On 26 February 2025, the Senate approved a bill that will make the currently mandatory regime of deferred taxation of income from Employee Stock Ownership Plans (ESOPs) optional. As the President did not sign the bill by 28 February 2025, the relevant changes are likely to become effective as of 1 April 2025.
We have already informed you about these expected changes in our article; however, during the 3rd reading in the Chamber of Deputies, an additional change was made to the transitional provisions concerning the taxation of income for the year 2024. Employers who are payers of tax on such income and want to keep the 2024 income in the deferred taxation regime must register them in the deferred taxation regime in time, otherwise they will be subject to taxation in the second month after the amendment comes into effect, i.e. most likely in May 2025. Similarly, for income taxable through a tax return, if the employer does not subsequently announce the intention to continue in the deferred taxation regime, it should be considered as income taxable in 2025.
We consider the wording of these transitional provisions, combined with the missed deadline for the amendment’s effectiveness from 1 January 2024, problematic and expect that the Ministry of Labour and Social Affairs and/or the tax administration may issue a statement in the coming weeks or months, indicating that they will not seek to reassess tax and insurance for the year 2025 during audits, if the income was already subject to tax and insurance in 2024.
We will keep you informed of further developments.
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