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Savings account at Greek banks? Tax on interest rates increased to 15%, retroactive 1.1.2013

They rip you off the moment, they smell you have a euro or two in your pocket or even worst at a bank savings account. Tax on interest rates from bank deposits and other bank products is increased from 10% to 15% and thus retroactive from 1. January 2013.

According to a statement by the Greek Banks Association (HBA), in accordance with the provisions of the recently adopted tax law, the tax rate on interest rates will be increased from 10% to 15% and banks will withhold the difference of 5% of the tax retroactive from 1. January 2013.

The tax increase refers to bank deposits, foreign bonds, repos, any form of securities issued by securities issued by subsidiaries of Greek banks abroad, bonds and Treasury bills of Greek state, Greek corporate bonds and securities issued in Greece by the European Investment Bank, the  the International Funding Bank, the International Bank for Reconstruction and Development, the European Bank for Reconstruction and Development and the Asian Development Bank.

In this context,  banks operating in Greece are required to make retroactive withholding of the tax difference (5%) from 1.1.2013, starting on 14. January 2013.

In simple words: if you have 50,000 euro in bank deposit with a 3.5% interest rate, you have been receiving 1.750 euro in interest year per year – 10% tax (175 euro) = 1,575 euro per year. Or 145 euro per month – 10% tax = 131 euro.

With the new tax up of 15%, you will receive net just 1,488 euro per year or 124 euro per month

Furthermore, you will have to pay to the state retroactive via the bank some 3,50 euro for the two first weeks of January 2013.

If you consider a state is so greedy because it needs to grab even 3,50 euro from your pocket, you ain’t see nothing yet… Think of all those having smaller amounts in the banks and will have to pay one euro or even less retroactive to the state.

Ridiculous!

PS I hope, I didn’t make any calculation mistake 🙂

 

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4 comments

  1. It all depends whether the 15% (or the 10% before it) are the final taxation, similar to the ‘Abgeltungssteuer’ in Germany or Austria. ‘Final taxation’ means that the bank withholds the 15% (or 10% before) and that’s the end of the taxation. The owner of the deposit no longer has to declare interest income on his tax declaration.

    If it is indeed an ‘Abgeltungsssteuer’, the 15% is actually quite low (and the 10% before it were a give-away). My understanding is that the Greek income tax goes up to 46%. Where is fairness when income from work is taxed at 46% and income from capital only at 15%?

    The ‘Abgeltungssteuer’ in Austria is 25% and I believe it’s the same in Germany. So, income from capital is taxed at roughly half the rate as income from work. That can be justified because income from capital comes from capital which presumably has been taxed once before.

    • guess, the money on deposits has been declared and owner has paid taxes for it. the ‘income’ from interest rate varies from 100 euro to what? 1 million?

      • I googled a bit. It indeed seems to be an ‘Abgeltungssteuer’, so 15% is not bad at all. Expect it to be gradually increased. What is always unacceptable in a ‘normal’ state of law is retroactiveness of new laws. Greece doesn’t seem to be very ‘normal’ in that regard. Last year the retroactive CACs, this year the retroactive tax.