A Peaceful Future, Tax Savings Worth Thousands, and State Contributions Still This Year?
These Products Can Make It Happen
With just two months left until the end of the year, now is the perfect time to review your personal finances. Check whether your savings are earning enough returns, whether you’re properly covered for unexpected events, and whether you’re taking full advantage of state contributions and tax deductions. These benefits can add up to thousands of crowns every year — and when it comes to the long-term appreciation of your savings, even hundreds of thousands or millions.
Our overview of state-supported financial products — from pension savings and long-term investment products to building savings and life insurance — will help you quickly understand how much each option can bring you and how to set them up correctly.
Good news to start with: It’s still possible to set up state-supported products this year — but don’t leave it until the very last minute, when financial institutions are overwhelmed with year-end requests. If you act now, you can still secure this year’s tax deduction and qualify for state contributions. You’ll also have everything set up to make the most of these benefits in the new year — and, most importantly, to make your money truly work for you.
If you already have some of these products in place, we’ll be happy to review them with you to make sure they’re properly optimized and that you’re not missing out on any money. In many cases, you can easily fix any gaps by simply sending the remaining contribution to the product account.
Supplementary Pension Savings (Doplňkové penzijní spoření)
Pension savings remain one of the most advantageous ways to build a financial reserve for retirement while also receiving state contributions. With a dynamic investment strategy, average returns can realistically reach around 7% per year.
For example, a monthly contribution of CZK 1,700, combined with the state contribution and this average return, could bring you about CZK 350,000 after 10 years, over CZK 1 million after 20 years, and more than CZK 2.3 million after 30 years — not bad, right?
State contributions and tax deductions are an extra bonus. If you contribute at least CZK 1,700 per month, you receive the maximum state contribution of CZK 340 per month, i.e. up to CZK 4,080 per year. The minimum contribution to qualify for the state benefit is CZK 500 per month, which earns you CZK 100. The state contribution is credited quarterly for every month you qualify.
You can also benefit from a tax deduction that applies to contributions exceeding CZK 1,700 per month. This allows you to reduce your taxable income by up to CZK 48,000 per year, which saves you up to CZK 7,200 in income tax. This limit is shared with other eligible products — such as the long-term investment product (DIP), life insurance, and long-term care insurance. To qualify, you can make a one-time contribution before year-end.
Your employer can also contribute up to CZK 50,000 per year to your pension savings, completely exempt from payroll taxes and social/health contributions. This same limit applies across all eligible products. If you are both the owner and employee of your own company, it’s perfectly acceptable to contribute to your own account this way.
Important reminder: If you still hold an older pension plan (the so-called transformed fund) and you’re far from retirement, it’s highly advisable to switch to the newer supplementary pension savings scheme. Keeping your money in old funds with minimal returns means losing potential profits. We can handle this transfer for you quickly and easily.
Long-Term Investment Product (Dlouhodobý investiční produkt – DIP)
The Long-Term Investment Product (DIP) is a modern way to build retirement savings through investments — while also enjoying even easier access to tax benefits.
Through a DIP, you can invest in mutual funds, specific stocks, or ETFs. Unlike pension savings, you can manage your investments more actively — ideal for experienced investors or those who prefer professional portfolio management. You can build your portfolio nearly freely, and with higher risk, potentially achieve higher returns.
A big advantage is that the entire invested amount qualifies for the tax deduction — not just the portion above a certain threshold, as with pension savings. This means any investment made within a DIP counts toward the annual CZK 48,000 deduction limit.
The best strategy is to combine supplementary pension savings with a DIP. Pension savings give you the state contribution, while the DIP offers greater flexibility and broader investment opportunities. Together, they form an efficient way to maximize both state support and tax benefits.
Life Insurance
Life insurance provides financial protection for unexpected events — and in the case of investment life insurance, it can also help you build a long-term reserve for retirement. Part of your premium covers risk protection (for injury, serious illness, or disability), while the savings component is invested according to your chosen strategy, similar to pension savings.
Investment life insurance can also reduce your taxable income. If your policy meets the conditions for tax benefits (i.e. it includes a savings component), you can deduct up to CZK 48,000 per year of the amount you’ve contributed to that portion.
Long-Term Care Insurance
Long-term care insurance is a relatively new but increasingly important product that helps cover the costs when a person becomes dependent on the assistance of others due to illness, accident, or age.
If you become unable to care for yourself, the insurance company starts paying a regular benefit, which can be used to cover care services, nursing home costs, or rehabilitation. This also helps reduce the financial burden on family members who may have to reduce their working hours to provide care.
In addition to providing financial security, long-term care insurance also offers tax advantages — you can deduct up to CZK 48,000 per year from your taxable income for the premiums paid.
Building Savings (Stavební spoření)
Building savings are one of the most traditional and secure ways to grow your money while still receiving state support. The state contributes up to CZK 1,000 per year, provided you deposit at least CZK 20,000 into your account during the year. The state contribution can only be granted once per year.
Even though the state support has been halved in recent years, combining it with interest on deposits and potential bonuses from building societies still makes this a safe choice for conservative savers.
If you haven’t received the contribution for this year yet, you can still get the full amount — simply open a new contract and deposit at least CZK 20,000 before December 31. The contribution applies to the total amount deposited within the year. Toward the end of the year, building societies also tend to offer special promotions, bonus interest rates, or cash incentives, making autumn the ideal time to start.
The binding period for building savings is six years, during which funds shouldn’t be withdrawn to avoid losing the state contribution. After that, you can use the saved money freely — as a financial reserve, for home renovation, or as your own capital when buying property. Another advantage is the option to obtain a low-interest loan for housing-related purposes such as purchase, renovation, or furnishing.
And just to remind you — if you are repaying a mortgage or another home loan, you can also deduct the interest paid from your taxable income next year. For loans signed after January 1, 2021, the deduction limit is CZK 150,000 per year; for older loans (before 2021), the limit remains CZK 300,000 per year.
Ready to Secure Your Financial Future?
Would you like to make the most of state support and tax advantages while building financial security for the future?
Contact us — we’ll review your current setup, recommend the ideal combination of products, and ensure you’re maximizing every available benefit.
A few minutes of your time can save you thousands of crowns today — and hundreds of thousands or even millions in the years to come.
