Revolut Launch Money Market Fund Product

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coolwap

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Was browsing Revolut app this morning and found Savings menu. There were no email or push notifications about this. Also, cannot find this on their website.

Money are stored in Revolut Securities Europe UAB and not Revolut Bank UAB. So protection is 22,000 EUR.

Money are invested in Fidelity Money Market Fund.

Interests with Standard Plan (free):
EUR: 3.51% (1.86% net)
USD: 4.70% (2.42% net)
GPB: 4.67% (2.46% net)

Interests with Metal Plan:
EUR: 3.86% (2.21% net)
USD: 5.05% (2.77% net)
GPB: 5.12% (2.91% net)

Interests with Ultra Plan:
EUR: 3.96% (2.31% net)
USD: 5.40% (3.12% net)
GPB: 5.27% (3.06% net)

Tax at a rate of 41% is deducted automatically by Revolut.
 

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Interesting find, thanks for sharing.

The rates for the Standard (Free) Plan are:
EUR: 3.51% (1.86% net)
USD: 4.70% (2.42% net)
GPB: 4.67% (2.46% net)

Monthly compounding interest is attractive.

41% tax isn't so attractive. And there is also a 12.5% Service Fee.

Would be a useful place to have your day to day reserve of 5/10/20k, earning some interest, not in your online facing Revolut current account so a little more secure and available immediately if needed.
 
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Because the money is invested in a fund, not on deposit - earnings on funds are taxed at the Exit Tax rate, currently 41%
DIRT = Deposit Interest Retention Tax 33%

The two used to be the same back in 2014 - 2016, but DIRT has reduced from 41% to 39% to 37% to 35% to 33% over the years whilst Exit Tax remained at 41%
 
jpd said:
Because the money is invested in a fund, not on deposit - earnings on funds are taxed at the Exit Tax rate, currently 41%
DIRT = Deposit Interest Retention Tax 33%

The two used to be the same back in 2014 - 2016, but DIRT has reduced from 41% to 39% to 37% to 35% to 33% over the years whilst Exit Tax remained at 41%
Click to expand...
Correct. Did the current minister for finance suggest some time back that he intends to revisit this in the future?
 
A few thoughts:

- Interesting that Revolut are withholding the 41% at source. Wow! Does that mean you don't need to declare?

- It is crystal clear that the tax rate is 41% because you own a personal stake in a MMF. (With T212 you dont own a stake).

- The rates offered is not great especially considering (1) general Revolut package fees for the higher rate products and (2) product fees. I am not sure why anyone would choose this over XEON that offers aprox. 3.90% yield less 0.10% TER or CSH2 that offers 3.90% less 0.05% TER. Both are free to purchase via T212.

- The service fee is very large. I see a service fee of 0.50%. That is a very big fee. (Not sure where the prior poster sees 12%?)

- Interesting that the investor protection level is 22k rather than the normal 20k.

Nutshell - if you want a MMF - with a little big of effort you can do a lot better.
 
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Some additional info to add after playing around on the app. Calculations below are based on my best guess from what I see in the app.

Revolut Standard Euro

Gross Interest - 4.01%
Service Fees - 0.5%
Plan rate / Annual percentage yield (APY) - 3.51% (Looks like Gross Interest - Service Fees)
Withholding Tax - 1.64% (At a rate of 41%. 41% * 4.01% = 1.6441)
Net Interest - 1.86% (3.51 - 1.6441 = 1.8659)


I know the offerings are different, but effective rate here lands somewhere between Bunq and LightYear based on my calcs.

LightYear - 3.25% * 59% ( Exit Tax Deducted) = 1.9175%
LightYear - 3.25% * 67% ( DIRT Deducted) = 2.1775%
Bunq - 2.46% * 67% (DIRT Deducted) = 1.6482%


With 22K protection, so many people already familiar with Revolut, & potentially no need to declare, there are some advantages here. It's not traditional savings, but in the app it is labelled as Savings, so some people may think of it as a standard savings account until they read the terms.

Note: Edited LightYear calculation to apply DIRT & not Exit Tax, after clarification from @Lightning in a reply below.
 

