Savings account abroad, is it a good idea?

V

Vodka_girl

Guest
Hi Just wondering what the pros and cons are to a savings account abroad, like somewhere where there is a higher interest rate.

Thanks
 
You'll generally need to factor in exchange rate risks unless you are talking about a € zone country which should have similar rates to here since the ECB base rate applies across the whole of this zone. The tax treatment of offshore interest may also be different - e.g. could be subject to income tax rather than DIRT, I'm not sure.
 
Interest rate differential drives FX rates so in theory there should be no difference
 
There are many existing threads on this topic that echo what the previous posters have said.

In addition, not all accounts in other countries will be available to non-residents.
 
Thanks everyone, I was considering openine a UK savings account as you can get 6% over there now. I realise the currency fluctuation would effect me but it does seem like a tempting option as I have a few thousand to put away.

I wonder what the cheapest way to convert the cash to sterling is.

Thanks
 
No DIRT where? In NL (Netherlands?) and in Ireland? Have you declared the account to the Revenue here in Ireland?

6.25% is less than you can get in Ireland on savings.
 
No DIRT? But the interest may well be assessable for Irish income tax and possibly PRSI so?
 
EU rules are that institutions in EU have to deduct 15% tax on all interest earned or deduct no tax but report the interest earned to the owner's tax authority. The owner of the account has to choose which option he wants. This became active in July 2006, I believe, and is required for all foreign holders of interest-bearing accounts.

Obviously, if you take the 15% withholding tax, you must still declare the interest income in Ireland.
 
jpd said:
EU rules are that institutions in EU have to deduct 15% tax on all interest earned or deduct no tax but report the interest earned to the owner's tax authority. The owner of the account has to choose which option he wants.
Click to expand...

So, if one opts for 15% deductions at source abroad , how will Irish Revenue ever know about the foreign saving accounts?
IMO, it seems silly to give the option...
 
bacchus said:
So, if one opts for 15% deductions at source abroad , how will Irish Revenue ever know about the foreign saving accounts?
Click to expand...
Because the holder is obliged to declare them. If they don't and are found out then the reprecussions will generally be serious/onerous as we all know from recent high profile backdated investigations.
 
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