The Startup Act 2026: Why It Matters

The Czech Republic is finally getting a legal framework for startups. The Startup Act, which is gradually coming into force, is changing the rules of the game for founders, investors, and employees. It brings changes to ESOPs, a new definition of a startup, and tools for easier access to capital.

“If we want the Czech Republic to make use of the potential it has, we have to say - here are the brakes that are holding our startups back. And the Startup Act could cover a large part of those changes,” explains Martin Jiránek, the new commissioner for startups and chair of the Startup Association.

Why the Startup Act is being created

The inspiration comes from countries such as Spain, Portugal, and Greece. They realised that they were lagging behind Estonia, Sweden, or Israel and did not want to wait 30 years to close the gap.

“The Spanish said: let’s create a startup act in which we try to skip several years, perhaps decades. Give startups advantages and reliefs so they have a better chance of surviving the valley of death at the start and then growing faster to a global level,” Jiránek describes.

The Czech Republic has a similar ambition. Few startups are being created here, capital is in short supply, and bureaucracy slows growth.

Definition of a startup - who meets the conditions?

It sounds trivial, but until now it has not existed in Czech law. The new definition is inspired by the Spanish model, which combines hard and soft conditions. For now the definition is not firmly set, but the following indicators are being discussed.

Hard conditions

• Age of the company
• Turnover
• The company should not be listed on the stock exchange or be a subsidiary of a large corporation

Soft conditions (assessed by a committee):

• Innovativeness
• Scalability of the business model

“A new hairdressing salon, for example, will meet the hard conditions - you have no turnover, you are not listed. But you will not meet the soft conditions, because scaling a hairdressing salon is significantly more difficult than scaling an online app,” Jiránek explains.

The system already works similarly in Spain, where around 2,500 applicants applied in the first year, but only 1,500 got through. 15 % failed the hard conditions, 25 % did not pass the soft ones. Applied to the Czech Republic, that would mean 400-600 registered startups.

What specifically is changing

1. ESOPs finally make sense

Employee shares are key for startups. They make it possible to motivate people who would otherwise leave for the competition. Until now they were tax-disadvantageous in the Czech Republic.

The new rules shift the moment of taxation. The employee will not pay tax at the moment the option is acquired, but only when the shares are actually sold. > How to set up an ESOP and what the benefits of the programme are? Download our clear e-book so you stay in the picture. Or get in touch.

Download the e-book for free

2. Less bureaucracy and employee flexibility

Startups need flexibility. To hire people quickly, and to part ways quickly when the direction or financial situation changes.

“A startup in its early phases needs to hire people quickly, and when it finds out that customers want something different, it logically no longer needs some of them. It often cannot afford a two-month notice period and severance pay that would ruin it,” says Jiránek. > Are you dealing with contractors in your company and worried about bogus self-employment (“Švarcsystém”)? Test your contractors against the labour inspectorate’s questions. 25 % of contractors do not pass the check.

I want to test my contractors

3. Better conditions for investors

Access to capital is the biggest barrier for most startups. The Czech Republic has few business angels - people who put up CZK 500,000 or a million to get things going.

The inspiration is the British EIS (Enterprise Investment Scheme). An investor deducts part of their investment in a startup from their taxes.

“Britain had very few business angels. Now it has more than 40,000 registered investors who invest in innovative companies and draw a tax advantage,” Jiránek states.

4. Pension funds - the state’s untapped potential

In American venture funds, roughly 60-70 % of the money comes from pension funds. In Sweden it is around 36 %. In the Czech Republic? Zero.

“American and Swedish pensioners earn money from the fact that part of their savings is invested in startups. When a large investor buys a Czech startup, an American pensioner’s annual income goes up,” Jiránek explains.

The aim is to persuade Czech pension funds to invest a few percent of their portfolio in startups. In total, this amounts to billions of crowns.

Realistic expectations

Jiránek points out that 100 % of the plans certainly will not get pushed through. Politics is not just about startups - it is about the budget, about other business groups, about employees.

“Let’s be glad if we manage to achieve 60-70 % of what we say would be great. Let’s not be disappointed that it was not 100 %.”