Examples of most optimal, acceptable and unacceptable practices across EU block for each component*:

Component Description Optimal Practice Acceptable Practice Unacceptable Practice
Taxation  (Timing of Tax) When tax is triggered, such as at grant, exercise, or sale. Tax at Sale: Deferring tax until the point of sale encourages long-term ownership, as seen in countries like Latvia and Portugal. Tax at Exercise or Sale: Tax at exercise with deferral options (e.g., Netherlands, where tax is due when shares become tradable or after 5 years). Tax at Grant/Exercise: Immediate tax on grant and exercise (e.g., Belgium‚18% tax if accepted within 60 days) reduces attractiveness as employees have not yet received value from shares.
Tax Rate The percentage applied to gains at sale or exercise, including capital gains and income tax rates. Reduced Capital Gains Rate at Sale: A flat or reduced rate [of 15-20%] is optimal for incentives, as seen in France, eg. BSPCE scheme. Incremental Income Tax Rates: Taxed as income with incremental rates, such as in Netherlands, which allows deferral options. High Income Tax Rates at Acquisition and Exercise: High rates on acquisition exercise (standard income tax) which discourage value and retention.
Holding Terms and conditions for early exercise The minimum period an employee must hold shares before achieving full tax benefits. 1-3 Year Minimum: Ensures employees can realise value without excessive waiting, as adopted in existing schemes  in Ireland and Estonia. Flexible with Vesting: 2-3 years provides tax benefits if held post-vesting, promoting ownership (e.g., Portugal). Long Mandatory Holding (e.g., 5+ Years) and monetary caps: Restrictive periods, like Spain‚ 3-year, EUR50k cap for tax benefit, with reduced flexibility and engagement.
Company Size Limits on eligible company size, typically by revenue or employee count, to target SMEs and startups. SME Focused with Mid-Sized Flexibility: Limits of 500 employees and revenue <EUR100 million are inclusive of SMEs and mid-sized businesses (e.g., France BSPCE). Limited to Small Enterprises: Only SMEs/startups with <250 employees and <EUR50 million turnover (e.g., Portugal), focusing on early-stage growth. Strict Limits Excluding Most Companies: Very low size caps (e.g., <EUR10 million turnover) limit reach and practicality, excluding growing companies needing incentives.
Employee eligibility/employee status Who can participate, including employees, contractors, and board members. Employees & Key Contributors: Includes all employees and core contractors with tenure, enabling broader participation (e.g., Ireland‚ KEEP). Employees and Select Contractors: Limited to employees plus key contractors (e.g., Poland), allowing some flexibility. Employees Only or Excluding Contractors: Limitation to full-time employees only reduces flexibility, not suited for startups needing diverse workforce models.
Shareholder
rights upon exercise of options The rights granted to option holders once they exercise their options and become shareholders Employees receive no voting rights upon exercising options, minimising their influence on corporate decisions and enabling the company to make quick decisions, reducing the administrative burden eg. France (BSPCE options typically convert to non-voting shares).
Employees receive dividend rights which allow employees to participate in profits as soon as they exercise. Employees are issued non-voting shares or limited consultation rights, informed of major decision but without direct control, eg. Ireland. exercised options convert to non-voting shares, employees are informed of key corporate decisions.
Estonia: Employees exercising options receive limited consultation rights and are generally issued non-voting rights.
Employees receive dividend rights, provided they meet holding terms. Aligns employee interest with company success. Employees are issued full voting rights or required consultation rights, requiring employee shareholders to be involved in key decisions, eg. Belgium: exercised warrant options often result in full voting right, requiring employees to participate in shareholder meetings.