The taxation of capital gains in the securities sector

Before the 2-year period for speculation, which was standardized in the 2000 tax reform, came into effect, the current legal regime (two-year retention period) was reinstated with the KMOG.

The Capital Markets Offensive Act (KMOG) regulates the taxation of speculative gains as follows from 2001 onwards:

According to § 30 of the EStG, the speculation profit tax applies to sales of shares in capital companies with a value below 1%, 000 €. If this percentage is reached or exceeded, there is a tax liability under § 31 of the EStG (sale of shares).

Substantial gains in investment funds
Reference to point 6 of the previous article. Depending on the fund type: normal taxation, 25% special taxes, 5% flat-rate KESt, 2.5% KESt "safeguard tax" (0.2% p.m. for year-end sales) and tax-free.

Determination of the speculative gain

· If a specific security is sold within one year of purchase, the difference between the purchase price plus ancillary costs (bank fees) and the sale proceeds minus advertising costs (bank fees) is subject to the normal income tax rate if the exemption limit of S 6,000 per month is exceeded.

Calculation problems arise when identical securities are purchased or sold at different times in different quantities at different prices. In this case, the application of the speculation deadlines to the individual sale is controversial. If the shares purchased earlier and later are mixed (e.g., shares in a GmbH), or it is not possible to determine which shares were purchased first, the BMF requires a ratio calculation, which is rejected in the literature on the grounds that the seller can determine which share is sold. In any case, it is important to differentiate between GmbH shares and other securities.
·
- Shares in a GmbH
In a response to a request dated June 18, 1991, the BMF stated the following:
According to the GmbH Act, shares acquired at different times constitute a unified economic asset. The taxpayer cannot therefore determine which shares – acquired at different times – are to be sold. If a share is acquired and part of the unified business share is sold within the one-year speculation period, a distribution of the profit must be made between the speculative business and the share issue. Since the shareholding in a GmbH usually amounts to at least 1%, in this case, from 2001 onwards it is already a share issue in which the retention period is irrelevant.

- Other securities
With the tax reform of 2000, a regulation for determining speculative gains was standardized in § 30 Abs. 8 Zi 4 and 5 EStG for depositary transactions. Although this law was never implemented, the calculation method listed in the special regulations issued in connection with it offers itself as a practical solution. However, for shares it is only applicable insofar as the shareholding does not reach 1%, since as of this shareholding level, from 2001 onwards, there is no longer a speculative transaction but a share transfer.

For now, however, it is necessary to decide which calculation method to use. Either the ratio calculation favored by the tax authorities or the direct assignment method preferred in the literature. Based on the following example, the speculative gains are shown to be significantly higher. Which method is more advantageous for the taxpayer depends on the specific circumstances and cannot be determined in a general way.

The calculation method based on the ratio method is based on a two-stage process as follows:
Step 1: Determination of the one-year retention period using the FIFO method. Sales are always attributed to the oldest purchases.
Stage 2: Determination of the cost of acquisition of the sold securities using the moving average method.

Practical advice:
The theory sounds easier than it is in practice. With a large portfolio, the asset sale gain allocation can be extremely complicated and time-consuming. This is especially true when the portfolio manager focuses on performance without taking retention periods into account.

For these purposes, a securities transaction statement must be requested from the bank, which must include the following data: for each type of security, the date and number of securities purchased and sold, the exchange value or purchase price, the profit value, and the bank fees associated with each transaction.

Example from a stock exchange for the X stock:

......................... STK .......Course
Accesses:
2001-03-20 ..100 ..........1.500
2001-05-01 ..40............. 1.395
2001-11-15 ..80............. 1.300

Sales:
2001-08-30... 50............ 1.600
2002-03-25 ...170.......... 1.500

Determination of the average purchase cost using the moving average method:

Access...........Unit by value
2001-03-20 ....100 x 1,500,- = 150,000
2001-05-01.... 40 x 1,395 = 55,800
..............Value. 140 x 1,470,- = 205,800
Sale
2001-08-30 .....-50 x 1,470.- = -73,500
..............Value 90 x 1,470,- = 132,300
Access
2001-11-15 ......80 x 1,300.- = 104,000
..............Value 170 x 1,390,- = 236,300
Sale
2002-03-25...... -170 x 1,390 = 236,300

.............................0 speculative gains

After the ratio calculation:

- Sales revenue 2001-08-30 .....50 x 1,600,- = 80,000
³ Acquisition costs ...............50 x 1,470 = -73,500
......................Speculation profit 2001: .........6.500

- Sales revenue 2002-03-25 .....170 x 1,500,- = 255,000
outside the speculation period
acquired (2001-03-20) -50 .
proportional revenue ...........................120 x 1,500,- = 180,000
Average purchase cost by proportion
........................................................120 x 1,390,- = -166,800
......................Speculation gain 2002: .........13.200

Sample: 120 units out of 170 units: 70.59%

Total sales revenue of 170 units 255,000
Average purchase cost -236,300
.....................Total profit .....................18.700
70.59% of which speculative gain 2002 13,200

According to the direct attribution method:

- Sales revenue 2001-08-30 ..... 50 x 1,600,- = 80,000
Oldest acquisition costs
2001-03-20.................................. 50 x 1,500,- = -75,000
......................Speculation profit 2001: ......... 5.000

- Sales revenue 2002-03-25 120 x 1,500 = 180,000
Specific purchase costs
2001-05-01 ................................. 40 x 1,395 = -55,800
Specific purchase costs
2001-11-15 ................................. 80 x 1,300 = -104,000
......................Speculation gain 2002: ......... 20.200

The direct attribution method can only be applied if the "demonstration of identity" is possible, which shows that exactly those papers are being sold that were purchased at the time.

2.3 Final remark

Depository holders are advised by the banks that the speculative gains themselves are taxable, or that the tax advisor is responsible for this. The depository bank usually points out that it cannot determine the taxable gains for professional reasons. The depositor may assume that his securities are already properly taxed anyway and relies on the bank to do it correctly. He may not even be aware that there is no end-of-year taxation of speculative gains. It is therefore solely the depositor’s responsibility to determine and explain the speculative gains themselves. The difficulties in calculating them are obvious. But rather than simply forgetting them, the speculative gains should be declared rather than not declared at all, in order to refute the accusation of criminal conduct.

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