Czech long-term investment product (DIP), how it works and how much tax you save

The long-term investment product (dlouhodobý investiční produkt, DIP) is a contract with a bank, a securities dealer or an investment company under which you put money aside for retirement in selected investments. You can deduct DIP contributions from your tax base (základ daně), up to 48,000 CZK (about 2,200 USD) a year in total together with supplementary pension savings (doplňkové penzijní spoření, DPS) and private life insurance, under Section 15(6) of the Income Tax Act (zákon o daních z příjmů). At a 15% tax rate, that saves you up to 7,200 CZK (about 330 USD) a year, at 23% up to 11,040 CZK (about 510 USD).

The tax relief comes with a condition. You can only withdraw the money without paying the tax back after 120 months from opening the DIP and no earlier than in the year you turn 60. If you withdraw earlier, you return the tax you saved for up to 10 years back. The rules in this article apply as of 2 October 2026, and the already promulgated wording of the laws effective from 1 January 2027 does not change the DIP provisions either.

What a long-term investment product is and who can offer it

The DIP was introduced by Act No. 462/2023 Coll. and has been available since 1 January 2024. It is not a specific fund. It is a special contract under Part Twelve of the Capital Market Undertakings Act (zákon o podnikání na kapitálovém trhu), under which the provider holds your money and investments with tax support. No existing investment account or savings plan turns into a DIP by itself, you need to sign a new contract (Ministry of Finance, Ministerstvo financí).

A DIP may only be offered by a bank, a credit union, a securities dealer, an investment company, a self-managed investment fund or a similar foreign firm permitted to operate in the Czech Republic (Section 134g(2)). Each DIP has a single provider. The law does not limit how many DIPs you can open, but the 48,000 CZK (about 2,200 USD) deduction limit is one for all of them combined.

What you can invest in through a DIP

What a DIP may hold is set by a closed list in Section 134i of the Capital Market Undertakings Act. Which of the permitted investments you actually get depends on the provider’s offer, the law only sets the limits.

• cash, for example a term deposit or savings account
• shares, bonds and other investment securities and money market instruments admitted to trading on a regulated market or a multilateral trading facility in the EU, or on a non-EU market on the list of the Czech National Bank (Česká národní banka, ČNB)
• government bonds of EU countries and covered bonds of European banks, such as mortgage bonds (hypoteční zástavní listy)
• fund units and other collective investment securities, including ETFs
• derivatives, but only as a hedge against movements in interest rates or exchange rates

Shares of companies that are not traded on any market and derivatives for speculation do not belong in a DIP. Dividends, interest and proceeds from selling investments must stay inside the DIP. If you pay them out to your current account, you lose the tax advantage just as with an early withdrawal (Section 15b(4)(d) of the Income Tax Act).

How much tax you save at the 15% and 23% rates

The deduction lowers your tax base, not the tax itself. If you still pay some tax after the deduction, your saving equals the contribution multiplied by your tax rate. At the 15% rate you save 150 CZK (about 6.9 USD) for every 1,000 CZK (about 46 USD) paid into a DIP, in the 23% band you save 230 CZK (about 11 USD). The cap of 48,000 CZK (about 2,200 USD) a year equals a contribution of 4,000 CZK (about 180 USD) a month.

The 23% rate applies only to the part of the tax base above 36 times the average wage, which for 2026 means above 1,762,812 CZK (about 81,000 USD) (Section 16 of the Income Tax Act, the average wage for 2026 is 48,967 CZK (about 2,200 USD)). So the full 11,040 CZK (about 510 USD) is saved only by those whose tax base stays above this threshold even after deducting 48,000 CZK (about 2,200 USD). For an employee with the same salary all year and no other deductions, that means a gross salary of at least 150,901 CZK (about 6,900 USD) a month. If you are in between, you save part at the 23% rate and the rest at 15%.

The model calculation shows an employee contributing 4,000 CZK (about 180 USD) a month who works for one employer all year and claims only the basic taxpayer credit (sleva na poplatníka) of 30,840 CZK (about 1,400 USD).

