Why you should keep your account statements

Storing paper account statements in ring binders is a thing of the past for most Belgians. However, many people believe their bank statements will remain available online indefinitely. Yet they are often lost forever after ten years. And that can come with irritating, expensive consequences…

More than 90% of Belgians no longer receive account statements on paper (source). Instead, they are able to view their statements in their banking app or online. In Belgium, you can search for statements going back ten years.

Banks are legally obliged to keep account statements during this ten-year period, but the statements will be deleted after the retention period has expired due to privacy legislation (GDPR). Many Belgians nonetheless think their account statements remain permanently available in digital form. However, banks may only retain account statements for a longer period in the event of a judicial investigation.

Why it's a good idea to download and save your statements

1. Avoid additional inheritance tax for your next of kin

Suppose you sell your home for €250,000, or a family member leaves you a lovely inheritance. Over the years, you spend your money on a fabulous mobile home and some great holidays. However, you die four years after the sum was deposited into your account, and most of the funds are no longer in your account. In such a case, the tax authorities will continue to assume that you were in possession of the money at the time of your death.

The tax authorities work with a 'legal presumption of ownership'. This means that if there is proof that you owned a large sum of money in the five years before your death, the tax authorities will assume that the sum is still part of your estate. Your heirs will then have to prove that the funds have been spent using invoices, payment receipts or account statements. If they don't have any proof, the amount will then be taxed as if it were still in the estate.

For heirs, this not only means that they bear the costs of retrieving account statements from the bank – which can be expensive and time-consuming – but they also run the risk of additional inheritance tax if they cannot provide such proof. You can therefore give your heirs a helping hand by keeping a careful track of your account statements, expenses and invoices.

2. Avoid inheritance disputes

In addition to the 'legal presumption of ownership', heirs have to deal with another aspect in what is known as the 'notional estate'. When settling an estate, the notary compiles the notional estate, which equates to the value of the total estate at the time of death, plus all gifts made during your lifetime and less any debts. The notional estate also serves as a basis for determining whether all heirs have received their legal share. However, any amounts you have gifted, to whom and when must be clear to make sure the calculation is correct.

This quickly becomes rather vague without account statements. Was a particular transfer a gift or a loan? Was it a one-off payment, or several payments? And who was it gifted to, exactly? If your heirs disagree and no objective evidence can be provided, this can lead to discussions and even legal proceedings. It's also important to remember that there is no time limit. In principle, this means that every gift counts – including those made twenty or thirty years ago. What does this mean in practice? Suppose you gifted €50,000 to one of your children twenty-five years ago. Upon your death, this amount will be indexed and, in principle, added to your estate to determine whether all children are receiving their rightful share. Yet if the proof is no longer available, it can lead to disputes.

3. Proof of split purchases

Families sometimes opt for a split purchase when it comes to property. The parents acquire the usufruct, while the children acquire the bare ownership. It's a neat technique on paper. When the parents die, the usufruct ceases and the children automatically become full owners, without having to pay any additional inheritance tax.

However, the tax exemption does not apply automatically. The tax authorities will only accept it if they can be certain that the children have actually paid for their share – the bare ownership – themselves. And that's where things can sometimes go awry.

Without conclusive evidence, the tax authorities may say that the parents actually financed the bare ownership, in which case the benefit will be re-classified as a concealed gift.

Here, too, account statements are key, as they show in black and white who paid which amount (whether or not it first takes place as a gift) when and from which account. They are proof that the structure was set up correctly years – or even decades – later.

4. Proof of the origin of assets

Banks are obliged by law to make concerted efforts to combat money laundering. As a result, banks and the tax authorities are increasingly asking individuals about the origin of certain sums of money, such as when you want to invest a large sum or want to buy a home using your own funds.

Imagine a certain amount has been sitting in your account for more than ten years, but your statements only go back ten years. In this case, it's harder to prove that you've saved the money yourself.

5. Justify your income and expenses in a tax audit

In a tax audit, the tax authorities look at your income as well as your expenses. The authorities can go back up to three years under normal circumstances, starting from 1 January of the tax year in question.

That is not a hard and fast limit, however. In the event of suspected fraud, unclear cash flows or complex and foreign structures, the three-year period may be extended to seven or even ten years.

If the tax authorities ask about the origin of certain expenses or deposits, you must be able to show evidence. Yet if you don't have any documents, it can quickly turn into suggestions of undeclared income. Clear account statements allow you to prove that the funds came from savings, a sale, a repayment or a gift with ease. And that can be the difference between a short check and long, unpleasant discussions.

Practical tips for storing your account statements

• Download your statements each year Get into the habit of downloading and saving all your statements as PDF files at the end of the year. Set an annual reminder in your calendar to do so.
• Use a digital safe The free Izimi digital safe, developed by the Royal Federation of Belgian Notaries, allows you to store documents securely and forward them to heirs. USB sticks or cloud services are other alternatives.
• Make back-ups Store important documents in at least two locations, such as on a USB stick with a back-up in the cloud.
• Be careful when closing an account Make sure you request all your account statements in advance, as you usually lose all access once you've closed an account. Some banks charge high fees for requesting account statements when you're no longer a client.

Want to download your statements?

Log in to Keytradebank.be, select your account and download your account statements