Future Financing Act and ESOPs – Really a Big Hit?

7 minute read | November.21.2023

On November 17, 2023, the German Bundestag passed the so-called Future Financing Act (Zukunftsfinanzierungsgesetz). The new law is, amongst others, meant to create improved (tax) rules for employee ownership programs in start-ups. Before the new regulations can come into force on January 1, 2024, the German Bundesrat still has to approve the law.

It remains to be seen whether the new rules will really bring a significant improvement and result in a wide-spread adoption of equity-based programs in the German start-up scene (as some initial commentators believe). However, as we show some significant challenges with equity-based programs remain and will require more work.