Advantages and disadvantages of the share tax

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With regard to the flat rate tax, it gives an advantage to richer people in particular if they have to pay tax on their share profits. The flat rate of taxation of 25 percent taxation enables shareholders with a medium or high income to save money. The maximum rates for the income bracket are currently 45 percent. If there is a lower income, the right to choose is available. One has to pay a lower interest rate on the income because of the income level. Thus, it remains up to one to decide whether to declare the share gains or not. Low earners who do not make high profits with shares are not at a disadvantage due to taxation. In order to strengthen their own salary, some investors buy shares. However, many people have turned away from shares since the new regulation with taxation has been in place. Shares bought before 2009 are still tax-free and do not have to be taxed.

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Paying final withholding tax automatically

A distinction must be made as to which income from shares is taxed. Basically, it should be noted that no costs have to be deducted for gains on shares that have been bought and sold. Most of the time, so-called transaction costs are due at the well-known brokers, which are incurred when buying a share. These are collected by the brokers and also the bank. Even the final withholding tax is deducted directly by the bank and the broker from the profits at and transferred to the tax office. Share owners therefore no longer have to take the shares tax into account in their annual income declaration.

However, this is not the case if the church tax is not automatically deducted by the bank. In this case, a reporting obligation is active that requires the church tax to be paid in the income tax return. In this case, it is important to inform the bank to which denomination the client belongs. Information about the investment income in the tax return ultimately pays off if the tax rate is below 25 percent. The investor benefits from the tax savings.

Share tax – the tax-free amount

Investors who have securities accounts at different banks must submit an application to all banks. If the investor does not submit an application, he can reclaim the tax-free amount when filing his tax return, so there is no disadvantage for traders and investors.

Before 2010, married couples did not have the option of deciding whether or not to apply for an exemption jointly. However, this fact has been changed. Each spouse can now decide for or against the exemption order. The regulation is active if the married couple has separate accounts. If there is a joint account, both must agree and sign the exemption order. One will pay tax on the share profits. If there are several accounts or custody accounts, each person must decide for themselves whether to sign the order. The exemption order can be adjusted during the course of a year. Every investor has to check the exemption amount, otherwise he may run the risk that the exemption amount will disappear and one will be taxed more on the profit. Of course, this is not in the traders’ interest.