Deposit interest is considered one of the most common types of passive income. Ukrainian banks attract customers by showing high rates, but do not remember about amendments to the legislation. To understand what real profit will be, it is important to know the procedure for calculating interest, as well as what tax on deposits is withheld.
Deposit tax: what you need to know first
The need for taxation of deposits of individuals was discussed in 2010, but only in 2014, amendments were made to the Law of Ukraine on the income of individuals, and banks became tax agents.
Clients of financial institutions do not need to go to the tax office to pay a tax on interest on deposits - banks do everything. They transfer funds to the tax, without information about the names of customers and the size of their deposits.
Why taxes are charged on deposits of individuals
Income from deposits is now equal to all other income, and therefore subject to taxation. The rate (PFD?) Is 18%, and 1.5% of the military duty is added to it. As a result, the tax on deposits of individuals is 19.5%.
With monthly interest accrual, the investor sees how the funds are taken from the amount received. If the agreement provides for the calculation of interest at the end of the term, then the client of the bank will see the settlements only at the end of the agreement. However, the tax bank will charge money on a monthly basis.
Who is affected by taxation of deposits
A change in the Tax Code affected every Ukrainian. As a result of amendments adopted by the National Bank of Ukraine, the profitability of deposits tends to zero. This led to an outflow of capital from the banking sector. As an alternative solution, experts suggest increasing the amount that the Deposit Guarantee Fund will return in the event of a bankruptcy of a financial institution. It is worth noting that changes in this direction occurred in 2012. The amount of the insurance sum was increased from 150 thousand UAH to 200 thousand UAH, which amounted to 25 thousand dollars. To date, this amount is equivalent to almost 8 thousand dollars.
Interest, taxation conditions for deposits
Income tax is calculated based on the actual interest paid. In the personal account, a bank client can see the amount of interest, as well as the tax that has been written off.
If the depositor breaks the contract ahead of schedule, then he loses a part of the income that has already been accrued, the bank recounts the tax on deposits, returns the funds.
The amount of the deposit is 50 000 UAH. The term of the contract is 12 months, the interest rate is 16.5% per annum.
After the end of the deposit agreement, the amount with interest will be 58 250 UAH. Of these, 8250 UAH (687.50 UAH x 12 months) - interest on the deposit. Sum 8250 UAH will become the basis for taxation. The bank will transfer to the budget:
PFDD - 1485 UAH;
military duty - 123.75 UAH.
After the end of the deposit agreement, the depositor will receive 56 641.25 UAH. Thus, the tax on deposits significantly reduces the profitability of deposits.