HC Deb 20 February 1991 vol 186 cc138-9W
Mr. David Shaw

To ask the Chancellor of the Exchequer what information he has on the rates of capital gains tax in EC and G7 countries and the Soviet Union.

Mr. Maude

The latest available information on EC and G7 countries is given in the table, which is supplemented by notes. No information is available on capital gains tax in the Soviet Union.

Countries have widely differing procedures for calculating the taxable proportion of a gain, and in many cases rates of tax depend on the type of asset on which the gain is made and the period for which the asset has been held. In most EC and G7 countries the gains of individuals and companies are added to income and taxed at the ordinary income or corporation tax rate as appropriate, but various reliefs and exemptions may apply.

The majority of these countries have no equivalent to indexation which substantially reduces the effective rate of tax in the United Kingdom and Ireland. Some countries have no equivalent of the £5,000 annual exemption in the United Kingdom. Where there is such an exemption, it is generally very much lower than in the United Kingdom.

Nominal rates of tax on gains of
Country individuals Companies
Per cent. Per cent.
EC
Belgium 0–331 412
Denmark exempt or 22–683 50
France 16 or 5–56.84 345
Germany 19–53 50
Greece exempt or 10–256 46
Ireland 30–507 30–507
Italy 10–508 plus 16.2 local tax 36 plus9 16.2 local tax
Luxembourg 10–5610 34 plus local tax (7.2–12)
Netherlands 35.75–6011 35
Portugal exempt or 1012 36.5
Spain 25–56 35
United Kingdom 25 or 4013 25 or 3513
Other G7
Canada 17–2914 plus provincial tax 38 plus14 provincial tax
Japan 10–50 plus local taxes 5–1515 37.5 plus local taxes 17–20
USA 15 or 2816 plus state tax 15–34 plus16 state tax
1 Gains are generally exempt, but some speculative gains are taxed at up to 33 per cent.
2 Some gains are exempt and long-term gains are taxed at 20.5 per cent.
3 A special flat rate of 50 per cent, applies to investment gains if the seller has a "substantial interest" in the company.
4 The 16 per cent, rate applies to some gains including those on the sale of certain unquoted shares and shares which constitute a substantial interest in a company.
5 Some long-term corporation gains are taxed at lower rates of 19 or 25 per cent.
6 Gains on moveable assets, including shares, are not taxed. Gains on immovable assets are subject to capital gains tax at varying rates depending on period for which asset was held.
7 Rates depend on period for which asset was held.
8 Gains only taxed if deemed to be derived from business assets sold within five years of date of acquisition.
9 Corporate gains not taxed if allocated to a special reserve or are reinvested within two years.
10 Gains on sale of immovable property held between two and 10 years are taxed at half the average rate on the individual's total income.
11 Gains on sale or private assets are exempt.
12 Only 50 per cent, of the gain on some types of asset is subject to tax.
13 The charge is confined to post-March 1982 indexed gains. Individuals are exempt from tax on gains not exceeding £5,000.
14 Three quarters of post-1971 gains are included in income and taxed at appropriate rates. Provincial rates vary. Rates in Ontario, the most populous province, are 53 per cent, of federal income tax for individuals and 10 to 15.5 per cent, of gains for corporations. For individuals there is a cumulative exemption on gains up to a lifetime limit of $100,000.
15 Gains by individuals taxable only if deemed to be business transactions.
16 Most states impose a state tax on both individuals and companies. In California, the most populous state, the top rate of 9.3 per cent, produces effective maximum rates of approximately 34 per cent, for individuals and 40 per cent, for companies.