure that you can withstand an inspection from the tax office, health insurance company or social security administration? Are you planning an investment and need legal certainty about the tax implications? We can help you navigate the law, whether it’s dealing with a specific tax situation, preparing for an audit by the tax authority or defending yourself in court.
I want to consult
- When you order, you know what you will get and how much it will cost.
- We handle everything online or in person at one of our 6 offices.
- We handle 8 out of 10 requests within 2 working days.
- We have specialists for every field of law.
Housing: interest deduction now also via housing cooperative
From the 2026 tax year, the possibility to deduct interest on housing is explicitly extended to situations where a household pays for housing through a housing cooperative – typically in the form of an annuity, where part of the interest corresponds to the interest on the cooperative’s loan. The basic ceiling remains at CZK 150,000 per year per jointly-operating household (and both “regular” and cooperative interest are included in the limit).
What to ask from the cooperative
To make the deduction defensible, in practice it pays to ask:
- a statement of interest paid (principal/interest schedule),
- a link to the specific housing need and the membership share.
In practice: many people have been claiming for years that they “pay the loan” but cannot prove what portion is interest. When you have a certificate from the co-op, the difference between a smooth return and arguing with the IRS tends to be huge.
Lump sum scheme for self-employed 2026: higher 1st band and sharp deadlines
For 2026, the most visible change is the increase in the payment in the 1st band of the flat-rate tax: CZK 9,984 per month. In bands 2 and 3, the amounts remain unchanged, according to the Tax Administration (in practice, they are quoted at CZK 16,745 and CZK 27,139 respectively).
The advance payment continues to be paid monthly in advance by the 20th of the month – so anyone going on standing order should adjust it.
Notification of entry (or change of band) this year was possible until Monday 12 January 2026.
From 1 April 2026: Uniform Monthly Employer Reporting (UEMR)
The Uniform Monthly Employer Reporting Act has been in effect since 2026 and the monthly reporting requirement is going into practice starting in April. The JMHZ is intended to unify the data that companies send to different institutions today, and reporting is done electronically.
At the same time, communication with the state is expected to gradually work more with personal identification numbers (PINs) instead of birth numbers – for HR/payroll, this mainly means adjusting processes and payroll systems so that identification fits and does not result in “manual corrections”.
Practical implications for employers: if you have an outsourced payroll accountant or turnkey software, check in advance who exactly is implementing JMHZ exports and who will be responsible for correcting error messages.
Frequently Asked Questions
When are employee stock options (ESOPs) taxed in 2026?
Typically only following exercise/implementation or settlement if you meet the conditions of the scheme; at the same time a longer maximum deferral period is addressed.
How do I know that a benefit is "genuinely non-monetary" and not a hidden wage?
If the benefit is linked to performance as remuneration, can be easily exchanged for money or replaces part of the salary, it can be treated as taxable income. The exemption is aimed at real non-monetary benefits.
What are the benefit exemption limits in 2026?
The limit for leisure benefits is often stated as CZK 24,483.50 per year (half of the average wage) and for health benefits as CZK 48,967 per year (the entire average wage).
Can I deduct my housing interest even though I live in a condominium?
Yes – from 2026, the interest part of the payments through the housing cooperative is explicitly envisaged, within the limit of CZK 150,000 per year per household.
How do I prove the cooperative interest for the deduction?
Most often a certificate/schedule from the co-op that distinguishes between interest and principal and ties it to your membership share and housing need.
How much is the flat tax in 2026 and when is it payable?
In Zone 1, it is CZK 9,984 per month; it is paid in advance until the 20th of the month.
Since when does the JMHZ apply and to whom does it apply?
The Act is effective from 1 January 2026 and the monthly reporting requirement starts in practice from April 2026; it applies to employers who have employees and comply with payroll reporting/deduction obligations.
