Equity savings account

02.12.2020

In Finland it became possible to open an equity savings account at the beginning of 2020. Since then, it has proven to be a success and, at the end of November 2020, a total of 133,000 accounts were opened. Many of those who opened an equity savings account were new investors. During the same time period, the number of persons investing in shares increased from 808,000 to over 900,000.

Within the equity savings account, investors will able to trade in shares of both Finnish and foreign companies listed on a stock exchange or, for example, the Nasdaq First North exchange without incurring any direct taxes.

Dividends and interest will also be exempt from taxes on the equity savings account and account holders will have the opportunity to re-invest them without having to pay any taxes in between. Thus the equity savings account makes it possible to reap the full benefits of the compound interest effect when investing in equities, as the proceeds and dividends are credited to the account without direct tax liability. The profit from an equity savings account is only taxed when you withdraw money from the account.

How does an equity savings account work?

  • You may have only one equity savings account at a time and thus you can open an equity savings account in one bank only.
  • The equity savings account is only intended for shares, so you cannot trade in exchange-traded funds (ETFs), for example, using the account. You cannot transfer your existing shareholdings to the equity savings account.
  • You can invest a maximum of EUR 50,000 on an equity savings account. You can either deposit all money on the account at the same time or make several deposits. However, this limit applies to the amount you may deposit on the account – the value of your total holdings may exceed the limit as a result of an increase in their value and dividends received.
  • You can only invest money in an equity savings account – this means that you cannot transfer shares that you already own to the account.
  • There can be both money and shares on the equity savings account at the same time,

You can only withdraw money from the equity savings account, which means that if the account contains shares, you need to sell them before withdrawing funds. You can withdraw money from the account at any time.

At the end of November 2020, it is possible to open an equity savings account in Danske Bank, Mandatum, Nordea, Nordnet or Ålandsbanken.

For more information regarding taxation, click here.

 

 

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