When do you have to pay taxes on your savings proceeds?

Anyone who keeps their money in a regulated savings account enjoys tax relief. This means that you do not have to pay taxes on a certain portion of the savings proceeds. Once you exceed this limit, you owe the tax authorities a 15 percent withholding tax.

Context: The tax break for structured savings accounts is usually adjusted to match your increased life expectancy. Over the past four years, the government has temporarily suspended the standard linkage process to finance budget efforts made during the Corona crisis. That changed this year. The tax exemption has been increased from 980 to 1,020 euros.

• If your savings generate larger returns, you must pay a 15 percent withholding tax on everything over that maximum amount. This is an appropriate rate. You typically pay 30 percent tax on all capital returns.

clarification: The more profitable the savings account, the faster you will have to hand over part of the proceeds to the tax authorities.

• We take the Ritme Savings Account from VDK Bank – the most profitable savings account on the Belgian market – as an example. Anyone who puts their money in this account earns 3.15 percent interest. This means that a portion of your savings proceeds flows into the government treasury once there is more than €32,380 in your savings account.
  • but: The VDK Bank formula allows you to save a maximum of 500 euros per month. So you'd have to save for about 65 months to reach this amount.
• Traditional savings accounts bring in less money, which means it takes longer before the tax authorities demand a share of the pie. For example, anyone who puts money into a regular BNP Paribas Fortis savings account would have to be satisfied with an annual return of 0.75 per cent. In this case, there must already be €136,000 in your account before you have to hand over a cent to the tax authorities.

attention: The tax exemption applies to every person, not every bank or account.

• If all your money is parked in the same bank, withholding tax (if necessary) will be deducted at source.
• If you have savings accounts in several banks, you should check for yourself whether you will receive interest of more than €1,020 this year. If so, you must declare the income on which you owe taxes on your tax return.

Unregulated savings accounts

but: The above arrangement only applies to regulated savings accounts.

• Savings accounts must meet a number of conditions in order to be considered regulated. For example, the total return should consist of the fidelity premium and the prime interest rate. The fidelity premium must be at least 0.1 percent and the prime interest rate must be 0.01 percent.
• With so-called unregulated savings accounts, you have to pay a 30 percent withholding tax on all interest. Almost all Belgian savings accounts are regulated.
  • The savings account of the Internet bank Izola Bank is one of the exceptions. This formula is accompanied by a gross interest of 2.25 percent or net 1.57 percent.

I noticed: The question is whether the tax break has a long life. After all, there are calls to abolish the Fidelity Bonus, meaning that in principle it is no longer possible to talk about regulated savings accounts.

• For example, Alexia Bertrand (Open VLD), Secretary of State for Consumer Affairs, no longer wants to oblige banks to offer such a bonus to their customers. The FSMA and the National Bank of Belgium (NBB) are also not opposed to the abolition of the fidelity bonus.
  • On the other hand, financial institutions prefer to maintain the premium. BNP Paribas Fortis recently warned that eliminating the fidelity premium could lead to dire consequences for both banks and clients.
  • “We have a unique system in Belgium where banks offer mortgage loans at a fixed interest rate. 87% of home loans at BNP Paribas Fortis are from this Type”. Trends.be. “This system is made possible by the stability of savings deposits, and this stability is partly guaranteed by the fidelity premium.” This premium forces savers to keep their savings for twelve months. If they don't, they could lose a significant portion of the interest.

Do you want to stay up to date with everything happening in the financial world? Niels Silence, a journalist with a passion for finance, follows everything closely. during this link You can subscribe to his daily newsletter.