Incentivizing investment in public listed companies, ETFs, and bonds
In December 2023 the Czech government introduced a new long-term investment product (called DIP in Czech) which is another tax-supported form of retirement security. The product has been available since January 1, 2024.
One of the primary advantages of DIP is its flexibility in investment options, allowing individuals to invest in a broader range of assets, including cash, securities (stocks, ETFs), mutual funds, bonds, and derivatives. This service can be accessed through regulated securities dealers, investment companies, or banks.
DIP also offers a tax benefit of up to around EUR 2000 per year, surpassing the current EUR 1000 per year benefit for pension funds and life insurance. Additionally, there is the advantage of employer contributions, with a common limit of 50,000 CZK per employee. All income, including employer contributions, will be tax-exempt.
DIP is a long-term investment intended to run for 10 years or more, with no option for early withdrawal of funds before the age of 60. Doing so would result in the investor forfeiting all tax benefits retroactively.
While DIP is not classified as a pension, it will be treated the same as supplementary pensions and life insurance products. The aim of these tax advantages is to incentivize investment in public listed companies, ETFs, and bonds.
