How investing is taxed
Each country taxes investing its own way, but the same three things come up everywhere: gains, income and holdings.
Three things taxed
Gains when you sell for more than you paid. Income: dividends and interest. And in some countries the holdings themselves, a small share each year. What, when and how much depends on where you live.
Italy
Gains, dividends and interest are taxed at 26%; government bonds of Italy and of countries on a list at 12.5%. Each year 0.2% of the value is due as stamp duty, or as IVAFE on accounts abroad.
Italy’s fund rule
In Italy a gain on a fund cannot be cut by losses on shares, but a loss on a fund can cut gains on shares. Losses can be used in the year and the four after. Portfolio’s tax tool follows this rule.
Germany
Gains and income are taxed at 25% plus a 5.5% surcharge on that tax, about 26.4%, and church tax for members. The first €1,000 a year per person is free, and 30% of a share fund’s gain is not taxed.
Who pays it
Some brokers work out and pay the tax for you. Others leave it to your tax return. In Italy these are called the administered and the declared regimes. Know which yours is before the year ends.
Key takeaways
- Gains, income and holdings can each be taxed.
- Italy: 26%, 12.5% on many government bonds, 0.2% a year on holdings.
- Check whether your broker pays the tax or you do.