While private capital gains usually remain tax exempt in Belgium, dividend and interest income is heavily taxed. How much can you have in your savings account before being taxed? What is the tax amount due in that case? What if you own several accounts with different banks?
In Belgium, interest on a Regulated Savings Account is exempt from withholding tax (WHT) up to €1,020 (tax year 2025) per year and per taxpayer. If the account is in two names, the exempted amount doubles to €2,040. Once the total interest earned exceeds the exemption threshold, the amount above it is taxed at 15% WHT.
You probably wonder how much can you save tax-free? The amount you can keep in your savings account without being taxed obviously depends on the interest rate offered by your Belgian bank. For example, if your savings account offers a total interest rate (base rate + loyalty premium) of 0.75%, you would need to have €136,000 in your bank account to generate €1,020 in interest.
Does it help to distribute your savings across multiple accounts? Unfortunately, you cannot avoid tax this way. The exemption applies per taxpayer, not per account. The total of your interest income is taken into consideration, regardless of which bank holds your savings. If you have multiple accounts and your total interest exceeds €1,020, you must report the interest income yourself in your annual tax return.
Are there alternative investments available? Long-term accounts or savings bonds are types of savings where your money is locked for a set period, and you receive a predetermined interest rate. Currently, the interest on a term account or savings bond is around 3% and is taxed at 30% WHT. On the other hand, the Branch 21 Savings Insurance is a life insurance policy with a guaranteed base interest rate. You do not pay WHT if you stay in the policy for at least eight years or if you take out death coverage. This can be a smart way to avoid taxes (with a guaranteed return currently around 2%). However, this only makes sense if you can afford to lock away your money for the next eight years.
What can you do if interest rates rise? In that scenario, you will logically need less capital to earn €1,020 in interest. It is worthwhile to regularly evaluate your savings situation and make adjustments if necessary, such as moving your savings to other types of investment products.
What does the future hold? The EC believes that the Belgian tax exemption for Regulated Savings Accounts and the reduced 15% WHT rate contradict the free movement of services and capital. Foreign banks may not be able to compete with Belgian banks due to the very specific conditions for the exemption. The EC is currently challenging the latter before the European Court of Justice.
TAXPATRIA® can provide guidance on optimizing your tax-efficient investment strategy.