What does the flat rate tax for capital assets look like?
July 21, 2022 | 50,00 EUR | answered by Robert Kockel
Dear tax advisor,
My name is Fanni Czakaj and I have some questions regarding the capital gains tax. Several years ago, I started investing my money in stocks and funds in order to diversify my wealth and achieve long-term returns. However, I do not have much experience with the taxation of capital gains and I am unsure how the capital gains tax works in this context.
Currently, I have made some profits from my investments and I am wondering how these profits will be taxed. Are there any tax allowances that I can use to reduce my tax burden? Do the profits from capital gains need to be reported in the income tax return and what is the tax rate for this type of income?
I am concerned that due to my lack of knowledge, I may make mistakes in the taxation of my capital gains and end up having to make high back payments. Therefore, I would be very grateful if you could explain the capital gains tax in more detail and provide me with possible solutions on how to optimize my tax burden.
Thank you in advance for your support.
Kind regards,
Fanni Czakaj
Dear Mrs. Czakaj,
Thank you for your inquiry regarding the capital gains tax. It is understandable that you are concerned about the taxation of your capital gains and wish to avoid any potential mistakes. I am happy to explain the key points regarding the capital gains tax and provide you with tips on how to optimize your tax burden.
The capital gains tax is a flat tax of 25% imposed on capital gains such as interest, dividends, and gains from securities transactions. It is withheld directly by banks and financial institutions and remitted to the tax office. As an investor, you no longer need to report your capital gains in your income tax return.
However, there are exemptions that you can utilize to reduce your tax burden. The basic tax-free allowance for individuals is €801 per year, and for married couples it is €1,602. This means that you can earn capital gains tax-free up to this amount. If your capital gains exceed these allowances, the capital gains tax will be due.
To optimize your tax burden, you can consider investing in tax-optimized investment products such as mutual funds or ETFs. These products often provide the opportunity to defer taxes or even remain tax-free in certain cases. Additionally, you can offset losses from securities transactions with gains to reduce your tax burden.
It is also advisable to regularly review your investment strategy and adjust it if necessary to take advantage of tax benefits. If you are unsure, I recommend consulting a tax advisor or financial expert who can assist you in optimizing your capital investments.
I hope this information is helpful to you and that you can effectively reduce your tax burden. If you have any further questions, please do not hesitate to contact me.
Best regards,
Robert Kockel
