Germany
Employee Equity in Germany
German startups are usually GmbH companies, where every share transfer needs notarisation before a notary, making direct share grants and even real option plans expensive to run. Most German startups instead use virtual share option plans (VSOP), with real options and Section 19a EStG deferral used more selectively.
German employee participation guides
Employee Equity
German GmbH law requires notarisation for share transfers and often for new share issuances, which pushes most startups toward virtual equity instead of real shares. Understanding this constraint explains almost every design choice in German employee equity plans.
Stock Options
Real stock options in Germany give an employee the right to acquire actual GmbH shares, but require notarisation of the option grant and of the exercise, adding cost that most companies avoid by using VSOP instead.
Virtual Shares
Virtual shares give employees a contractual claim on value tied to the company's shares without any transfer of ownership. In Germany they are the standard building block of a VSOP and avoid the GmbH notarisation requirement entirely.
VSOP
A VSOP, or virtual stock option plan, is the default way German startups incentivise employees with equity-like upside. It combines a vesting schedule, a strike price, and a cash payout tied to an exit, all without transferring real shares.
Equity Tax
Employee equity in Germany is mostly taxed as wage income, whether through VSOP payouts or real option exercise, with Section 19a EStG offering deferral for real shares and a small allowance under Section 3 No. 39 EStG.
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