Savings and investment following the new coalition agreement

Five major changes

Savings and investment following the new coalition agreement


On 26 July 2017, the federal government signed off on the new coalition agreement (its 'summer agreement'). Your banking will also be affected by the new budget provisions. Here, we explain the main impacts on private savers and investors in 2018.

Bear in mind, however, that this is not yet final since parliament has to vote on the new provisions and they need to be set down in legislation. The rules may eventually differ in form from what you read here, therefore.

Savings

Two pension saving schemes

Tax relief on your pension savings account is to be more flexible. The present system is retained, but a second option will be introduced in 2018. Choose for yourself:

  • Option 1 (as now): 
    You pay in up to 940 euros and qualify for 30% tax relief on the amount paid. You therefore get up to 282 euros back.
  • Option 2 (new):
     
    You pay in up to 1 200 euros and qualify for 25% tax relief. You therefore get up to 300 euros back.

Tax on interest from regulated savings accounts

You receive interest on your regular savings account at a certain rate. It's normally liable to tax (deducted by the bank when it's credited), but savings accounts are treated a little differently: the first portion of interest that you receive is tax free. Until now, the first 1 880 euros of interest was tax free. The figure now falls to 940 euros.

That said, few savings accounts yield even that amount of interest. Only if yours boasts a particularly large balance will the lower threshold affect you.

Investments

Exemption for share dividends

When you own shares, they can yield dividends, which also attract a tax charge (again, deducted at source), though a tax-free portion is introduced in 2018. The first 627 euros of dividends will now be exempt, though how exactly the measure will apply in practice is not yet known.

Custody accounts taxed

Custody account balances exceeding 500 000 euros per person trigger a 0.15% tax charge on the full account balance.

Stock market tax

The tax on trading in shares at a stock exchange through a professional broker rises from 0.27% to 0.35%. The tax on bonds rises from 0.09% to 0.12%.

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State Notes