In the first quarter of this year, withholding tax revenue increased by 45 percent to almost 1.2 billion euros compared to the same period last year, driven by rising interest rates and the growing popularity of term accounts and bonds, as reported by De Tijd. This represents an increase of 362 million euros compared to the same period last year, according to new figures from the Federal Public Service Finance.
The European Central Bank’s interest rate hikes have led to higher yields on investments, which has contributed significantly to the increase in withholding tax revenue. Additionally, households have shifted billions from tax-friendly savings accounts to more heavily taxed investment products that offer better returns.
Between February 2023 and February 2024, around 30 billion euros were withdrawn from savings accounts while an additional 35 billion euros were placed in term deposits. Record amounts of bonds, including government bonds, were purchased last year. All proceeds from these investments are subject to the 30 percent withholding tax.
Overall, the increase in withholding tax revenue reflects the changing investment landscape as savers and investors seek higher returns in a rising interest rate environment.
