Capital Gains Tax (Hansard, 27 January 1989)

§ Mr. Norman Lamont

[holding answer 24 January 1989]: The information requested is given in the table, which is supplemented by notes. The rates quoted relate to capital gains on the sale of investments in general since there is no evidence available to suggest that the countries listed distinguish between gains on quoted and unquoted investments.

Country	Nominal rates of tax on gains of
	Individuals	Companies
Canada^{1 2 3}	17–29 per cent. plus provincial tax	28 per cent. plus provincial tax
France^{4 5}	16 per cent. or 5–56.8 per cent.	15 per cent. or 42 per cent.
Germany⁶	22–56 per cent.	56 per cent.

791W

Country	Nominal rates of tax on gains of
	Individuals	Companies
Italy^{7 8 9}	12–62 per cent. plus 16.2 per cent. local tax	36 per cent. plus 16.2 per cent. local tax
Japan¹⁰	10.5–60 per cent. plus inhabitants tax (5–16 per cent.)	42 per cent. plus inhabitants tax (17.3–20.7 per cent.)
United Kingdom¹¹	25 and 40 per cent.	25 and 35 per cent.
USA¹²	15 and 28 per cent. plus state tax	15–34 per cent. plus state tax
¹In Canada, two thirds (three-quarters from 1990) of the post-1971 gains are included in the individual's or company's income and taxed at the appropriate income tax rates.
² Provincial rates of tax vary. The rate in Ontario (the most populous province) is 52 per cent. of federal tax for individuals and 10–15.5 per cent. of gains for corporations.
³An individual may claim a deduction equal to taxable capital gains up to a cumulative life-time maximum of $250,000 (£117,370 at latest available purchasing power parities (ppp) rate).
⁴In France the reduced rate of 16 per cent. applies if sale takes place more than two years after acquisition and if the shares constitute a substantial interest in a resident or non-resident company (ie where the shareholder has held more than 25 per cent. of the company's share capital at any time during the preceding five years).
⁵The reduced rate of 15 per cent. applies to long-term gains of companies, provided the net balance is allocated to a "special long-term gain reserve".
⁶In Germany the gains of individuals are subject to income tax if the securities were held as business assets or if they are sold less than six months after acquisition. Gains amounting to less than DM 1,000 (£274 at latest ppp rate) are not taxable.
⁷In Italy gains of individuals are subject to tax only if the shares were held as business assets or are sold within five years of acquisition and, in the case of unquoted companies, exceed 10 per cent. of the company's capital.
⁸In Italy corporate gains are not taxed if they are allocated to a special reserve and are re-invested within two years.
⁹In Italy local tax is deductible when calculating national income tax. The effective rates, including the local tax, are 46.4 per cent. for corporations and 26.2–68 per cent. for individuals.
¹⁰In Japan gains by individuals are only taxable if deemed business transactions They are subject to a deduction of 500,000 yen (£1,423).
¹¹In the United Kingdom the charge is confined to post-1982 indexed gains. Individuals are exempt from tax on gains not exceeding £5,000.
¹² In the USA most states impose a state tax on both individuals and corporations. For example in California (the most populous state) the maximum state tax of 9.3 per cent. produces an effective maximum rate of approximately 34 per cent. for individuals and 40 per cent. for companies.