Which region in Europe pays the highest capital gains tax?

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Capital gains are taxes that apply to the sale of capital assets or assets that are not part of ordinary inventory. These typically include bonds, stocks, real estate, cryptocurrencies, vehicles, jewelry, and more.

Generally, you only need to pay capital gains tax on an asset when the asset is sold. Long-term capital tax generally applies to profits earned from investments held for more than one year. On the other hand, short-term gains on assets owned for less than one year are taxed at the owner’s ordinary income tax rate. This would be higher than the capital gains tax on long-term investments.

Which country in Europe has the highest capital gains tax?

According to the Tax Foundation’s European Capital Gains Tax 2024 report, Denmark has the highest capital gains tax at 42%. Norway comes in second place with 37.8%, followed by Finland and France with 34% each. Ireland came in fifth place with 33%.

Moldova had the lowest capital gains tax at 6%, followed by Bulgaria and Romania at 10% each and Croatia at 12%. Greece and Hungary followed with both 15%.

Some countries do not impose capital gains tax, including Belgium, Czech Republic, Georgia, Luxembourg, Malta, Slovenia, Slovakia, Switzerland, and Turkey.

Why do Denmark and Norway impose high capital gains taxes?

“Denmark and Norway, the two countries with by far the highest capital gains tax rates, have made some adjustments to explicitly link them to the statutory personal income tax rate,” said Alex Menden, global policy analyst at the Tax Foundation. ” One possibility that countries with high labor taxes tax capital gains at high rates may be to prevent people from disguising labor income as capital income.

“But when comparing interest rates on long-term stock holdings with no real ownership, this reasoning doesn’t hold true. Instead, capital gains taxes help people save money for the future rather than spend it right away. creates a bias against savings by imposing additional tax on the portion of after-tax income that is invested.

“That’s why even countries like Belgium, which has the highest tax burden on workers in the OECD, do not tax capital gains if they are considered savings income rather than professional income,” Menden says. he said.

France Capital gains are taxed at a flat rate of 30%, with high-income earners paying an additional 4%. Low-income taxpayers may choose to have their capital gains taxed at progressive income tax rates on securities.

In that case, you will receive a rebate based on how long you held the security, but this is only valid for shares or securities purchased before January 1, 2018.

A 50% rebate is available for stocks held between 2 and 8 years, while the 65% rebate is reduced for stocks held for more than 8 years.

Finland Capital and earned income are taxed separately. Examples of capital income include entrepreneurial income and activities, profit sharing and capital gains, income from timber sales, and dividend income. It also includes rental income, income from extractable land resources, and certain types of interest income.

Finland also has a progressive capital gains tax, with a 30% tax rate applied to capital income below €30,000. Taxable capital income in excess of that threshold is taxed at 34%.

Eastern and Southeastern European countries such as Moldova, Bulgaria, and Romania have low capital gains taxes, making them attractive places to do business for a variety of companies.

Lower taxes, cheap land and labor, and very easy laws for establishing a company also contribute to this.

Capital income in developing countries is usually obtained through the exchange or sale of real estate, while in developed countries it is primarily obtained through the sale of securities. This is primarily because a large portion of the wealth and capital in developing countries is tied up in real estate. Additionally, capital gains tax on stocks is also less effective as bearer shares are widely used.

In developing countries, real estate investments are usually considered speculative and less socially productive, so capital gains are also taxed. As a result, taxes on this type of investment are also aimed at discouraging investment to some extent in the hope of directing citizens to other investments that are more in line with the country’s economic and social goals.

Capital gains tax can be a double-edged sword

Higher capital taxes typically make people less inclined to save, prefer to increase their immediate consumption, and hold onto assets for longer periods of time. For investors, capital gains tax can be both an advantage and a disadvantage.

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This is because capital gains are typically taxed at lower rates than ordinary income, giving investors an advantage over ordinary salaried employees. However, short-term capital gains earned on investments lasting less than one year are typically taxed more than long-term capital gains.

This means you need to stay invested for at least a year, and usually longer, to get the most out of your tax dollars. This is known as the lock-in period or realization period, and it also leads to lower sales and lower income for both investors and the state.

Another benefit is that capital losses may be amortized against your personal tax bill, saving you more money.

Some European countries, such as Spain, exempt senior citizens (in this case over 65) from paying capital gains tax, but others, such as the UK, do not, so taxes vary by country. Very different.

This information does not constitute financial advice. Always do your own research to ensure it is appropriate for your particular situation. Also remember that we are a journalist’s website and aim to provide you with the best guides, tips and advice from the experts. Any reliance you place on the information on this page is strictly at your own risk.

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