When you’re building a startup or scale-up, attracting and keeping the right people is often harder than raising your next funding round.
You need a strong team, but early on you probably can’t match corporate salaries or big bonuses.
So how do you reward your best people for taking a risk with you?
How do you make them feel like true co-founders of the journey?
That’s where Employee Stock Option Plans (ESOPs) come in.
They’re a way to give employees a small ownership stake in your company. A real share in the upside if your startup becomes successful.
But here’s the catch:
In Belgium, the tax rules around ESOPs are complex. This guide explains everything founders need to know, in plain language.
What exactly is an ESOP?
An Employee Stock Option Plan (ESOP) gives employees the right to buy company shares in the future, usually at a fixed price set today (the exercise price).
Think of it like a promise:
“If you stay with us and help the company grow, you’ll get a chance to buy shares later, at today’s price.”
If the company’s value increases, the employee profits from that growth.
Example:
- You grant 1,000 options at €10 each (exercise price)
- Three years later, company value is €100 per share
- Your employee can buy shares at €10 and instantly hold something worth €100
That’s a €90 gain per share, a clear financial reward for loyalty and hard work.
This system helps startups:
Attract top talent without offering high salaries
Retain key team members, because they usually only earn the shares after a few years
Align everyone’s goals, since both founders and employees benefit from company growth
How ESOPs work in practice
Most ESOPs include three key stages:
Grant: you promise an employee a certain number of stock options (e.g. 1,000 options).
Vesting: the employee gradually earns the right to exercise the options over time, usually over 3 to 4 years.
Example: 25% after year one, then monthly or yearly thereafter.
Exercise: the employee chooses to buy the shares at the pre-agreed price (called the exercise price).
If the company grows, this creates a real financial gain and that’s where tax comes into play.
Belgium’s two ESOP systems: when taxes apply
Belgium recognizes two legal ways to grant stock options.
They both work, but the difference is when your team pays tax and how much.
1. Under the Law of 26 March 1999: pay now, peace later
This is the official, most commonly used and preferred system for Belgian startups.
Your employees pay tax upfront, right when the options are granted not when they exercise or sell them later.
The tax is a percentage of today’s share value, not the future one.
So even if your company skyrockets in value, no additional tax is owed later.
Calculation of taxable base:
Standard: 18% of today’s share fair market value
If the ESOP subscription rights run for more than five years,
the taxable benefit increases by 1% for each additional year beyond the fifth, on top of the base rate of 18%, up to a maximum of 23%.
Reduced: 9–11.5% if the plan meets five conditions:
The exercise price is fixed at grant
The options can’t be exercised before three years, or after ten years
The options can’t be sold, gifted, or otherwise transferred to another person.
The company doesn’t provide downside protection
The options relate to the company’s own shares or its parent
Example: Meet Sophie, your new CTO
You grant Sophie 1,000 options when your company’s shares are worth €100 each.
You meet all five conditions, so she qualifies for the reduced 11.5% rate.
Taxable benefit = 1,000 × €100 × 11.5% = €11,500
If Sophie’s marginal tax rate is 50%, she owes €5,750 in tax right away, before exercising her options.
If the company later grows and the shares are worth €500, Sophie pays no extra tax on that increase. Her early tax covers everything.
This system is predictable and founder-friendly, but requires proper paperwork and valuation.
2. Outside the 1999 Law: pay later, risk more
If the offer isn’t accepted in writing within 60 days, or doesn’t meet the formal requirements, the 1999 Law doesn’t apply.
In that case, tax is only due at exercise, when the employee buys the shares.
Sounds attractive, but if your company grows fast, this can be painful.
Example: same Sophie, different route
You grant her 1,000 options at €100. Three years later, the company is worth €400 per share when she exercises.
Taxable benefit = (€400 – €100) × 1,000 = €300,000
At 50% tax + social contributions, she owes €180,000+ in tax before selling a single share.
Conclusion: waiting to pay tax sounds nice now but if your valuation climbs, your team could face huge unexpected tax bills later.
Freelancers and management companies: special rules apply
Belgium’s startup ecosystem often works with freelancers or consultants instead of employees, especially in early stages.
They can also receive options, but the tax treatment differs:
Freelancers (natural persons): taxed similarly to employees (can benefit from the 1999 ESOP regime) but must also pay social security contributions (min. €898.30 in 2025) and are required to issue an invoice with VAT for the ESOP subscription rights. It is important that the options are granted directly to them and accepted in writing within 60 days.
Management companies: the tax treatment depends on whether the rights are passed on to the individual manager.
If they are passed on immediately and under identical conditions, the individual manager is taxed like a self-employed person, including social security contributions, under the 1999 law (flat 18% rate plus 1% per extra year after five years) and the management company itself faces no extra corporate tax.
If the options stay with the management company, their fair market value is taxed as company profit (25%), and the company must also invoice VAT on the grant of the options. Undervaluation may trigger additional tax or penalties. To avoid double taxation and unnecessary complexity, always transfer ESOP rights immediately and under identical terms to the individual manager.
Pooling shares — timing matters
Pooling shares through a holding entity can help streamline governance and protect minority shareholders, but never pool unexercised options.
Transferring options before they’re exercised counts as a taxable transfer, which cancels the favourable 9–11.5% regime.
Pooling only makes sense after the options are exercised and converted into shares.
If you want to pool earlier, a tax ruling is strongly recommended
The Bottom Line
An ESOP isn’t just an HR perk, it’s a strategic finance and retention tool.
Done right, it aligns founders, employees, and investors behind the same growth story.
Done wrong, it can lead to confusion, frustration, and heavy tax surprises.
Founder takeaways:
Start early. Setting up an ESOP correctly from day one avoids costly restructuring later.
Document your valuation. It protects you in case of audits or disputes.
Avoid “in-the-money” grants. If the option price is below the current value, it can be taxed as salary.
Inform your team. Make sure they understand when tax applies and when they’ll actually benefit.
Ask for a ruling if unsure. Especially for pooling setups or consultants via management companies.
At Ventureleap, we don’t draft the legal paperwork but we do help founders think through the financial impact of their ESOP: from valuation to shareholder structure and investor readiness. If you’re planning an ESOP, make sure it fits your bigger funding and ownership strategy.
