Tax on earnings from savings

Learn how interest on a savings account is taxed

Tax on earnings from savings

Learn how interest on a savings account is taxed

Withholding tax

You have to pay tax on income from moveable assets like interest on a savings account. This income tax is called withholding tax, which banks deduct before paying interest to your savings account.

Tax exemption

Savings accounts are regulated by the government. This has resulted in the interest on savings accounts being tax free up to 1,880 euros per individual (2017 figure, which may change each year).

If the savings account is in the name of a married or officially cohabiting couple, the exemption is doubled to 3,760 euros euros a year.

If you have a joint account with someone you're not married to or living with officially like your sister or brother, you can also get twice the amount of exemption by completing a certificate of double exemption from withholding tax at your KBC branch.

Deduction of withholding tax by banks

Banks must deduct withholding tax of 3,760 euros on interest above the threshold amount. Consequently, the withholding tax releases individuals entirely from future tax payments on the amount in question. This means that the interest no longer has to be included in their personal income tax return.

Example of an account held by an individual

Base rate of interest + fidelity bonus (accrued on 31 December)

1,920 euros

Withholding tax is payable on

1,920 euros - 1,880 euros (2017 exemption figure)= 40 euros

Withholding tax is

40 euros x 1,880 euros = 6 euros

Net interest on 31 December

1,920 euro - 6 euro = 1,914 euros

Example of a joint account held by a married or officially cohabiting couple

Base rate of interest + fidelity bonus (accrued on 31 December)

3,900 euros

Withholding tax is payable on

3,900 euros -  3,760 euros (2017 double exemption figure) = 140 euros

Withholding tax is

140 euros x 15% = 21 euros

Net interest on 31 December

3,900 euros - 21 euros = 3,879 euros

What if I have more than one savings account?

Banks look at each savings account separately. The total interest for all your savings accounts (whether with one or more banks) may be more than the mtax-free threshold. Interest on the accounts of minor children is also counted as interest earned on savings by their parents. Earnings on savings above the tax-free threshold must be declared in your tax return under code 1151 or 2151.

Example of an individual with savings accounts at several different financial institutions

  KBC KBC Bank X Bank Y
Interest accrued
2,000 euros 1,200 euro 1,150 euro 1,950 euro
Amount exempt from withholding tax (in 2017) 1,880 euros 1,880 euros
1,880 euros
1,880 euros
Interest from which the bank deducts withholding tax
120 euros 0 0 70 euros
Withholding tax deducted by the bank
18 euros 0 0 10.50 euros

Calculation of the amount that must be declared to the tax authorities

  • Total interest accrued where withholding tax applies: 2,000 + 1,200 + 1,150 + 1,950 = 6,300 euros
  • Total interest accrued where withholding tax is not deducted: 2,000 + 1,200 + 1,150 + 1,880 = 6,110 euros
  • Interest that must be declared: 6,110 – 1,880 = 4,230 euros

Can I get back withholding tax if I've paid too much?

The tax authorities do not provide a specific section on the tax return form for refunds of excessively deducted withholding tax.
If you've paid too much withholding tax, you'll need to submit a withholding tax refund claim to the local Belgian tax authorities:

Federale Overheidsdienst Financiën
Belastingen en invordering
Administratie van de Ondernemings- en Inkomensfiscaliteit
Brussel II Directie Vennootschappen
Gewestelijke Directie
Louizalaan 233 - 245
1050 Brussel

It's advisable to do so as soon as possible after interest has been paid to your account.


 

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