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Lightning said:
- The service fee is very large. I see a service fee of 0.50%. That is a very big fee. (Not sure where the prior poster sees 12%?)
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Hi Lightening

It's very very cleverly, but also appallingly and non-transparently buried in the small print and they display it as per the attached screen grab from the Raisin app. It works out as follows:
1708717071378.png


Which looks very credible and respectable and all that, and sure who’d be bothered about a service fee of half a percent anyway, isn’t there more to life ? But hang on a second, look at the line above it - Exit tax of 1.64% ??? We all know that the exit tax is 41%, so how is it showing as 1.64% ?? What they are very very cleverly showing is the exit tax as a percentage of the principle invested, not as a percentage of the interest. An utterly meaningless and misleading figure. Just because 1.64% exit tax sounds a lot better than a 41% exit tax. And likewise, their so called “service fee” is shown as .5% rather than the much more realistic 12.5% servicing levy that it actually is.

You could easily and much more accurately present this as follows:

1708717029104.png


Frankly this is grossly and despicably misleading and they should be called out on it.
 

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@Flying Dutchman :
- Interesting thoughts and calculations.
- Lightyear is 33% tax.
- I think this product is best compared to other MMF products (XEON, CSH2, Plum etc) rather than comparing to savings products.
- Any clue why exit tax is applied to the gross interest rather than the return after fees??? Exit tax is charged on gains. Gains surely means after fees.

@Freelance:
- Yeah, the fees and charges could be clearer.
- But displaying the fees as "0.50%" is the normal way to display a TER/fee of a fund. Displaying fees as "12.5%" is not the normal way. For example, CSH2 pays aprox. 3.90% and has a TER of 0.07% and therefore an aprox net return of 3.83%.
 
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The KID describes the investment product and fees and charges deducted by the investment product provider.

The service charge is a a charge levied by Revolut and has nothing to do with the investment product per se.
 
jpd said:
The KID describes the investment product and fees and charges deducted by the investment product provider.

The service charge is a a charge levied by Revolut and has nothing to do with the investment product per se.
Click to expand...

Understood that the KID should only display charges imposed by Fidelity and not the charges imposed directly (service fee) or indirectly (subscription fee) by Revolut.

But who pays Fidelity if the KID says zero?
 
Thanks. What a convoluted process where the fund has "zero fees" (as per the KID) but Revolut charge high "service fees" (and indirect subscription fees) and Revolut kick back some of the "service fee" to Fidelity. Would be a lot simpler/more transparent if there was no service fees and the fund itself applied a TER/fee as per the normal process.
 
Lightning said:
Thanks. What a convoluted process where the fund has "zero fees" (as per the KID) but Revolut charge high "service fees" (and indirect subscription fees) and Revolut kick back some of the "service fee" to Fidelity. Would be a lot simpler/more transparent if there was no service fees and the fund itself applied a TER/fee as per the normal process.
Click to expand...
All in all it’s an excellent example of how appallingly lacking in transparency the financial services industry is in when it comes to fees, charges, commissions etc. It’s really very difficult to understand how much is being creamed off, especially when intermediaries are involved.
 
Lightning said:
@Flying Dutchman :
- Interesting thoughts and calculations.
- Lightyear is 33% tax.
- I think this product is best compared to other MMF products (XEON, CSH2, Plum etc) rather than comparing to savings products.
- Any clue why exit tax is applied to the gross interest rather than the return after fees??? Exit tax is charged on gains. Gains surely means after fees.

@Freelance:
- Yeah, the fees and charges could be clearer.
- But displaying the fees as "0.50%" is the normal way to display a TER/fee of a fund. Displaying fees as "12.5%" is not the normal way. For example, CSH2 pays aprox. 3.90% and has a TER of 0.07% and therefore an aprox net return of 3.83%.
- I find is surprising that the KID (Key Investor Document) makes no reference to the direct fees (service charge) and no reference to the indirect fees (Revolut subscription package fees which are mandatory to get the higher rates).
Click to expand...

Revolut are going to great and convoluted lengths to show the exit tax as 1.64%. Have you ever before seen exit tax describes as 1.64%. In my experience it is always shown as 41%. And the only reason they are doing this is to show their fee as .5% when in reality it is 12.5% of the growth being returned by the fund manager.
 
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