Wise.com Paying 1.79% via "Cashback"

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Ceist Beag

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I recently became aware of the above as I had used Wise for transfer of a cash amount from USD to EUR. It seems they offer cashback to customers in the EEA. The rates seem quite reasonable but I don't fully understand how this works. The description of the feature is
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Wise pays balance cashback each month based on the EUR, GBP and USD you hold in your Wise account. You agree that the cashback rate is variable and that we may change the rate and/or stop paying cashback at any time. For eligible balances held in Wise accounts in February 2023, Wise paid an annualised cashback rate of:

1.12% for any EUR

2.65% for any GBP

3.53% for any USD

Wise Europe operates within the tax jurisdiction of Belgium, where cashback is liable for 30% withholding tax.

We deduct this tax and pay it to the Belgian tax authorities before we add the cashback to your account.
See https://wise.com/help/articles/b8sVSdAzytqVamfajSirb/how-does-balance-cashback-work for more.

Does this mean that you can lodge money to your Wise account and receive the above rates? If I simple add EUR and convert it to my USD account does that mean I can triple the rate received? It sounds a bit too simple so I'm sure I must be missing something here as otherwise isn't this a very attractive deposit rate?
 
Whilst the USD "balance cashback" looks attractive, it comes with risk. Exchange rate risk. The risk is that the USD declines in value in terms of EUR. So in EUR terms, you could end up with less money than you started with.
 
Recently signed up with Wise and had to hold some currency in Sterling, happy to get a small return.
Quick question on tax implications - As DIRT is withheld in Belgium, do I need to declare anything to Irish Revenue?
Any advice appreciated.
 
It's really strange that Wise.com call this "cashback" rather than interest.

Moving money into USD leads to FX risk. Generally speaking you should keep your deposits in the currency that you intend to spend the deposits in.

Deposit interest tax is withheld in Belgium (unless you complete a form) but you still need to declare the interest to the Revenue less any tax already paid in Belgium.

The Wise.com rate is good relatively speaking but obviously Trade Republic, Bunq, Raisin and Go-Lightyear offer better rates.
 
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Hi guys, although I am a resident in the Republic where I have lived and worked since 2020, I still have around £5k sitting in my UK Current Account up North with Ulster Bank. If I moved this to my Wise account but didn't convert it to Euros and kept it in GBP, would I be allowed to earn tax-free interest on it up to a certain limit under the UK Personal Savings Allowance? Or would I still have to declare it to Revenue and pay DIRT on it? I had been keeping it in my UK current account in the event that I might need to loan it to a UK family member in an emergency. I'm thinking though that I could probably do something better with it than just sitting in a UK current account earning zero interest.
 
I can't find any references on deposit guarantee up to 100k in wise website despite being depicted in the best instant access and notice desposit accounts post. Can anyone confirm this or point me to the exact URL?
 
This seems to say that the Belgian deposit guarantee scheme does not apply.

We are not a bank, which means we don't lend out our customers’ money to people or businesses. This also means our payment services aren't subject to the Belgian Deposit Guarantee Scheme.
Click to expand...
 
Double taxation relief is up to a maximum of 15%.
You have to claim tax relief from Belgium to reduce it whatever is the lower percentage they have for non-residents, otherwise you would end up paying 30% to Belgium and 33-15 = 18% to revenue, i.e. almost 50% between Belgium and Irish revenues
 
Am I mistaken to think that all income is treated equally and taxed at one's marginal rate, and that DIRT is just a withholding tax for which one gets credit? If that were the case, the amount due to Revenue would not be 33% minus whatever was paid to Belgium, but your marginal rate minus the credit of what was paid to Belgium (capped at 15%, if PIC16f84 is correct).
 
PIC16f84 said:
Double taxation relief is up to a maximum of 15%.
You have to claim tax relief from Belgium to reduce it whatever is the lower percentage they have for non-residents, otherwise you would end up paying 30% to Belgium and 33-15 = 18% to revenue, i.e. almost 50% between Belgium and Irish revenues
Click to expand...

Thanks. Do you have a link or source for the 15% cap on Double taxation relief?
 
Sorry I have confused dividend withholding tax in that post.
That is the double taxation relief for dividends.
I have checked form 11 and there are two boxes for showing different EU withholding tax for EU bank deposits. I don't know how this tax relief works.
 
Since, in the words of Wise, they are "not a bank", I'm not sure which box on Form 11 it should go under. There is "EU Deposit Interest" (where you specify (a) the interest, (b) the "Savings Directive withholding tax credit" and (c) the foreign tax not included in (b)), "EU ‘Other’ Interest" (same subfields as previous), and "Income from all other Foreign Non-Deposit Interest, Royalties, Annuities, Dividends, etc. on which foreign tax deducted".
 
I have serious doubts anyway with wise and Interactive Brokers, I wouldn´t call them "deposits" as people may think they are under deposit guarantee schemes when they are not. Perhaps they should have their own thread/section on the best buys, something like "brokers that pay interests" to avoid confusion. Personally I´m not putting any of my saving on them as I´m only looking at deposits and current accounts that pay interests, both of which are covered under deposits guarantees schemes. Lightyear (up to 20k) and Trade Republic (up to 100k,50k paying interest) clearly advertise their protection/guarantees, the others don't
 
So it's risky then keeping money in Wise.com if there's no deposit guarantee (I'd foolishly assumed there'd have to be to get a licence). I often keep larger amounts in USD and GBP in there to help balance currency risk but I'd take that any day over deposit risk!
 
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