How much money can you have in your savings account before the Taxman takes notice?

How Much Money Can You Have in Your Savings Account Before the Taxman Comes Knocking?

Italians have always been inclined to save money, and as a result, many choose deposit accounts or savings books to safeguard their funds.
While these financial instruments keep savings safe from potential threats, the tax authorities may come knocking not only for tax payments on savings but also to verify the amount of assets deposited to detect any discrepancies with declared income.

In recent times, the tax burden on savings, whether held in accounts or invested, has significantly increased.
Any amount resulting from savings held in deposit accounts, savings books, or current accounts is subject to taxation, just like any other gains made through various financial products.

How Much Money Can You Have Before Paying Taxes?

Even savers do not find peace and tranquility when it comes to their savings.
Taxes are due on any money set aside, whether deposited or invested.
The first tax applied is the stamp duty on current accounts and savings books.

For individuals, stamp duty is due when the average balance on the current account or savings book exceeds €5,000, amounting to €34.20 for each year the balance surpasses that threshold.

For corporate accounts and associations, the stamp duty amount is €100 without a minimum balance requirement.

To calculate the average balance for stamp duty application, all daily balances must be added, then divided by the number of reporting days.
If the average exceeds €5,000, stamp duty is applied (€2.85 for each month the average balance exceeds the limit; some institutions may charge quarterly, semi-annually, or annually, depending on the signed agreement).

Changes in Stamp Duty for Deposit Accounts

When opting for a deposit account as a form of savings, one must also consider the stamp duty, which does not apply to earnings.
It is an indirect tax calculated on the average account balance annually.

It’s essential to note that not all deposit accounts incur this tax, as some credit institutions include the cost of the stamp duty in their customer offers.
To determine whether payment is required, it is advisable to inquire with the respective institution.

When the stamp duty on the deposit account is applicable, it amounts to 0.2% of the locked-in amount and is due only when the average balance exceeds €5,000.
Unlike the limit set for current accounts and savings books (which never exceeds €34.20 per year), there is no maximum limit for deposit accounts, and the tax is proportional to the amount.

It applies only to locked sums (those the customer cannot use) and does not affect the interest generated by the account.

For example, if you hold a deposit account with €7,000 locked-in opened on January 1, 2024, and maintained until the end of the year, how much stamp duty must be paid? The balance exceeds €5,000, triggering a 0.20% stamp duty:

€7,000 x 0.20% = €14 stamp duty.

The duty must be paid based on the number of days the deposit is held.
If the same deposit account was opened on June 1 and held until December 31, the stamp duty would be:

(€7,000 x 0.20%) x 202 (days the deposit account was open) / 365 = €7.74 stamp duty.

Taxation of Financial Returns and Interests

Despite the meager interest accrued on current accounts and savings books in recent years, any active interest earned is subject to a 26% withholding tax.

In administered savings, the taxation of capital gains is managed by intermediaries, with clients receiving only the net amount.
The 26% tax is levied on any gains obtained from bonds, Etf, stocks, and funds.
This tax also applies to any interest earned on current accounts, savings books, and deposit accounts.

On the other hand, investments in government securities entail a favorable tax regime with a 12.5% rate.
This tax applies to the gains from Treasury bills, government bonds, Certificates of Treasury and Zero-Coupon Treasury Bonds.

How Much Money Can You Have in Your Account Before the Taxman Comes Knocking?

Taxes aren’t the only threat to savings.
Tax authorities can access various financial reports such as current accounts, deposit accounts, savings books, securities, and bonds to uncover tax evasion.
It’s crucial to be cautious of the amounts deposited.

It is not risky to have a substantial growing savings over time; the key is to ensure that there are no deposits in a given period that are inconsistent with the declared income.
The tax authorities use a new tool called the “Anonimometro” to cross-check financial reports with their data anonymously, extracting taxpayer information only in case anomalies are detected.