Bought a few shares for €100 each and sold them for €180? Well, don’t get too excited. As soon as you start seeing those green numbers pop up in your brokerage account, your local taxman is waiting with open arms for you to hand over a good chunk of the profit. That’s how it is in most parts of Europe anyway. But you’re in for a surprise because, believe it or not, there are actually quite a few countries in Europe that won’t slap you with a tax bill for your capital gains. Yes, it’s hard to believe that such utopian lands still exist, but it’s true — and no, you don’t need to move to Monaco.
If you’re considering living fully or partially off your investments in the market, this alphabetically listed roundup may provide a good starting point for further research. For simplicity’s sake, the rates mentioned below are focused on gains from publicly listed shares and ETFs/mutual funds, not property, dividends, precious metals, cryptocurrencies or other types of investments. Also, the overview is about personal and not corporate taxation. Tax wrappers, like the UK’s ISA-system, France’s Prélèvement Forfaitaire Unique (PFU), or pension accounts, aren’t considered either.
👋 A necessary disclaimer: Although we use primary sources such as government websites to back up what we write, this article shouldn’t be viewed as official tax or legal advice. Think of it as a handy introduction to the country and its tax system. If you have any doubts, always talk to a certified specialist to figure out what you should do based on your unique circumstances.
Countries and territories in Europe with no capital gains taxes on long-held shares
The list is surprisingly long. Bear in mind that many countries have minimum holding requirements, while others impose wealth taxes.
- Czech Republic
- Isle of Man
- San Marino
Here's a simplified overview of capital gains tax rates on shares:
Article 5 of the Andorran Income Tax Law exempts individuals from paying tax on capital gains from shareholdings as long as they own less than 25% of the company, as well as on gains from investment funds and dividends. There is no minimum holding period. On the other hand, losses cannot be deducted or carried forward. If you own more than 25% of the shares in a company, you don't have to pay tax on the sale proceeds if you hold the shares for 10 years or more. However, if you sell before the 10-year mark, you'll be taxed at 10%.
The small Pyrenean principality has become a popular refuge for taxpayers in neighbouring countries fleeing the growing arms of Spain's "Hacienda", as well as those of France and Portugal. Before 2015, there were no income or corporation taxes in Andorra. Under pressure from the EU, a 10% tax rate was introduced on personal income above €40,001 and corporate income above €100,000. However, due to the country's bracket system, the effective tax burden for a low-income earner earning €40,000 per year is only 2%.
- Official Gazette of the Principality of Andorra. “Law 5/2014, of April 24, on the taxation of physical persons.” https://www.bopa.ad/bopa/026030/Pagines/8627A.aspx (in Catalan)
Belgium is a tax-heavy country with one of the highest effective tax rates in the world. There is hope for those looking for a tax break, however – capital gains are generally not taxed in Belgium as long as two conditions are met: the gains must arise within the "normal" scope of personal asset management, and the investment activity must not be of a professional nature. Although Belgium has a top marginal tax rate of 53%, one professor still thought it was fair to call Belgium a "tax haven" due to the exemption.
What the Belgian tax authorities consider "normal" and "abnormal" (as in speculative) is not always so easy to know beforehand, but as a rule of thumb, if you are investing long-term in shares, ETFs, or other investments and don't engage in day trading, derivatives, and other activities most investors would consider speculative, then it's likely that they won't be taxed.
Between 2012 and 2016, the Belgian tax authorities only taxed 76 individuals on capital gains from shares, amounting to less than 5 million euros. In recent years, there have also been several rulings regarding profits from cryptocurrencies in favour of the taxpayer, meaning that it's likely that cryptocurrency gains will also be exempt from taxation. Overall, the authorities don't interpret the law strictly and are unlikely to tax individuals on capital gains unless there is very good evidence that the gains have arisen due to highly speculative or professional activities.
Belgian law on capital gains
According to Article 90 of the Belgian Tax Code, Wetboek van de Inkomstenbelastingen, capital gains from selling shares are considered taxable income except as part of normal wealth management:
"meerwaarden op aandelen die zijn verwezenlijkt naar aanleiding van de overdracht onder bezwarende titel van die aandelen buiten het uitoefenen van een beroepswerkzaamheid, daaronder niet begrepen normale verrichtingen van beheer van een privévermogen".
