This article offers a clear overview of two long-term savings and investment options in the Czech Republic: the Long-Term Investment Product (DIP) and the Supplementary Pension Savings (DPS). Both are suitable for foreigners with residence and income in the Czech Republic, offering attractive tax advantages and better retirement preparation.

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In this article, you’ll learn about two important ways to strengthen your long-term financial security in the Czech Republic: the Dlouhodobý investiční produkt (DIP) — Long-Term Investment Product — and the Doplňkové penzijní spoření (DPS) — Supplementary Pension Savings. Both offer attractive tax benefits and can play a key role in your personal retirement planning when used wisely.

What is the Long-Term Investment Product (DIP)?

Despite the name, the DIP is not a single product but a tax-advantaged investment framework, introduced in the Czech Republic by Act No. 462/2023 Coll., effective from January 1, 2024. Its goal is to motivate individuals to build retirement savings through long-term investments in various financial instruments.

Unlike traditional pension savings, the DIP provides greater investment flexibility. Within this regime, you can invest in mutual funds, ETFs, stocks, bonds, or other vehicles that fit your risk profile and financial goals. The tax advantages are tied not to a specific product but to whether your investments meet the conditions of the DIP regime.

Key Tax Benefits of the DIP:

Annual tax deduction up to CZK 48,000:

You can deduct up to CZK 48,000 in personal contributions from your taxable income — saving up to CZK 7,200 per year at a 15% income tax rate.

Tax-free investment gains:

Returns on investments under the DIP are not taxed annually and remain fully exempt if you hold the investment for at least 10 years and withdraw funds only after age 60.

Employer contributions:

Employers can contribute up to CZK 50,000 per year, exempt from income tax and social/health insurance. Combined, this means up to CZK 98,000 per year in tax-advantaged contributions.

Foreign nationals can open a DIP if they:

Have tax residency in the Czech Republic (this is crucial!).

Have taxable income from the Czech Republic (employment, business, etc.).

Sign an agreement with a registered DIP provider (such as a bank or licensed investment company).

What is the Supplementary Pension Savings (DPS)?

DPS (Doplňkové penzijní spoření) is the standard third-pillar pension scheme in the Czech Republic. Unlike the DIP, it is a specific product type, offered by licensed pension companies.

Anyone with a Czech birth number (rodné číslo) or substitute ID (insurance number) can open a DPS account if they contribute at least CZK 100 monthly. Foreign nationals can have DPS if they:

Have permanent or long-term residence in the Czech Republic.

Have a work permit or run a business in the Czech Republic (e.g., as a self-employed person).

Have Czech tax residency (important for the tax advantages).

Have been assigned a birth number or substitute insurance ID.

To receive state contributions, you must contribute at least CZK 300 monthly and be part of the Czech social and tax system.

To illustrate how these savings options can work in practice, here’s a simple comparison:

A: A 30-year-old client saves CZK 1,700 per month into DPS and receives an additional CZK 340 monthly as a state contribution. With an average annual return of 6% p.a., the total value at age 60 would be around CZK 1,729,000.

B: A 35-year-old client invests CZK 4,000 per month in a DIP with an average annual return of 7% p.a. This would grow to about CZK 2,750,000. In addition, the client benefits from an annual tax deduction worth up to CZK 48,000, which saves around CZK 7,200 in income tax each year. Over 25 years, this adds up to an extra CZK 180,000 in total tax savings.

Comparison of DPS and DIP Eligibility for Foreigners:

Type of Foreigner DPS DIP

EU citizen with permanent or long-term residence Yes Yes

Non-EU citizen with residence permit Yes Yes

Foreigner without residence but with Czech income Possible (with limitations) Yes, if tax resident

Foreigner with no residence and no income in CZ No No

Important Considerations

DIP is a regime, not a product: You must use an investment account or instrument that qualifies under the DIP rules and is offered by an approved provider.

Minimum holding period: To benefit fully from tax exemptions, you must keep the investment for at least 10 years and withdraw funds only after age 60.

No guarantees: DIP investments are subject to market fluctuations. A clear strategy and diversification are essential.

DPS is simpler and includes state support: DPS is more restrictive in terms of investment choice but includes a state contribution if conditions are met.

Employer contributions: Many larger employers in the Czech Republic offer contributions to DPS or DIP as part of employee benefit packages. These employer payments are tax-advantaged for both the employer and the employee and can significantly increase your total retirement savings.

Take the First Step Today

The Long-Term Investment Product (DIP) and the Supplementary Pension Savings (DPS) can both help you build a more secure financial future — and the two can complement each other well. Many people benefit from combining both tools to diversify their approach, balance flexibility with security, and maximize tax savings.

However, it is always important to choose the right products and decide on the appropriate ratio for distributing your money between the DPS and the DIP. This depends on your risk tolerance, time horizon, and personal retirement goals. A qualified financial advisor can help you design the best strategy, select suitable providers, and ensure you meet all conditions to take full advantage of the tax benefits.

Start planning today, your future self will thank you!