The Belgian has a toxic relationship with his savings account; it’s time to break it

Despite increasing life expectancy, Belgians continue to park their money in a savings account en masse. Figures from the National Bank of Belgium show that regulated savings accounts held 300.7 billion euros in June. This is 1.3 billion euros more than in May. Belgians therefore remain very loyal to their savings account, but is it a healthy relationship?

The Belgian and his savings account, it could be a love story straight out of a fairy tale. Even ultra-low interest rates cannot break that relationship. Due to the low interest rate policy of the European Central Bank (ECB), many financial institutions have lowered the interest rate to 0.11 percent in recent years, the absolute minimum in our country.

Some banks, including KBC and ING, even introduced negative interest rates for large savers and legal entities. But now that the European regulator has announced an interest rate hike for the first time in eleven years, they are abandoning the negative interest rate. For example, KBC has already stopped this month, which was a month earlier than expected.

More than 300 billion euros in savings

Because many Belgians have parked huge amounts of money in a savings account in recent years, they are now less resistant to skyrocketing inflation. Even the low inflation of recent years has crippled savings. The banks note that this makes savers more interested in investing, but if we look at the capital in the savings accounts, we see that there is still a lot of money missing for work.

In June, there was a total of 300.7 billion euros in regulated savings accounts. These are savings accounts where you get an interest rate of at least 0.11 per cent. In addition, you enjoy tax exemption on savings income up to 980 euros per person. In addition, savings of up to EUR 100,000 are protected by the depositor guarantee scheme if a bank goes bankrupt. A combination of these factors ensures that Belgians remain very loyal to their savings account, even if they have to lose purchasing power.

Abolition of tax-free savings account

In recent years, various analysts have noted that our country needs to get rid of the divergent tax systems for investment and savings products. Savers and investors sometimes base their investment choices on what is the most tax-advantaged. In addition, they are less aware of their own investment goals and the advantages and disadvantages of certain banking or insurance products.

Vincent Van Peteghem (cd&v), finance minister, now appears to be responding to these reservations. His plan for tax reform states that he wants to get rid of the tax exemption for savings accounts. In return, a general exemption would amount to 6,000 euros for all capital income. “By tax-exempting an amount of income from savings, investments and investments, we ensure that everyone can build wealth,” the plan says.

If you only save, this means that the tax exemption is extended from 980 to 6,000 euros. Those who both save and invest should closely monitor their capital income in that situation to see when they jump over the cap amount. In any case, it is a step in the right direction, because in this way tax will no longer play a role in the investment choices that a saver or investor makes.

Not unimportant either: The minister will tax all capital income in the same way, which should greatly simplify the tax system for investors. “A fair tax system treats income from assets in the same way. We choose a tax rate of 25 percent for all recurring income from wealth.

Will he succeed? Of course, all this has yet to be discussed in the lap of the government. Those debates will undoubtedly be a lot of work. It is still unknown which tax reforms by Van Peteghem will actually see the light of day.

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