Directors’ stock options: what’s the tax impact in 2026?

Are you a company director holding stock options, wondering whether the personal income tax reform will push up your tax bill from 2026? Short answer: yes, but by less than the wording of the reform might suggest. Here’s why.

A different penalty from the one employees face

Unlike the rule for employees, exceeding the 20% threshold doesn’t trigger a non-deductible separate 7.5% contribution for company directors. For a director, the consequence is limited to losing the benefit of the reduced corporate tax rate.

That’s a distinction worth remembering: lawmakers treat director pay and employee pay differently, even though the mechanics for calculating the 20% threshold are identical in both cases (based on 281.20 forms for directors).

Who this penalty actually applies to

This penalty only targets companies that meet the conditions to benefit from the reduced 20% rate on the first EUR 100,000 bracket of taxable profit. If the 20% threshold set for lump-sum benefits is breached, that bracket would be taxed at the ordinary 25% rate instead of the reduced rate.

Companies already subject to the ordinary 25% rate face no additional tax consequence from this measure. The new rule is primarily aimed at smaller companies eligible for the reduced rate, where director pay leans too heavily on lump-sum benefits in kind rather than ordinary remuneration.

Take the example of a director operating through a management company. For that company to qualify for the reduced rate, it must meet all the statutory conditions — including granting the director a minimum annual gross remuneration of EUR 50,000 (raised to this level from 2026 as part of the tax reform; the previous threshold was EUR 45,000). Within that framework, lump-sum benefits in kind can’t exceed 20% of that minimum remuneration, i.e. a maximum of EUR 10,000. Beyond that cap, the company loses the reduced rate on the first EUR 100,000 bracket of taxable profit.

What this actually costs

The figure to remember: the maximum tax cost of this reform is a 5% rate difference (25% minus 20%) applied to a taxable base capped at EUR 100,000. That’s a maximum additional corporate tax charge of EUR 5,000 per tax year.

This cap changes how you should read the risk: it isn’t a proportional, unlimited charge like the one employees face — it’s a fixed, known-in-advance amount that only applies to companies already eligible for the reduced rate.

Should directors give up on stock options?

In practice, the financial impact stays fairly limited for most directors. The reform doesn’t fundamentally undermine the case for stock option plans or other incentive schemes that rely on lump-sum benefits for company directors.

It does, however, mean this new parameter needs to be factored into how director pay is structured — particularly for smaller companies currently making full use of the reduced corporate tax rate. An option plan that looked tax-efficient until now could, going forward, cost you that reduced rate if this new cap isn’t respected.

How a director can get ahead of the risk

The 20% threshold becomes a tax risk indicator to track on an ongoing basis, taking into account the director’s existing pay structure — meaning all lump-sum benefits in kind, including stock options, granted by any company the director provides services through their own management company. That also means systematically assessing the impact of each new grant against the threshold before putting it in place, not after.

For companies also structuring an incentive plan for their teams, the picture is different — the penalty facing employees is considerably heavier, as explained in our article Employee stock options: the risk of the 7.5% contribution.

FAQ

Does a director pay the same 7.5% contribution as an employee?

No. For company directors, exceeding the 20% threshold doesn’t trigger the separate 7.5% contribution. The only consequence is losing the reduced 20% corporate tax rate.

What’s the maximum this reform could cost a director?

The maximum tax cost is EUR 5,000 per tax year — a 5% rate difference (25% instead of 20%) applied to the EUR 100,000 bracket of taxable profit eligible for the reduced rate.

Does this penalty apply to all companies?

No. Only companies that meet the conditions for the reduced 20% corporate tax rate are affected. Companies already taxed at the ordinary 25% rate face no additional tax consequence.

Is the 20% threshold assessed director by director?

No. It’s assessed collectively across all the company’s directors, based on the remuneration reported on 281.20 forms — not director by director.

Should a director drop a stock option plan because of this reform?

No — the financial impact stays fairly limited for most directors. The reform doesn’t undermine the case for option plans, but it does call for regular monitoring of the 20% threshold to avoid an avoidable loss of the reduced corporate tax rate.