§ Lord Marlesford
asked Her Majesty's Government:
Which countries in the European Union have a capital gains tax on shares or other assets, indicating the rate of tax and the annual exemption level (expressed in pounds sterling) in each instance. [HL3724]
§ Lord McIntosh of Haringey
The United Kingdom and Ireland are the only countries in the European Union that have separate capital gains taxes as such.116WA
In the case of Ireland, the annual exemption is £971. Most types of gain are charged at 20 per cent. apart from three minor classes where the rate is 40 per cent. Various types of gain are exempt.
In the UK, the annual exemption is £6,800. Gains are subject to tax at the highest marginal rate but this is reduced according to the period for which the asset has been held: it is tapered from 40 per cent. for higher rate taxpayers after two years to 24 per cent. after 10 years (23 per cent. and 13.8 per cent. respectively for basic rate taxpayers). Various types of gain are exempt.
In other countries, capital gains are normally subject to tax but gains are either taxed as income or specifically as income from capital and may thus be subject to a different rate. Details of the regimes operating in European countries are as follows:
- Austria—Capital gains are included in taxable income but those realised by a private person are generally exempt. However, capital gains from speculative ventures and from the disposal of certain participations are in principle subject to tax.
- Belgium—Gains realised by individuals not engaged in business activities are in principle not taxable. However, gains realised from speculative transactions or from intangible property are taxed at a flat rate of 33 per cent. and no exemptions apply. Capital gains realised on the disposal of business assets are regarded as business income and subject to taxation at the ordinary rates.
- Denmark—Taxable gains and deductible losses are included in taxable income, subject to various categorisation rules.
- Finland—Gains are included in the income from capital category and taxed at a flat rate of 28 per cent. The annual exemption is £3,300. There are some exemptions.
- France—Gains are added to taxable income for income tax purposes.
- Germany—Gains are included in ordinary income. An individual disposing of private assets is generally exempt, with certain exceptions.
- Greece—Only gains arising from the sale of non listed shares are taxable. Any gain is taxed at a flat rate of 20 per cent. There is no exemption.
- Italy—Gains realised by individuals are generally exempt but a restricted category of gains are subject to individual income tax. Gains on the disposal of most shares or other participations are liable to a flat-rate substitute capital gains tax.
- Luxembourg—Gains are in principle taxed as income. Gains arising from a particular activity, e.g. trade or business, are included in the taxable income from that source.
- Netherlands—Gains are taxed as income, although a distinction is made between those realised by a business and those by an individual. There is no basic exemption.
- Portugal—Gains constitute a category of income for income tax purposes.
- Spain—Gains constitute a category of income for income tax purposes.
- Sweden—An annual exemption of £3,372 is allowed in respect of gains from the sale of most "private assets" but this excludes immovable property, shares and securities and private dwellings. For these classes of asset no exemption applies but 100 per cent. of the gain is not always taxable. If the gain arises from the disposal of "private assets", it is included in the income from capital category and taxed at a flat rate of 30 per cent.
Amounts in foreign currency have been converted to £ sterling according to the latest known OECD purchasing parity taxes.