In many countries, investment income, such as dividends and capital gains, is taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. ed at a different rate than wage income. Today’s map focuses on how capital gains are taxed, showing how capital gains taxA capital gains tax is levied on the profit made from selling an asset and is often in addition to corporate income taxes, frequently resulting in double taxation. Capital gains taxes create a bias against saving, leading to a lower level of national income by encouraging present consumption over investment. rates differ across European OECD countries.
When a person realizes a capital gain—that is, sells an asset for a profit—they face a tax on that gain. For example, if you buy a share for $100 and sell it for $120, you pay capital gains tax on your $20 gain.
The capital gains tax rates shown in the map are the top marginal capital gains tax rates levied on individuals, taking into account exemptions and surtaxA surtax is an additional tax levied on top of an already existing business or individual tax and can have a flat or progressive rate structure. Surtaxes are typically enacted to fund a specific program or initiative, whereas revenue from broader-based taxes, like the individual income tax, typically cover a multitude of programs and services. es. If the capital gains tax rate varies in a country by type of asset sold, the tax rate applying to the sale of listed shares after an extended period of time is used.
Denmark levies the highest top capital gains tax of all countries covered, at a rate of 42 percent. Norway levies the second-highest top capital gains tax at 35.2 percent. Finland and France follow, at 34 percent each.
A number of European countries do not levy capital gains taxes on the sale of long-held shares. These include Belgium, the Czech Republic, Luxembourg, Slovakia, Slovenia, Switzerland, and Turkey. Of the countries that do levy a capital gains tax, Greece and Hungary have the lowest rates, at 15 percent.
On average, the European countries covered tax capital gains arising from the sale of listed shares at 19.4 percent.
|Top Marginal Capital Gains Tax Rates on Individuals Owning Long-Held Listed Shares without Substantial Ownership (Includes Surtaxes)|
|European OECD Country||Top Marginal Capital Gains Tax Rate||Additional Comments|
|Belgium (BE)||0.00%||Capital gains are only taxed if they are regarded as professional income.|
|Czech Republic (CZ)||0.00%||Capital gains included in PIT but exempt if shares of a joint stock company were held for at least three years (five years if limited liability company).|
|Denmark (DK)||42.00%||Capital gains are subject to PIT.|
|Estonia (EE)||20.00%||Capital gains are subject to PIT.|
|France (FR)||34.00%||Flat 30% tax on capital gains, plus 4% for high-income earners.|
|Germany (DE)||26.38%||Flat 25% tax on capital gains, plus a 5.5% solidarity surcharge.|
|Hungary (HU)||15.00%||Capital gains are subject to a flat PIT rate of 15%.|
|Lithuania (LT)||20.00%||Capital gains are subject to PIT, with a top rate of 20%.|
|Luxembourg (LU)||0.00%||Capital gains are tax-exempt if a movable asset (such as shares) was held for at least six months and is owned by a non-large shareholder. Taxed at progressive rates if held <6 months.|
|Netherlands (NL)||31.00%||Net asset value is taxed at a flat rate of 31% on a deemed annual return (the deemed annual return varies by the total value of assets owned).|
|Norway (NO)||35.20%||Capital gains are subject to PIT (an adjustment factor applies).|
|Slovakia (SK)||0.00%||Shares are exempt from capital gains tax if they were held for more than one year and are not part of the business assets of the taxpayer.|
|Slovenia (SI)||0.00%||Capital gains rate of 0% if the asset was held for more than 20 years (rate up to 27.5% for periods less than 20 years).|
|Switzerland (CH)||0.00%||Capital gains on movable assets such as shares are normally tax-exempt.|
|Turkey (TR)||0.00%||Shares that are traded on the Stock Exchange and that have been held for at least one year are tax-exempt (two years for joint-stock companies).|
|United Kingdom (GB)||20.00%||–|
Note: “PIT” refers to personal income tax.
Sources: Bloomberg Tax, “Country Guide,” https://www.bloomberglaw.com/product/tax/toc_view_menu/3380/; and PwC, “Worldwide Tax Summaries Online,” https://taxsummaries.pwc.com/.
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