Savings accounts in Europe

You can keep your money in a savings account with a local bank, but online you can easily save money at a higher interest rate at banks in a different country. The differences between a local and a savings account in another country are sometimes significant, although there are some risks to watch out for.

Content:

• Interest rates across the border
• European p2p-platforms
• Pros and cons of saving money abroad
• Taxation on savings abroad

Savings accounts in Europe

Saving money abroad is currently gaining popularity. Through Raisin Bank (Germany) you can easily open a savings account with several European banks. These often have a higher interest rate than what you receive in a local bank account. Banks that work with Raisin include:

The banks listed above all offer good savings rates, and even as an international client it is easy to open an account there. However, it is not possible to open a business savings account through Raisin. If you are interested in getting the highest savings rates, you could also consider other institutions than banks.

Interest on European savings accounts

Banks in other countries sometimes offer higher interest rates on a savings account than your local rates. And if you consider other institutions, interest rates can be even higher. There are many different financial sites in Europe, such as peer-to-peer platforms or investment platforms. These platforms offer a fixed interest rate on your investment, which can be quite high.

European investment platforms sometimes offer high fixed interest rates.

Interest rates in countries like Spain, Poland or Estonia are often higher than other European interest rates. You could also start saving outside of Europe. But currency differences and economic or political developments sometimes pose risks. Also, a bank account from outside the European Union falls outside the guarantee system.

European p2p platforms

Both in and outside Europe, p2p lending platforms are booming. They often raise money from savers to lend out through small business and consumer loans. In return, you get a fixed interest rate on your investment. On these platforms, there is some supervision from governments, but it is not comparable to supervision that applies to banks. Popular European platforms currently include:

Pros and cons of international savings accounts

Saving money abroad can have both advantages and disadvantages. These differ by bank, platform, country or (savings) account. Some advantages are:

Higher interest rates: Interest rates on savings abroad are often higher than at local banks.
Exchange rates: Do you conduct a lot of business in another currency? By keeping your savings in the same currency, you will not run currency risks. Conversely, a different currency can sometimes generate additional returns.
Financial privacy: Money abroad can offer financial privacy, although the rules for this vary widely.

Some disadvantages of saving abroad are:

Fraud and security: There is a risk of fraud or a security breach at any financial institution, and this risk may be greater at foreign banks with which you are less familiar.
Currency Difference: The currency of the country where you open a savings account may depreciate against your own currency.
Political and economic instability: The money you store abroad may be affected by political and economic events in that country.
Regulations: Countries have different rules and regulations for foreign bank accounts, and these can change. You may face legal risks, and many foreign platforms are not covered by the European deposit guarantee scheme for bank accounts.
Access to your money: Sometimes it can be more difficult to access your money quickly, especially if you have to deal with time zones and other logistical issues.

Taxation on savings abroad

If you open a savings account at a foreign bank, this can create complex tax issues. You may have to pay taxes in both your home country and the country where you save.

Savings products from foreign financial institutions are not always recognized as savings. For example, tax laws in some countries view savings at a p2p platform as an investment. It taxes the returns on this in a similar way as investments you purchase with an investment account at an online broker.

A foreign savings account at an unauthorized bank is taxed as an investment for income tax purposes.

Withholding tax

In addition, you face an assessment of withholding tax in many countries. This means that you also pay taxes in the country where your money is placed. Sometimes you can avoid or reduce double taxation with a statement showing that you pay your taxes in your home country.

You can also make sure your savings account is without withholding tax, by opening one in a country without such a retention tax, like Germany, Estonia, France, Italy or Sweden.

Frequently asked questions

Some frequently asked questions about saving abroad are:

Which foreign bank has the highest savings rate?

In Europe, Renault Bank, Inbank and Nordax bank offer high savings rates. Interest rates can vary from day to day, making it difficult to say which bank offers the highest interest rate today. In addition, with some banks you run a currency risk or you may not be able to access your savings for long periods of time.

Are you considering other financial platforms in exchange for higher interest rates? With some large European p2p platforms, you can receive above 10 percent interest per year.

How can I open a savings account in another country?

Through Raisin Bank, you can easily open an account with many European banks. Both via desktop and an app on your mobile. You can also save abroad on p2p platforms. Please note: on some p2p platforms, you risk losing your deposit, and your money is only covered by the deposit guarantee scheme with an authorized bank from the European Union.