Government Bonds Trade Republic

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An Cigire

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Has anyone considered purchasing government bonds via TR?

• Romanian Bonds are offering annual returns of 4.53% over 2.9 years.

• Romania offering over 6% returns over 5-10 years.

The country S&P rating is BBB- with outlook as stable.

What are peoples opinion? Good secure government backed vehicle for deposit savings?
 
What about forex risks given that Romania is not in the Eurozone (slated to join in 2029)?
 
There are also some really nice property developments in Hungry that are worth a look....
 
RedOnion said:
Factor in that interest is taxed at your marginal tax rate, not DIRT rate.


Romania has also issued Euro denominated bonds. E.g XS2538440780 maturing Sept 2026.
There's no FX exposure on Euro bonds.
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Didn't realise it at 41% tax thanks for that info much appreciated.
 
An Cigire said:
Thanks for the info. So that significantly makes it less attractive then compared to the likes of PTSB deposit rates. Cheers for the info
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There's pro's and cons to both. Overall the Romanian bond gives a better return, it's just how you assess the risk of each. The PTSB deposit tax would be 37% and the bond income would be dependent on your other income but likely 52% if you're a higher rate employee. If interest rates were to fall you could sell the bond early and earn a capital gain rather than income which would be at 33%. It's hard to do a direct comparison.
 
Djimi Traore said:
There's pro's and cons to both. Overall the Romanian bond gives a better return, it's just how you assess the risk of each. The PTSB deposit tax would be 37% and the bond income would be dependent on your other income but likely 52% if you're a higher rate employee. If interest rates were to fall you could sell the bond early and earn a capital gain rather than income which would be at 33%. It's hard to do a direct comparison.
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Thanks for the info would the PTSB lump sum savings deposit not be at DIRT rate of 33%?
 
An Cigire said:
Thanks for the info would the PTSB lump sum savings deposit not be at DIRT rate of 33%?
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DIRT at 33% plus 4% PRSI. If you file a tax return, Revenue will take the PRSI. If you don't then according to the legislation you still owe it but in practice I don't think they've been collecting it. Will come into more focus now that people can actually earn decent amounts.
 
Djimi Traore said:
DIRT at 33% plus 4% PRSI. If you file a tax return, Revenue will take the PRSI. If you don't then according to the legislation you still owe it but in practice I don't think they've been collecting it. Will come into more focus now that people can actually earn decent amounts.
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Nothing on PTSB website or revenue website on PRSI being at 4% on top of DIRT where could I find that information.

Hopefully they don’t decide too start

I’m not allowed attached links unfortunately.
 
An Cigire said:
Nothing on PTSB website or revenue website on PRSI being at 4% on top of DIRT where could I find that information.

Hopefully they don’t decide too start

I’m not allowed attached links unfortunately.
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As I said it’s not made clear anywhere but it is in legislation and if you file a Form 11 and put a figure in the bank deposit interest section they will charge you the 4% so no ambiguity there. If you’ve €5k or more non-PAYE income, then you need to lodge a Form 11 so there’s no avoiding it.

The confusion lies where people only have income from PAYE employment and have bank deposit interest of less than €5k. Technically they’re still liable to pay PRSI but I’d imagine a tiny percentage declare it. It has been a bit of a moot point for a long time as bank interest was pretty much zero but I’d imagine they’ll be looking into it now that people can get decent rates.

https://www.revenue.ie/en/additiona...It is up to the,not apply to deposit interest.

“you may also have to pay Pay Related Social Insurance (PRSI) on the interest you received”

https://www.irishtimes.com/business/prsi-to-be-levied-on-bank-interest-and-other-income-1.2260
 
Djimi Traore said:
As I said it’s not made clear anywhere but it is in legislation and if you file a Form 11 and put a figure in the bank deposit interest section they will charge you the 4% so no ambiguity there. If you’ve €5k or more non-PAYE income, then you need to lodge a Form 11 so there’s no avoiding it.

The confusion lies where people only have income from PAYE employment and have bank deposit interest of less than €5k. Technically they’re still liable to pay PRSI but I’d imagine a tiny percentage declare it. It has been a bit of a moot point for a long time as bank interest was pretty much zero but I’d imagine they’ll be looking into it now that people can get decent rates.

“you may also have to pay Pay Related Social Insurance (PRSI) on the interest you received”

Thanks for the info its much appreciated and gives me a better understanding of what to expect.
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Cheers for the info. If your bank deducts the DIRT at source when the deposit terms do you still declare it on your annual income tax return too?
 
An Cigire said:
Cheers for the info. If your bank deducts the DIRT at source when the deposit terms do you still declare it on your annual income tax return too?
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Yeah there's a section on Form 11 that asks for the gross amount received from Irish bank deposits so you still need to enter it even if DIRT was paid on it.
 
no wonder Pascal was encouraging people to place deposits at banks outside the state for a better return. Department gets more income too!
 
daheff said:
no wonder Pascal was encouraging people to place deposits at banks outside the state for a better return. Department gets more income too!
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Ha ha ha, that is actually true. Although technically the state might make more if it is in an Irish bank because of corporation tax and bank levy but still funny.
 
Djimi Traore said:
As I said it’s not made clear anywhere but it is in legislation and if you file a Form 11 and put a figure in the bank deposit interest section they will charge you the 4% so no ambiguity there. If you’ve €5k or more non-PAYE income, then you need to lodge a Form 11 so there’s no avoiding it.

The confusion lies where people only have income from PAYE employment and have bank deposit interest of less than €5k. Technically they’re still liable to pay PRSI but I’d imagine a tiny percentage declare it. It has been a bit of a moot point for a long time as bank interest was pretty much zero but I’d imagine they’ll be looking into it now that people can get decent rates.

https://www.revenue.ie/en/additional-incomes/dirt/index.aspx#:~:text=It is up to the,not apply to deposit interest.

“you may also have to pay Pay Related Social Insurance (PRSI) on the interest you received”

https://www.irishtimes.com/business/prsi-to-be-levied-on-bank-interest-and-other-income-1.2260
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Personal story.
A long time ago I asked Revenue over the phone whether deposit interest was subject to PRSI. I was assured that No, DIRT was a final liability.
Then one day I was subject to a Revenue audit (I worked for a bank, all of whose employees above a certain limit were). I hadn't declared any of my deposit interest as, after all, DIRT was supposed to be a final liability (I know I should have declared it anyway). They pointed out to me that they knew I had deposits and why had I not declared them. "Sorry" I said "but sure there is nothing due on them anyway". "You are so wrong Mr. Duke, you owe PRSI and so does your wife as these were joint accounts".
I told them that I had been told over the phone it was a final liability and they promised to follow that up and correct the misunderstanding but I still had to pay, but avoided being named and shamed. ;)
 
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