Scepticism over the state’s ability to honour its guarantee on deposits and fears over the future of the euro means savers are beginning to look abroad for alternatives, The Sunday Times reports.
The newspaper’s personal finance section gives a ‘how-to guide’ to lowering exposure to Irish banks. Germany and France are obvious places to deposit money because the strength of their economies indicates stability but trying to open an account in these countries can be a tortuous process and probably not worth the effort. It is simpler to open a euro deposit account on the Isle of Man or the Channel Islands. However, as the report also points out, this may attract unwanted attention from the taxman.
And moving deposits abroad is certainly no guarantee of higher returns. Interest rates are usually lower than at home and, of course, tax is still liable at 25% on any profits. Banks in the Isle of Man and the Channel Islands apply a 20% withholding tax on interest paid to Irish customers but this will rise to 35% in July 2011 unless you apply for an exemption certificate from the Revenue to allow the 25% domestic rate instead.