Pay attention, checking account owners: You can expect taxes to be withheld on certain money in 2024. Here’s what it’s all about.

Among the various features to consider when opening a current account, such as opening costs and commissions, the tax charges linked to the account should not be underestimated. There are two taxes foreseen by current account legislation. The first is the stamp duty, the second is the withholding tax on the credit interest that is accrued on the account.

Be careful, you risk tax withholding on this money in current accounts –

The bank applies a withholding tax of 26% on all interest income from deposits, i.e. from the money in the account. This is called withholding tax because it is deducted directly by the bank as a substitute tax, and then paid to the State in favor of the account holder. A rate of 26% is therefore applied to gross interest. We can divide them into gross interest which does not consider withholding tax and net interest which does consider it.

For example, choosing a current account with a gross rate of 2%, we will have a net rate of 1.48%. On 2,000 euros deposited during a quarter, the gross interest is therefore 10 euros, but the account holder will only see 7.40 euros arrive, given that 2.60 are removed for tax withholding.

Current accounts and tax withholding: how much you lose

In summary, therefore, in the event of credit interest on the sums in the account, the withholding tax of 26% on the interest must be paid. Credit or active interests are those that the bank recognizes to customers for depositing capital for financial operations. We remind you that stamp duty is also mandatory on all current accounts. This is a fixed amount, payable annually, quarterly or monthly.

Here’s what you should expect in terms of tax withholding on current accounts –

For natural persons it costs 34.20 per year (people with an average annual balance under 5,000 euros are exempt). For legal entities the bubble is 100 euros per year. It should be noted that many banks prefer to take care of the burden of stamp duty instead of having the account holder pay it, offering advantageous offers, especially on online accounts.

To calculate the interest on the current account (and therefore the withholding tax) there is a simple formula. Interest = (deposited capital * interest rate * time)/36500. This will give you gross interest, from which you will then have to remove account fees and tax withholding. Be careful in the case of stamp duty, because the average balance of the account must be considered. This can be a kind of property tax, even with the fixed amount.

If you receive only one bank statement per year, the stamp duty will be paid only once, paying 34.20 euros. In the case of a monthly statement we will have to pay 2.85 euros per month and in the case of a quarterly statement we will pay 8.55 euros per month. There is also the six-monthly option, with 17.10 euros every six months. We remind you that for all these cases you pay only if the average balance, whether monthly, quarterly, half-yearly or annually, exceeds 5,000 euros.