Declaration of Investment Income Becomes the Rule
To organize the additional levy of 4%, a novelty was introduced, namely an obligation to declare movable income. From the 2013 tax year (2012 income) you will be required to enter your movable income, both interest and dividends, on your tax return. As a check, banks and insurers (and all other withholding tax debtors) will also be required to inform a central point of contact about interest and dividend payments to their customers. This central point of contact will be established to implement the law and will inform the tax authorities if the threshold of 20,020 euros has been reached or if the tax authorities explicitly request it.
An alternative system has been worked out for savers and investors who want to keep their personal financial data protected from the tax authorities. They can choose to have an additional levy of 4% deducted at source from their movable income that is subject to 21% withholding tax. If this additional tax is opted for, the bank or insurer is not obliged to report the relevant movable income to the central point of contact and the taxpayer must not declare it on his tax return either. In the course of this year, your bank will probably ask you to make your choice known and will provide you with the necessary explanation. Notwithstanding the fact that you have opted to withhold the additional tax at source, you can still opt to state your movable income in your tax return, in order to recover the tax in whole or in part (maximum 4% of EUR 20,020).
If you opt for the additional tax at source, keep in mind that it will be charged from the first euro on movable income. If, on the other hand, you opt for the declaration of your movable income, the additional levy is only payable on the surplus above EUR 20,020. It is also important to know that this option does not exist for the dividends that are in any case subject to 25% withholding tax. They must always be reported on the tax return, although the additional levy does not apply to this.