This also applies to any other type of income or profit that arises "occasionally or incidentally" from a transaction or speculation, except for normal transactions relating to the management of a private estate consisting of immovable property, portfolio values and movable objects:
"winst of baten, hoe ook genaamd, die zelfs occasioneel of toevallig, buiten het uitoefenen van een beroepswerkzaamheid, voortkomen uit enige prestatie, verrichting of speculatie of uit diensten bewezen aan derden, daaronder niet begrepen normale verrichtingen van beheer van een privévermogen bestaande uit onroerende goederen, portefeuillewaarden en roerende voorwerpen"
This means that capital gains from shares and other types of movable property are exempt from taxation in Belgium as long as the activity is considered a normal part of your private asset management. Finally, if you organise your investment activity in a professional manner to a scope that falls outside what a regular private investor would do, their capital gains might be taxed.
Reasonable and unreasonable wealth management: the goede huisvader as a point of reference
The definition of "normal" private wealth management varies depending on the situation. Again, the Belgian taxman rarely hunts down individual investors, but if the authorities question your activities and you disagree with their assessment, the courts will often use the standard of a "good family father" ("goede huisvader").
A good family father, or "bonus pater familias" in Roman law, is a person who behaves reasonably and takes all relevant circumstances into account. This means being as cautious as any average citizen would be in the same factual circumstances. In the context of normal wealth management, a reasonable person would seek to maximise profits without risking a large percentage of all their money.
For example, someone who has a regular job and invest part of their savings in index funds, large or medium-cap shares, and bonds over a longer period of time is likely not to be taxed. On the other hand, someone who is engaged in high-frequency algorithmic trading, moves in and out of stock positions very quickly, speculates short-term on the movement of foreign currencies, uses high leverage or borrows money to invest, or trades in high-risk derivatives could face taxation from the Belgian authorities.
The black-or-white situations are clear-cut. The grey zone, where most people find themselves, is the murky area where the conduct of the "reasonable person" serves as a point of reference. Consider the following scenarios:
- Would a reasonable person invest 50% of their money in Dogecoin? No, ergo, it's not normal wealth management.
- Would a reasonable person invest 5% of their money in Bitcoin? Maybe, depending on the individual's risk appetite. If their other investments were more conservative, this would likely fall within the range of normal private asset management.
- Is trading contracts for differences (CFDs) on foreign currency markets normal wealth management? No.
- Is it reasonable to hold a percentage of your liquid savings in trusted foreign currencies, such as U.S. dollars or Swiss francs? Yes, this is a reasonable way to hedge against currency devaluation.
- Would a reasonable person buy put options on stocks in which they hold a sizable long position? Maybe. Since the put options could provide downside protection, this could be considered a sign of reasonable cautiousness.
- Is it normal wealth management to engage in Telegram pump-and-dump schemes? Definitely not.
- Would a reasonable person buy shares of a specific stock and sell it within one month of purchasing it? Probably. If the profits were significant, it could be argued that the investor had done what any other reasonable person would do in the same situation. Or, if the person urgently needed the money, this could be another reasonable cause for a rapid sale.
- Would it be considered reasonable to invest in artworks, wine, comics, vintage cars, or other collectables? It depends on the situation. If these rare objects are held for long-term investment and appreciation purposes, probably.
The question is always: what would a goede huisvader or huismoeder do in the same situation?
Belgian Financial transactions tax
Since 2007, Belgium has imposed a financial transactions tax (FTT). The FTT is imposed on trades of regulated financial instruments, such as stocks, bonds, options, etc. When Belgian residents buy or sell any type of regulated security—whether it's a local asset or foreign asset, local or foreign brokerage—they have to pay the TOB, also known as the "taks op de beursverrichtingen" or "taxe sur les opérations de bourse." The tax ranges from 0.12 to 1.32%, depending on the financial instrument.
Belgian wealth tax on brokerage accounts
If you have a brokerage account worth more than 1,000,000 EUR, you will need to pay a 0.15% tax on the account's average value to the Belgian taxman. This tax applies to any Belgian investor with accumulated wealth, investments and cash combined. Fortunately, the law wasn't well thought through. You can have multiple accounts across different brokerages and avoid the tax by keeping the value of each below the threshold.
Belgian tax on immovable property
Capital gains from selling your primary residence are tax-exempt as long as you have lived there for at least 12 months. If you sell any other building within 5 years of acquiring it, the capital gain will be taxed at 16.5% (plus local taxes). After that point, though, it is tax-free. Unbuilt land can be sold tax-free 8 years after you bought it.
