Taxation of the term account: what you need to know

How is the interest on a term account taxed? 💸

Interest generated by a CAT is considered fixed income investment income. Since 2018, they have been subject to the Single Flat Rate Tax (PFU), also called flat tax.

The PFU: 30% tax 📊

12.8% income tax

17.2% of social contributions

👉 This 30% is directly charged by the bank at the time of interest payment.

The option for the progressive scale 🧾

You can choose taxation at the progressive scale of income tax, if this is more advantageous for you. In this case:

Interest is added to your other income

The CSG (6.8%) is partially deductible from your taxable income

The deposit waiver ⚠️

Some savers with modest incomes can request a waiver of the levy (under reference tax income conditions).

Concrete example

Placement: €50,000 at 2% over 2 years

Gross interest: 2,000 €

Taxation at the PFU: 600 € (or 30%)

Net interest: €1,400

Conclusion

The taxation of the term account is simple and transparent: in most cases, it is the 30% PFU that applies automatically. Although the net return is impacted, the CAT remains a secure and easy-to-manage investment.