The tax-exempt threshold on earnings accrued in Belgian savings accounts will be raised for the first time in four years from 2024, according to a new analysis by l'Echo.
The study, which used current inflation data as well as predictions by the Federal Planning Bureau, Belgium's main economic forecasting body, estimated that the tax-exempt limit will be increased from €980 to €1,020.
Any interest income earned over the €1,020 limit will also be subject to a favourable withholding tax rate of 15%, instead of the 30% typically levied on bonds, stock dividends, and other financial assets.
Those who have multiple savings accounts will be required to determine themselves whether their net earnings exceed €1,020. If so, the 15% withholding tax rate will apply to their total savings income.
A freeze on the tax-exempt limit was imposed by Prime Minister Alexander De Croo's "Vivaldi" coalition government in 2020 to fund healthcare spending associated with the Covid-19 pandemic.
Limitless greed?
The forecast threshold hike comes as Belgian savers have experienced an enormous decline in earnings from their savings accounts in recent decades.
According to a report published earlier this year by the IESEG School of Management, the annual interest income of Belgian savers fell from €10.695 million in 2008 to €2.101 million in 2022 — a 80.36% reduction.
If interest revenues had remained at 2008 levels, Belgian savers would have accumulated a total of €87.543 million in additional savings over the past fifteen years, the study noted.
Savers' losses have largely been banks' gains, with many Belgian financial institutions posting bumper profits over the last couple of years.
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Belgium's six largest commercial banks (BNP Paribas Fortis, KBC, ING Belgium, Belfius, Argenta and Crelan) recorded total net earnings of €3.1 billion over the first six months of 2023 – roughly a quarter more than the same period last year.
Numerous analysts, including the IESEG, attribute banks' soaring profits specifically to their failure to pass on repeated interest rate hikes over the past year-and-a-half by the European Central Bank (ECB) to customers.
According to l'Echo, NIBC's Fidelity savings account currently offers the best savings rate in Belgium, at 3% – well below the 4% deposit facility rate provided to commercial banks by the ECB.