- Belgian FIRE community on Reddit, What about taxes?, accessed 22 November 2022
- Mondaq, The Truth About Capital Gains Tax In Belgium, accessed 22 November 2022
- Belgian Ministry of Finance, Fisconet [database of binding tax rulings in Belgium available in French, Dutch, and German]
- Eubelius, Securities accounts are subject to an annual tax of 0.15% again, 2022
- Wikifin.be, De taks op de effectenrekeningen [about the tax on securities accounts], 2022
While millions of young Bulgarians have left for Western Europe in search of better opportunities, the country's fiscal climate for entrepreneurs and private investors is actually quite favourable. Bulgaria boasts some of the lowest personal and corporate tax rates in Europe and no capital gains taxes on securities listed on EU/EEA markets. There's also a flat 10% tax on capital gains from non-EU securities, cryptocurrencies, and most other types of movable property.
Capital gains taxes in Bulgaria
According to Bulgaria's Personal Income Tax Act, income from selling or exchanging financial instruments is taxed at the standard 10% rate. However, Article 13 exempts certain financial instruments if they are traded on a regulated market. The instruments being referred to are shares.
But what does a "regulated market" mean? It has to do with Bulgaria's Financial Instruments Markets Act. In short, a regulated market within the context of Bulgarian law is a place where people trade financial instruments that are licensed in Bulgaria, in another European Union country, or in Switzerland, Norway, Iceland or Liechtenstein. You can check the EU's registry of regulated markets to see if the exchange you want to trade on is regulated.
If the shares are traded on regulated markets elsewhere, including the U.K., U.S. and Asia, capital gains taxes apply, but the rate is still just 10%. One Bulgarian tax lawyer has warned that the authorities believe making more than 3 stock trades in a year is outside of personal wealth management. It becomes a business activity. Bulgaria is perhaps the only country in Europe with such restrictive rules, and eventually, someone will have to challenge the logic in court.
To summarise: For capital gains to be considered tax-free, three conditions must be met. (1) It must be a share; (2) it must be bought and sold on a regulated EU/EEA market; (3) you should not trade more than three times in a year.
Sources and further reading
- Taxmonkey.bg, Данък върху печалба от акции на регулирани пазари [a machine-translated version can be found here Capital gains taxes on shares in regulated markets], 2021
- Ruskov & Co., Tax on Trading with Shares in Bulgaria, 2021
The legendary birthplace of Aphrodite is not only blessed with beautiful scenery and a pleasant Mediterranean climate with 3,414 hours of sunshine per year but also offers some of the most competitive tax legislation in Europe. Cyprus is very much hands-off when it comes to personal and corporate taxation, especially for foreigners who can take advantage of the country's generous non-domicile program.
Capital gains taxes in Cyprus
Individuals and businesses in Cyprus do not pay capital gains taxes on profits from the sale of shares and other securities. Article 8 of the Income Tax Law (2002) of Cyprus grants tax exemption to "shares, bonds, debentures, founders' shares and other securities of companies
or other legal persons, incorporated under a law in the Republic or abroad and options thereon." This includes shareholders with majority equity in private companies.
It is less clear what the situation is for other types of movable property, including cryptocurrencies. The different sources that are available online about cryptocurrency taxation in Cyprus often contradict each other, and there are no official guidelines.
Sources and further reading
- Polycarpos Philippou & Associates, Cyprus Tax Regime, 2022
- Blevins Franks, Capital gains tax in Cyprus – an attractive tax regime, 2022
The Czech Republic
The Czech Republic is a low-tax country, both for individuals and companies. The OECD estimates the top statutory tax rate on personal income to be only 23%, while the corporate tax rate sits at 19% and 15% for the self-employed. It's also an appealing country for long-term investors.
According to § 3, Section 4 in the Czech Act on Income Taxes, individuals in the Czech Republic have two options to be exempted from capital gains taxes. These rules only apply to profits from securities (shares, mutual funds, exchange-traded funds, etc.) and not all types of assets, which are taxed at different rates:
- Option one: The realised capital gains do not exceed 100,000 CZK (around 4,100 EUR) per tax year. In this case, it's irrelevant how long you have owned the security. Only the amount is significant for tax purposes. So if your total yearly investment income from securities stays below this threshold, the capital gains are tax-exempt.
- Option two: If you have owned a security for more than three years, any profits you make from selling it are exempt from taxation. This rule is applied under the first-in, first-out (FIFO) principle. This means if you own, e.g. shares or exchange-traded funds for at least three years, you can receive the proceeds tax-free.
An example of a simple investment strategy to benefit from the rules would be to only invest in accumulating mutual or index funds.
