Understand · Banking Products
What your bank offers you — and what it doesn't always tell you.
Unfamiliar with some terms? Check the glossary →
Banking products are not all bad. Some fulfill a useful function. But understanding exactly how they work — their real fees, their taxation, their constraints — is essential for making an informed decision.
The Belgian savings account works with two components: a base rate (paid from the first day) and a fidelity premium (acquired only if the capital remains on the account for 12 consecutive months).
The fidelity premium is a behavioural mechanism: it penalises unforeseen withdrawals and secures low-cost financing for the bank. If you withdraw before 12 months, you lose the premium on the amount withdrawn.
Tax advantage
The first €1,020 of annual interest per person (amount for 2026 income, indexed annually) is exempt from withholding tax. Beyond that, each additional euro of interest is taxed at 15% — and not 30% like other mobile income: this is one of the rare tax advantages of the regulated savings account.
Verdict
The savings account has a precise and legitimate function: your emergency fund (3 to 6 months of expenses), available at any time without risk of capital loss.
For this function, it is irreplaceable. For everything else — medium or long-term savings — every year spent in a savings account is a year where your purchasing power stagnates or retreats against inflation.
These products lock your capital for a fixed duration (1 to 10 years) in exchange for a guaranteed rate. The certainty of the return is paid for in two ways:
Total absence of tax exemption
Unlike the savings account, all interest is subject to 30% withholding tax from the first cent. A displayed gross rate of 3.10% becomes 2.17% net.
Capital lock-up
Early withdrawal is generally impossible or penalised. Your capital is locked until the contractual maturity.
Verdict
In almost all cases, a savings bond or term account is inferior to a simpler alternative.
After the 30% withholding tax, a 3.10% gross rate becomes 2.17% net — all while locking your capital. A money market ETF like XEON offers a return close to the ECB policy rate — generally higher than the best term accounts after tax, while remaining totally liquid and without triggering annual withholding tax.
The only argument for a savings bond would be not wanting to open an account with a broker. In this case, a high-rate savings account (vdk Rythme, Belfius Flow) remains more flexible for the same risk profile.
Branch 21 is technically a life insurance contract offered by insurance companies, not a bank deposit — even if banks commonly distribute it. It offers a guaranteed interest rate, supplemented by a possible non-guaranteed profit sharing. Its taxation is specific:
The 8-year rule trap: a product presented as 'secure' actually locks your capital for 8 years to be tax-optimal. And the 2% tax on each premium immediately reduces your invested capital.
Concrete example
Out of €10,000 paid, only €9,800 is invested (after 2% tax). At a guaranteed rate of 2.50%, it takes about a year just to recover this initial tax.
Verdict
Branch 21 is structurally disadvantageous for the ordinary investor:
On a short horizon (<8 years), XEON is more profitable and liquid. On a long horizon (>8 years), an equity ETF structurally surpasses this guaranteed return.
Branch 21 wins on no horizon for an investor who accepts using a broker. Note: within the specific framework of long-term savings (see next section), Branch 21 and 23 products may benefit from a 30% tax reduction and an exemption from the 2026 CGT — which can reduce the disadvantage in very specific cases, without changing the general conclusion.
Long-term savings is a distinct federal tax scheme, separate from pension savings, though the two are often confused. It allows the premiums paid into a life insurance contract (Branch 21 or Branch 23) to be tax-deducted at a rate of 30%, with a contribution ceiling significantly higher than pension savings.
2026 tax ceiling
Up to €2,450/year (depends on net taxable professional income) — Maximum tax reduction: €735/year (30% × €2,450) — Practical rule: a full-time employee can generally deduct ~€75/month. For a gross salary ≥ €45,000/year, the maximum ceiling is accessible.
This scheme is stackable with pension savings: both can be used simultaneously, for a potential combined tax benefit of over €1,000/year.
For old loans (pre-2016 in Flanders and Wallonia, pre-2017 in Brussels): long-term savings and mortgage deductions share the same 'federal tax basket' capped at €2,450. In practice, capital repayments and outstanding balance insurance premiums typically fill this basket entirely — leaving no room for long-term savings.
For recent loans (post-2016 in Flanders, post-2017 in Brussels, post-2025 in Wallonia): mortgage tax benefits now fall under a separate regional system. The federal basket is entirely free, allowing you to fully benefit from long-term savings on top of your mortgage deduction.
Simple rule: if your loan was taken out after 2016 (Flanders/Wallonia) or 2017 (Brussels), you can most likely combine both benefits. If in doubt, check with your local tax office.
Tax structure
Premium tax: 2%
Levied on each payment before any investment — identical to any Branch 21 or 23 product.
