Belgium could end tax break for savings

Belgium’s finance minister, Koen Geens, has called for an end to a popular savings tax break, provoking fierce opposition across the political spectrum, writes Tax News’s Ulrika Lomas. Geens insists savings account investments in Belgium are too heavily subsidised by the state and advocates that the withholding tax exemption applicable to such accounts be abolished and a withholding tax of 15% be imposed on classic savings accounts. 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, SP.A president Bruno Tobback warned that plans to abolish the exemption and establish a 15% rate of withholding tax for savers would be detrimental for investors. It is estimated that €240 billion is currently invested in savings accounts in Belgium. Interest earned on savings is exempt from withholding tax up to a threshold of €1,880. Opponents of the tax break argue that this money does not finance the real economy. The government is also considering setting up a centralised 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.