Sources and further reading
- Accace, 2022 Tax Guideline for the Czech Republic, 2022
- ILP Abogados, The essential Tax Law in Czech Republic, 2019
- Jake-james.cz, Daně z obchodování s akciemi: jak na to a kdy se zdanění vyhnete [Taxes on stock trading: how and when to avoid taxation], 2022
If you're a resident of Greece, there's a high chance you may not have to pay tax on capital gains from shares, ETFs, mutual funds, and corporate bonds. Under Article 42 of the Greek Income Tax Code (Act 4172/2013), individuals who own less than 0.5% of the shares in a public company are not subject to capital gains tax when they sell their shares, regardless of the amount of profit they make.
Capital gains and dividends from UCITS mutual funds and ETFs are also exempt from tax if they are listed in the EU or EEA, according to Law 4099/2012, Article 103. You can check whether a fund is classified as a UCITS by looking at the fund's name, which is usually indicated as "UCITS ETF", and by reviewing the fund's factsheet. Gains on corporate bonds issued in the EU or EEA are also tax-free.
Greece’s tax rates on investments
Where capital gains are taxable in Greece, the applicable rates are set out in Articles 40 and 43 of the Income Tax Code. For capital gains from shares and funds, Greece's Ministry of Finance issued a circular in 2015 (POL. 1032/26-1-2015) that clarifies the tax exemptions under Article 42.
- Shares: If you own less than 0.5% of the shares in a public company and sell those shares at a profit, you'll pay 0% capital gains tax on that profit. This applies to shares listed in Greece, the EU/EEA and other countries. If you own more than 0.5% of a public company, you'll pay 15% tax.
- Shares (in private companies): If you own shares not listed on a foreign or Athens stock exchange, the capital gains tax rate is 15%. This is usually the case if you sell shares in a private company, such as your own business.
- ETFs, mutual funds: If you own shares in UCITS funds and sell them at a profit, you'll pay 0% capital gains tax. ETFs listed on EU/EEA stock exchanges are almost always of the UCITS type when available to individuals. Gains on non-UCITS funds registered outside the EU/EEA are taxed at 15%.
- Dividends (from stocks): Dividends from shares and non-UCITS mutual funds and ETFs are taxed at 5%. However, for dividends from non-Greek sources, the effective rate is often higher. If the source country withholds tax, a double tax treaty may apply to avoid double taxation. The tax paid in the source country can usually be credited against the Greek tax liability, but only up to the Greek amount. However, any excess paid cannot be credited to the investor, according to Circular E.2018/2019.
- Dividends (from UCITS ETFs/funds): If you receive dividends from a UCITS ETF or mutual funds, you'll pay 0% in dividend tax, according to Law 4099/2012, Article 103.
The transaction tax
Although Greece offers capital gains exemptions, it's important to note that they aren't entirely tax-free. Starting in 2021, there is a 0.2% tax on the sale value of securities, according to Article 112 of Law 4799/2021. This relatively small tax may have little impact on your portfolio, but it can be an annoying little burden for those who regularly sell their stock holdings. Still, it shouldn't be a deciding factor on whether to embark on a Hellenic adventure.
Tax incentives for foreigners moving to Greece
Aside from the generous tax exemptions on capital gains, Greece has made strides to make itself a more attractive place for foreigners to locate. In 2022, the solidarity tax, popularly known as the wealth tax, was abolished for all income levels. The country has also recently introduced a number of tax incentives for foreigners, including a non-dom programme for HNWIs, tax breaks for employees and a flat tax on foreign pensions. These can be found in Articles 5A, 5B and 5C of the Income Tax Act for those interested in the details.
Not much data has been released on the success of these incentives. According to the experts we've spoken to, there's a lot of fine print attached to these programmes, including high social contributions and documentation requirements, which may hinder their momentum. But the perhaps biggest challenge faced by those looking to relocate to Greece is staying abreast of the country's ever-changing tax laws and new amendments.
- Articles 40, 42, and 43 of the Greek Income Tax Code 4172/2013, along with the clarifying circulars POL 1032/2015 (Transfer of Securities), POL 1082/2018 (0.5% Ownership Rule), POL 1042/2015 (Treatment of Dividends), and E.2018/2019 (Treatment of Dividends from Foreign Entities), and Article 103 of Law 4099/2012 and (UCITS Funds). The transaction tax is covered in Article 112 of Law 4799/2021. These sources define the methods and rates of taxation applicable to such profits.