Exit tax: 10% at age 60
At age 60, the state levies 10% on the total accumulated capital and return. If you subscribed after age 55, the tax is due after 10 years of contract. Payments made after age 60 are no longer subject to this tax.
Exemption from the 2026 capital gains tax
Life insurance contracts qualifying for the long-term savings tax reduction are permanently exempt from the new 2026 capital gains tax (CGT). Important: this exemption is separate from the 10% exit tax — both coexist. The exit tax is due at 60; the 2026 CGT is not.
The maths are more nuanced than they appear
Over 30 years with a net annual payment of €1,715/year (= €2,450 minus the €735 tax refund), the combination of tax benefit + CGT exemption can, in the best cases, produce a result comparable to a World ETF — or even slightly higher. But this requires all of the following conditions to be met simultaneously:
Beyond ~1.5–1.8%/year in total annual fees, the ETF systematically regains the advantage — even with the full tax benefit. Most products distributed through traditional banking networks far exceed this threshold.
Verdict
Long-term savings is a real, overlooked scheme that is potentially relevant for taxpayers with access to the federal basket. But the verdict depends entirely on the product chosen.
With a low-cost product (~1.4%/year), the net return can be competitive with an ETF. With a standard banking product (1.7–2.5%/year in fees), the ETF wins structurally — the tax advantage does not offset the fee gap over 30 years.
The 10% exit tax at 60 and the lock-up of capital until that age remain significant structural constraints, regardless of fees.
Pension savings appeal through their immediate tax advantage, available in two options:
Standard option
Up to €1,050/year paid → 30% tax reduction → up to €315 recovered.
Increased option
Up to €1,350/year paid → 25% tax reduction → up to €337 recovered.
Tipping point: the increased option only becomes advantageous from €1,260/year in payments. Below this, the standard option is preferable.
But three elements temper this enthusiasm:
Fees — the silent enemy
Belgian pension savings funds show TERs of 1.25% to 1.50%, to which are added entry fees of 0% to 3% depending on the institution. Over 30 years, these fees can erase a significant part of the initial tax advantage.
The exit tax — on a fictitious capital
At age 60, the state levies an anticipatory tax of 8% — not on your real capital, but on a fictitious capital calculated as if your fund (branch 23) had earned 4.75% per year from the start. This fictitious calculation applies to branch 23 pension savings funds only; branch 21 follows a different mechanism. If your fund underperformed the 4.75% threshold, your effective tax rate on the real return increases considerably.
Lock-up until age 60
Capital is locked until age 60. Early withdrawal triggers taxation at the personal income tax (PIT) rate of 33%, to which are added municipal surcharges — this is not a withholding tax, but a final tax that can exceed 35% depending on the municipality of residence.
Verdict
The 30% tax advantage seems considerable — but it is a one-time bonus, paid once a year, that does not compound.
Meanwhile, the performance gap between the pension fund (~4%) and an ETF (~8%) compounds every year for decades.
Our simulator demonstrates it concretely: over 30 years at €87.50/month (tax ceiling), an All-in-one ETF surpasses Argenta pension savings from the 11th year — and ends with €33,000 more at 30 years, despite the best fund on the market (0% entry fees) and the maximum tax advantage.
Added to this: capital locked until 60, an exit tax of 8%, and annual management fees of 1.25% to 1.50%.
Our conclusion: pension savings are not an investment strategy — they are a tax product that structurally underperforms over the long term. Keep your capital free and invest it in an ETF.
Active mutual funds are the most lucrative product for banks — and often the least advantageous for the investor.
Their economic model relies on retrocessions: the management company levies a TER of 1.50% to 2.50%, part of which is paid back to the distributing bank to remunerate its commercial effort. MiFID II (2018) imposed more transparency — banks must now publish a KID/DICI document mentioning total costs — and banned retrocessions for independent advisors. But traditional banking networks, which operate as tied distributors, can still receive these commissions. In practice, the network client remains exposed to a structural selection bias: recommended funds are those that generate the most retrocessions, not necessarily those that offer the best net return for the investor.
« Over 20 years, between 85% and 92% of active funds underperform their benchmark index after fees. This is not a question of incompetence — it is a mathematical reality linked to the cost of active management. »
Verdict
There is no general case where a bank active fund is the best choice for a long-term investor.
Between 85% and 92% of active funds underperform their benchmark index over 20 years, after fees. This is not an opinion — it is the documented result of decades of academic studies and Morningstar data.
An ETF with 0.17% TER versus an active fund at 1.73%: the difference seems small. Over 30 years, it often represents more than 30% of the final capital.
Want to see the real impact of fees on your situation?
Our calculator compares banking products and ETFs with your real capital and horizon.
Last updated: March 2026