When you save less than the calculator promises

The deduction cannot give you back more tax than you would have paid. The basic credit of 30,840 CZK (about 1,400 USD) covers the tax on a tax base of 205,600 CZK (about 9,400 USD) a year. You therefore get the full saving of 7,200 CZK (about 330 USD) only if your tax base does not drop below this amount even after deducting 48,000 CZK (about 2,200 USD). For an employee, this works out at a gross salary from roughly 21,140 CZK (about 970 USD) a month. With a salary of 20,000 CZK (about 920 USD) you save 5,160 CZK (about 240 USD) and the remaining 2,040 CZK (about 94 USD) of relief goes unused, because your tax is already zero.

The second trap is the shared limit. The 48,000 CZK (about 2,200 USD) includes premiums for private life insurance and long-term care insurance and also pension savings, but for pension savings only the part of the monthly contribution above 1,700 CZK (about 78 USD) counts (Section 15(7) of the Income Tax Act). If you pay 2,500 CZK (about 110 USD) a month into pension savings, you use up 9,600 CZK (about 440 USD) of the limit, which leaves you 38,400 CZK (about 1,800 USD), or 3,200 CZK (about 150 USD) a month, for a DIP with tax relief.

You can also put more than 48,000 CZK (about 2,200 USD) a year into a DIP. You only get relief up to the limit, but the 10-year and age-60 condition applies to all assets in the DIP (Ministry of Finance). Money above the limit is locked in just like the money with relief.

How to claim the deduction in your annual tax reconciliation or tax return

After the end of the year, the provider issues you a certificate of the assets credited to your DIP. Together with the contract, it is your proof of entitlement (Section 38l(1)(k) of the Income Tax Act). Employees hand it to their employer with a request for the annual tax reconciliation (roční zúčtování) by 15 February at the latest (Section 38ch). If you file a tax return yourself, you enter the deduction among the non-taxable parts of the tax base (nezdanitelné části základu daně), most quickly in a tax return filed electronically.

The deduction is calculated per calendar year. The law refers to contributions paid in the tax period and, for a DIP, to assets credited to the DIP, so do not leave your December payment until the last minute. Whatever reaches your DIP only in January can only be claimed for the following year.

Employer contributions to a DIP are tax-exempt up to a shared limit of 50,000 CZK (about 2,300 USD)

Your employer can contribute to your DIP, and the contribution is exempt from tax up to 50,000 CZK (about 2,300 USD) a year. The limit applies jointly to the DIP, pension savings, private life insurance and long-term care insurance (Section 6(9)(m) of the Income Tax Act). Because it is exempt income, no social security or health insurance contributions are paid on it either (Section 5 of Act No. 589/1992 Coll. and Section 3 of Act No. 592/1992 Coll.). Anything above 50,000 CZK (about 2,300 USD) is taxed, and insurance contributions are paid on it as on salary.

The employer contribution does not count towards your 48,000 CZK (about 2,200 USD) limit, the two limits run side by side. If your employer contributes and your tax base is high enough, up to 98,000 CZK (about 4,500 USD) a year can go into tax-advantaged retirement savings products. For comparison, if your employer adds the same 1,000 CZK (about 46 USD) of costs to your salary instead of making a contribution, you are left with roughly 549 CZK (about 25 USD) net after insurance contributions and 15% tax (employer contributions 24.8% and 9%, employee contributions 7.1% and 4.5%).

Your employer must not influence your choice of DIP provider or accept an incentive from a provider for doing so. The employer faces a fine of up to 1,000,000 CZK (about 46,000 USD) for this (Sections 134j and 163b of the Capital Market Undertakings Act).

When you can withdraw money from a DIP without paying the tax back

You can withdraw money without losing the relief only when both conditions are met at the same time. Since you opened the DIP, 120 calendar months have passed, and it is the calendar year in which you turn 60 (Section 15b(1) of the Income Tax Act). You do not have to wait for your birthday, the year is what counts.

