There is a real surge in interest among individual investors in treasury bills, attracted by the chance to maximize returns on savings while money costs rise. Banks, meanwhile, have been slow to adjust deposit rates.
Both short-term bills and longer instruments come with distinct tax and maturity considerations. Some bills mature in under two years, while bonds and other government securities span two to five years or longer. In other words, the appeal of shorter maturities does not guarantee high performance, just as longer ones may carry different risk and tax profiles. For the first time since 2012, certain maturities have surpassed 3% return, highlighting a fresh tap into these products for investors.
1. Profitability
The official rate on money in these products has climbed to around 3%. Analysts anticipate a further lift by the next policy meeting of the European central monetary authority, which could push rates higher the following day. This shift makes treasury bills a compelling option for households and savers. After several years of weak or negative returns from 2016 through 2022, such instruments are delivering more robust yields for periods of six months to twelve months. The recent surge in demand is partly driven by institutions and households seeking secure, liquid fixed income in a shifting rate environment. A notable effect has been higher foot traffic at the central bank’s offices, which prompted new appointment systems and greater emphasis on online services to handle the rise in visitors.
2. Taxation
Tax professionals warn that these assets, despite their strong performance, are not exempt from the tax burden. Income from these securities, including interest and gains, is considered movable capital and taxed accordingly. The tax rates apply progressively, with combinations such as 19% on the first portion up to a base amount, then 21% on the next brackets, followed by higher rates on larger gains. Historically, the top tax rate has climbed in recent years, underscoring the importance of planning around tax obligations. Tax professionals note that the year a gain is realized can influence when it appears on an income statement, and that changes in the accounting period can affect reporting timing.
3. Taxable portion
The taxable share is the portion of the gain that arises from the investment’s movement, whether through discount issuance or through redemption at maturity. For bills issued in an investor’s name, the difference between the sale or redemption proceeds and the purchase price is taxable, and this applies in the fiscal year when the transaction occurs. For bonds and liabilities, the same rule holds at redemption. If the operation occurred in the prior year, it is counted in that year’s revenue; if it happened in the current year, it will be reflected in the financial statements for that year. Returns from treasury bills themselves are typically not subject to withholding, while coupon income from bonds and government liabilities is taxed. Investors should note that amortization or sale of public debt in the medium or long term can have different reporting requirements, and yields must be included in the proper boxes on the income statement.