Are there specific investments that are more vulnerable to double taxation?
June 13, 2022 | 120,00 EUR | answered by Guido Hoffmann
Dear tax advisor,
my name is Sandra Maier and I am currently dealing with the issue of double taxation in relation to my investments. I have heard that there are certain investments that are more susceptible to double taxation, and I would like to learn more about it.
Currently, I have some stocks in my portfolio that I consider long-term investments. I am aware that with dividends I receive from these stocks, double taxation can occur, as both the company I have invested in and myself as a shareholder must pay taxes on the dividends. This means that my capital is double taxed and I end up making less profit.
I am concerned that this double taxation could affect my returns and would like to know if there are certain investments that are less vulnerable to double taxation. For example, are there specific investment forms or tax structures that allow me to bypass or at least minimize this double taxation?
I would appreciate it if you could help me make my investments more tax-efficient and provide me with possible solutions to reduce the impact of double taxation. Thank you in advance for your support.
Sincerely,
Sandra Maier
Dear Mrs. Maier,
Thank you for your inquiry regarding double taxation in relation to your investments. It is understandable that you are concerned about how double taxation may affect your returns and what options are available to minimize it. There are indeed certain investments that are less susceptible to double taxation, and I will present you with some options that can help you make your investments more tax-efficient.
One way to minimize double taxation on dividends is to invest in tax-friendly investment products such as mutual funds or ETFs (Exchange Traded Funds). These investment forms allow dividends to be taxed at the fund level before they are distributed to investors, thus eliminating double taxation at the investor level.
Another option is to invest in foreign securities. Investing in companies outside your home country can result in dividends being taxed only in the country of origin and not again in the investor's country of residence. This can avoid or at least reduce double taxation.
Additionally, certain tax structures can be utilized to minimize the impact of double taxation. These include forming tax reserves or applying double taxation agreements between different countries to avoid double taxation.
However, it is important to note that tax regulations and laws may vary depending on the country and individual situation. Therefore, I highly recommend consulting a tax advisor or financial expert who can analyze your personal situation and suggest tailored solutions for your investments.
I hope that this information helps you optimize the taxation of your investments and I am available to clarify any further questions you may have.
Sincerely,
Guido Hoffmann
Tax Advisor
