Daně a legislativa ČR
DIP and Tax Reliefs: How They Work and When They Pay Off
Key takeaways
- DIP allows you to deduct your own contributions from the tax base — the combined cap with pension and life insurance is up to CZK 48,000 per year.
- At a 15% tax rate this amounts to a real tax saving of up to CZK 7,200 per year.
- Funds are generally locked in until age 60 and for at least 10 years from opening.
- Early withdrawal generally means the clawback of all claimed deductions.
- DIP can be invested in ETFs and shares — the choice of products is broader than with pension savings.
DIP — Long-Term Investment Product — is a scheme introduced in the Czech Republic from 2024 that allows contributions to be deducted from income tax in return for a commitment not to withdraw the invested funds for a specified period.
How large is the tax saving
Personal contributions to DIP, pension savings and supplementary pension savings and life insurance can be deducted from the tax base within a combined annual limit of up to CZK 48,000. At the basic 15% income tax rate, this means a tax saving of up to CZK 7,200 per year. If you are subject to the higher 23% rate, the saving is even greater.
Conditions for retaining the deduction
For the state to let you keep the tax benefit, you must satisfy two conditions:
- Age at least 60 at the time of withdrawal
- At least 10 years from the conclusion of the contract
Early termination of the contract or withdrawal outside these conditions generally means clawback of all claimed deductions in the year of withdrawal. This is therefore genuine locking-in of funds — not merely a formal commitment.
How DIP differs from pension savings
DIP generally offers a broader choice of investment instruments — it is possible to invest in ETFs, shares or funds. Pension savings (transformed funds) are more conservative and investment options are restricted by law. DIP is suitable for investors who want to combine tax relief with more active investment in ETFs.
A comparison of DIP vs. pension savings from a tax perspective is in the article pension savings vs. DIP from a tax perspective.
This article does not constitute tax advice. DIP terms, limits and rules may change — verify the current position or consult a tax adviser. See also taxes on ETFs in the Czech Republic.
FAQ
What is DIP and why was it introduced?
DIP (Long-Term Investment Product) is a scheme introduced in the Czech Republic from 2024. It allows personal contributions to be deducted from the tax base in return for a commitment not to withdraw funds before age 60 and after a minimum of 10 years from signing the contract.
How large is the tax saving through DIP?
The combined annual limit for DIP, pension savings and life insurance is up to CZK 48,000. At a 15% income tax rate this corresponds to a saving of up to CZK 7,200 per year. At 23% even more.
What happens if I withdraw money from DIP early?
Early withdrawal generally means you are obliged to claw back all claimed deductions in the year of withdrawal. The relevant tax administrator must be notified of this, so it is a real risk, not merely theoretical.