Tax-supported retirement savings products – a long-term investment product

Tax support for products that aim to provide for retirement/old age has been extended this year.

➤ Up to and including 2023, certain products were tax-supported, the most common being “savings” in the form of private life insurance or pension (re)insurance (whether historically a state-contributed pension or a subsequently taken out supplementary pension savings).

➤ Since 2024, the range of tax-supported products of this type has been expanded to include, among others, the so-called long-term investment product (DIP). Through the DIP, (regular) investments are also newly tax-supported, which may be more risky than private life insurance or pension (re)insurance, but may yield higher returns. Under the DIP, funds can thus be channelled into a wide range of investment instruments, such as shares, exchange-traded funds (ETFs), mutual funds, exchange-traded bonds, investment certificates, etc.

The tax support for the DIP is similar to the above-mentioned retirement savings options and consists of a deduction of contributions paid from the tax base (in the maximum amount of CZK 48,000 per year) and an exemption of contributions paid by the employer on behalf of the employee (in the maximum amount of CZK 50,000 per year). However, these maximum annual limits do not apply only to the DIP, but apply to all retirement savings products taken together (including contributions to private life insurance or, for example, contributions to pension (re)insurance). The tax support for the DIP is also conditional, inter alia, on the fact that the DIP is not terminated before 120 months (10 years), but not before the taxpayer reaches the age of 60.