If you open a DIP at 35, you can withdraw from the year of your 60th birthday. If you start at 55, you have to wait 10 years and can withdraw at 65 at the earliest. The exceptions are third-degree disability, a payout after the owner’s death, and the provider ceasing to exist or having its authorization revoked, provided you put the money into another DIP within a month. Transferring the whole DIP to another provider does not count as a withdrawal, and the time the original DIP ran is counted (Section 15b(4) and (7)).

A DIP lets you deduct contributions, but it does not exempt gains from tax. Selling shares or fund units inside a DIP is taxed under the normal rules, so tax is due if you have not met the 3-year holding test and your sale proceeds exceed 100,000 CZK (about 4,600 USD) a year. You have to pay this tax from money outside the DIP, otherwise it would count as a withdrawal (Ministry of Finance).

What happens if you withdraw from a DIP early

Withdrawing even 1 CZK (about 0.046 USD) before the conditions are met costs you the tax advantage. All contributions you deducted over the last 10 years become your income under Section 10 of the Income Tax Act in the year of withdrawal, and you pay tax on them. Employer contributions that were exempt in the year of withdrawal and the previous 10 years become taxable employment income (Section 15b(5)). You can no longer claim the deduction for the year of withdrawal.

A model example. An employee with a gross salary of 40,000 CZK (about 1,800 USD) pays 4,000 CZK (about 180 USD) a month into a DIP for six years and the employer adds 1,000 CZK (about 46 USD). The deductions saved him 43,200 CZK (about 2,000 USD). If he withdraws in the seventh year, 288,000 CZK (about 13,000 USD) of his own deducted contributions and 72,000 CZK (about 3,300 USD) of employer contributions are added to his income. Together this does not push him above the 23% threshold, so at the 15% rate he pays 43,200 CZK (about 2,000 USD) and 10,800 CZK (about 500 USD), 54,000 CZK (about 2,500 USD) in total. He has to file a tax return himself (Section 38g of the Income Tax Act).

Before you give such an instruction, the provider must warn you about the tax consequences on a durable medium, and you must declare that you are aware of them (Section 134h(1) of the Capital Market Undertakings Act). Money you may need within 10 years therefore does not belong in a DIP. Keep a financial reserve outside the DIP for unexpected expenses.

DIP or pension savings, how they differ

Supplementary pension savings (DPS) under Act No. 427/2011 Coll. and the DIP share the deduction limit and the withdrawal conditions under the Income Tax Act. They differ in the state contribution and in what the money goes into.

You can combine both products. Pension savings with a contribution of 1,700 CZK (about 78 USD) a month earn the maximum state contribution of 4,080 CZK (about 190 USD) a year and use up none of the deduction limit. A DIP with 4,000 CZK (about 180 USD) a month can add a tax saving of up to 7,200 CZK (about 330 USD) on top. Whether it pays off depends on the fees and returns of the specific products, which this article does not assess.

Before you sign a contract, check the provider on the ČNB list

The Czech National Bank keeps a list of providers that have notified it that they offer DIPs in the Czech Republic (Section 134k of the Capital Market Undertakings Act). You will find it in the Lists of Regulated and Registered Entities application (Seznamy regulovaných a registrovaných subjektů), in the section Basic Lists, Long-Term Investment Product Providers (Základní seznamy, Poskytovatelé dlouhodobého investičního produktu). The ČNB does not record your contracts there, only the institutions allowed to offer DIPs.

Check three things before signing. The institution must be on the ČNB list. The contract must be expressly called a long-term investment product contract (smlouva o dlouhodobém investičním produktu), an ordinary investment account does not give you the deduction. And work out how much of the 48,000 CZK (about 2,200 USD) limit your pension savings and life insurance already take up, so that you do not send money to a DIP without relief that will then be locked in for years.

Finally, compare the fees. Every crown taken as a fee is also missing from the compound interest of the following years. A one-off deposit with a fee 0.5% a year higher ends up roughly 5% lower after 10 years at the same return.

USD amounts are approximate, converted at the Czech National Bank rate of 21.80 CZK per USD on 2 October 2026.