Belgium's Geens Eyes End To Savings Tax Perk
15 May 2013
Posted by: Author: Ulrika Lomas
Source: Ulrika Lomas (Tax-News.com, Brussels)
Provoking fierce opposition from both the Flemish Liberals and Socialists, Belgium's Finance Minister Koen Geens has called for an end to a highly popular savings tax break.
Finance Minister Geens insists that savings account investments in Belgium are currently too heavily subsidized by the state. The Minister therefore advocates that the withholding tax exemption applicable to such accounts be abolished and that a withholding tax of 15 percent be imposed on classic savings accounts.
Echoing these views, NBB Central Bank Governor Luc Coene suggested that instead of the savings tax shelter, greater tax breaks could be awarded for long-term investments, including the purchase of state bonds.
In contrast, President of the Flemish Socialist Party (SP.A) Bruno Tobback warned that plans to abolish the withholding tax exemption and to establish a 15 percent rate of withholding tax for savers would merely be detrimental for investors.
It is estimated that EUR240bn (USD311.4bn) is currently invested in savings accounts in Belgium. Interest earned on savings is exempt from withholding tax up to a threshold of EUR1,880. Opponents of the tax break argue that this money does not serve to finance the real economy.
The Belgian Government is also considering the idea of a setting up a centralized databank, to clamp down on tax evasion, and to prevent abuse of the savings tax perk. The Central Bank is due to submit its report on plans for a profound reform of the country's financial sector by the summer.