Set up a savings company

If you have a lot of savings or low yield assets as a private individual, these are taxed annually for personal income tax purposes (Box 3). You will be deemed to have received a notional return on your wealth (assets less liabilities) as at 1 January of the relevant year which, after deducting the tax-free allowance, is then taxed at a rate of 31%. The notional return on assets between EUR 50,001 and EUR 950,000 is 4.5% for the tax year 2021, and 5.69% for assets in excess of EUR 950,001. This equates with an effective tax rate of 1.76% on the value of your wealth in Box 3.

As you do not currently get any return on your savings or may in fact have to pay negative interest, it can be very attractive to place your savings or other low yield assets in an existing private limited liability company, or one specifically set up for that purpose, before 31 December 2021. It will be possible to withdraw those savings from the company tax-free after a certain period of time. The company will only pay 15% corporation tax on the actual return received (savings interest) up to an amount of EUR 395,000 (2022), and 25% on the excess return (or 25.8% if this rate is introduced). If the return achieved is subsequently paid to you in a private capacity, you will owe personal income tax on that amount at a rate of 26.9% (Box 2). In the case of low or no yield assets, this combined levy is considerably lower than the 31% tax (Box 3 rate) on the notional return calculated. 

If you set up a private limited liability company, do bear in mind that you will incur one-off incorporation fees payable to the notary. Then there are the annual maintenance costs, such as for keeping the company’s accounts and records and filing its corporation tax return. These costs should be considered when determining whether a savings BV would be attractive for you. 

If you have any questions, please feel free to contact us without obligation. 

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