Tax relief on saving for your home and your retirement

Secure your financial future with a tidy nest egg

Tax relief on saving for your home and your retirement

Secure your financial future with a tidy nest egg

Want to build some financial security into your life? There's nothing better than tax-advantaged saving. With pension saving and long-term saving, you can get annual tax relief of 30% on the amount you save. At the same time, you accumulate a nice little nest egg. And, if you start a long-term saving plan when or soon after you start working, the amount set aside can be used to pay the mortgage protection cover on the loan for your home.

Get 30% tax relief each year on the amount saved

Pension saving and long-term saving let you pay less tax (30% of the sum you save). So, if you put aside 1.000 euros, you'll get tax relief of 300 euros in the next year. Save 100 euros a month and the 1.200 euros you set aside in a year will save you 360 euros in tax.

Tax-advantaged saving: maximise your tax relief entitlement

The maximum amount qualifying for tax relief on pension savings schemes is 940 euros a year (or 78,33 euros a month).

The maximum amount qualifying for tax relief on long-term saving plans is dependent on your earned income. The annual figure is 6% of your net taxable earned income plus 169,20 euros, which is different from your net pay. Calculate your net taxable earned income with the KBC Tax Planner. You'll also find the figure on last year's tax assessment notice under 'Gezamenlijk belastbaar beroepsinkomen’ (joint taxable earned income). Someone with net taxable earned income of 24.000 euros per year can save 134,10 euros per month (1.609,20 in that year). There is an absolute maximum of 2.260 euros per year.

Save for your home …

With long-term saving, you make it easier to buy or build a home of your own later in life. The amount you accumulate now and claim tax relief on is later used to pay the premium for your mortgage protection cover. On average, you have to save 5.000 euros to insure a 200.000 euro home loan. By saving 50 euros per month, you can accumulate that in just over nine years. 100 euros a month gets you to your goal in less than five years.

If you go to another bank for your mortgage, they will only have to arrange insurance for the amount not covered by what you've saved by then via KBC.

Save for your other projects later in life

Whilst you're paying off your home loan, the tax benefit you get from long-term saving will reduce or disappear. Once you pay off your home loan, you will again qualify for tax relief on the amounts put aside under your long-term saving plan. You'll get back 30% of the amounts saved, even after retiring, as long as you still pay tax then. This is a major benefit because pension saving stops in the year you turn 64. You can use the accrued savings for any purpose.

Double your pension pot

“'What? My pension? I've only just started working. That's miles away.' If that's what you think, you're not the only one. But let us give you food for thought. The longer you put off, the less capital you'll have when you do retire. The earlier you start, the bigger your tax-advantaged savings will be.

An example:

Suppose the maximum for tax purposes stays the same at 940 euros,
you save the same amount each year and the average return is 6%. 

  • If you start to save on your 25th birthday, the plan gives you 138.000 euros to retire on
  • If you start to save on your 40th birthday, the plan gives you 49.000 euros to retire on 

The moral of the story is that you should start saving for your pension as soon as you can. The sooner you begin, the more financial freedom you'll have after retiring.

Start cautiously, build up at your own pace

Of course, setting aside money is not always easy when you've just started working. That's why you can start a pension savings scheme with just 10 euros per month and a long-term saving plan with 25 euros a month.  You can combine the two starting at 35 euros per month.

If you want to increase your rate of saving after a while, you can do so at any time.

Tax-advantaged saving is a win-win-win situation

Because of how tax relief works, when you combine pension and long-term saving, you cash in three times:

  • You have a tidy little pension to look forward to
  • You get tax back on your savings, which build into a sum that you later use to finance mortgage protection cover when you take out a home loan, even if you arrange your mortgage with another bank
  • Every year your savings qualify for tax relief, you pay less tax. And, if you still pay tax after retiring, that continues long afterwards under a long-term saving plan


We're ready to help you

When should I best raise the amount I save? When is it advisable to tone down my savings plans? And for how long should I do so? These are not easy choices, which is why we're on hand to help. We put together tax-advantaged savings plans that are tailored as closely as possible to your own personal situation. Call us, or start a video chat. We’re ready and eager to help you.

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