The terms are related in that the term "qualified" can describe a type of ESPP offered to employees. For example, a qualified ESPP is a plan that meets the requirements of Section 423 of the Internal Revenue Code (the "Code"). Qualified ESPPs allow employees to purchase stock at a discount (usually a 15% discount) from fair market value without any taxes owed on the discount at the time of purchase. Employees may receive favorable tax treatment if they hold the shares for at least two years from the grant date and one year from the purchase date.
Non-Qualified ESPPs do not meet the requirements Section 423 of the Code. However, a non-qualified ESPP may be structured like a qualified ESPP, or it may offer different benefits from a qualified ESPP, but without the preferred tax treatment for employees.
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