Negative interest is not tax deductible

Negative interest is not tax deductible
Current Faroese tax laws do not allow bank clients to deduct negative interest expenses when calculating taxable income
Businesses can deduct expenses spent on increasing revenue, but negative deposit rates in banks are not regarded as such an expense, according to tax authority TAKS
 
29.12.2020 - 07:56

The recently introduced negative deposit interest in banks are not tax deductible, neither for businesses nor private clients.

After investigating this matter, tax authority TAKS has concluded that the tax laws do not allow bank clients to deduct the negative interest expenses from their income tax.

 SEE ALSO Negative interest adds pressure on property market

TAKS requested clarification from the finance ministry in January on how to administer the negative deposit interest rates.

No official reply has come yet, but finance minister Jørgen Niclasen says that no changes relating to this matter are underway in the tax laws.

Increased tax revenues in 2020

The state, municipalities and the church have all enjoyed higher tax revenues this year compared to 2019.

Up to 1 December this year, state tax revenues saw a year-on-year increase of 4 percent and a 7-percent increase in taxes from early retirement payments. Church taxes went up by 6.28 percent over the same period.

The overall preliminary tax revenues for the country’s 29 municipalities increased by 3.24 percent.

Nineteen municipalities saw an increase in tax revenues, while the remaining ten had a decrease.

In percentage terms, Húsavík municipality has had the highest growth, at 8.55 percent. At the other end of the spectrum is Viðareiði municipality, with a year-on-year decrease of 8.67 percent.

 

Translated by prosa.fo

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