- Deloitte, Greece. "Tax treatment of gains on transfer of securities clarified." (PDF). February 4, 2015. Accessed October 30, 2023. https://www2.deloitte.com/content/dam/Deloitte/gr/Documents/tax/gr_tax_alert_tax_treatment_en_noexp.pdf
Greenland doesn't tax individuals on capital gains from selling listed shares, mutual funds, or bonds, with a few exceptions. The world's largest island isn't geographically considered part of Europe, nor is it a part of the EU, but it nevertheless has strong ties with the continent. If you're a nature-lover willing to live in a cold climate where winters last six months and the population density is one of the lowest in the world, you might want to take advantage of this tax loophole.
Capital gains taxes in Greenland
§ 34, point 2) of Greenland's Income Tax Law exempts individuals from paying tax on capital gains made from selling securities unless the purchase and sale are considered part of professional trading activity or speculation. Price losses on securities, on the other hand, will not be deductible from the taxable income either. The unofficial rule of thumb is that securities need to be held for at least three years for the sale to be considered non-speculative. But this is not a hard-and-fast rule. Bitcoin and cryptocurrencies are generally considered speculative assets by the Greenlandic Tax Agency.
The tax exemption can be found in § 34 of the Greenlandic Income Tax Act, where it is stated that gains or losses from selling a taxpayer's personal assets aren't relevant to their income statement unless there was profit or loss from selling these were obtained as part of a business activity or for speculation. Consequently, individuals are generally not responsible for taxes on capital gains, and capital losses can't be deducted or carried forward. This applies whether the purpose of the investment association is to invest in stocks, funds, or bonds.
Dividends are treated as regular taxable income. Picking accumulating funds or non-distributing shares is, therefore a logical choice.
Sources and further reading
- Deloitte, Grønlandsk beskatning af afkast i akkumulerende investeringsforeninger [Taxes on accumulating mutual funds in Greenland] (PDF), 2014
- PwC, Greenland: Tax Overview, accessed November 22, 2022
Liechtenstein, officially the Principality of Liechtenstein, does not tax capital gains. However, since the country only grants 89 residency permits per year to citizens of EEA countries and Switzerland, we won't use space to discuss its tax system any further.
For a country of only 2,586 km2, the tiny Grand Duchy of Luxembourg packs an economic punch. It's the third richest country in Europe (measured by GDP per capita), only outdone by Monaco and Liechtenstein, according to the World Bank.
Luxembourg doesn't tax individuals on capital gains on profits from the sale of stocks, bonds, or other types of movable assets if these are held for at least six months. If the holding period is less than six months or if the person owns 10% or more of a company's share capital, gains are taxed at progressive rates. Needless to say, it's best to have a long investment horizon, albeit half a year isn't that long in comparison to other countries.
Taxation of "movable" property in Luxembourg
According to Luxembourg's Income Tax Law, Loi du 4 décembre 1967 concernant l'impôt sur le revenu, capital gains on movable property, including securities, are not taxed if the asset is held for more than six months and the taxpayer owns less than 10% of the shares in the company or asset. In plain English, this means shares, ETFs, Bitcoin, and other investment assets can be sold tax-free after six months.
In most cases, capital gain from the sale of your main residency is also tax-free, but there are certain conditions that must be met to qualify for the exemption. Dividends and interest are generally not tax free and are subject to different rules.
Sources and further reading
- Deloitte, Luxembourg Individual Tax Guide, 2022
- The Government of the Grand Duchy of Luxembourg, Identifying and reporting income from the purchase or sale of shares or other securities, accessed November 22, 2022
- Analie Tax, Luxembourg Tax Guide, accessed November 22, 2022
- Taxx.lu, How to report your Crypto/Virtual currencies?, accessed November 22, 2022
Private individuals in the Netherlands are generally not taxed on capital gains. Any profits made from selling shares, options, mutual funds, ETFs, bonds, cryptocurrencies, precious metals, artworks, or other types of movable assets are exempt from taxation. Instead of imposing a tax upon profits, the Netherlands assesses a wealth tax. Foreigners moving to the Netherlands who qualify for the tax-reducing "30% Ruling" can opt for "partial foreign tax liability" and pay a reduced wealth tax.
Capital gains tax in the Netherlands
The Dutch Income Tax Law, the Wet inkomstenbelasting, divides income into three categories. Each category in the tax system has different rules and different rates. Income from savings, assets, and investments belongs to the third category, commonly known as Box 3 on the tax return.
You are not taxed on the actual returns made on your investments. Instead, you pay a yearly wealth tax (Vermogensbelasting) based on the value of your assets minus any liabilities (debts). The wealth tax is calculated by assuming a fixed hypothetical yield, irrespective of what your actual returns may be. Your primary residence does not count towards the wealth tax. Expats with the 30% ruling can request to be exempted from Dutch taxation in Box 3.
There is a tax-free allowance of 50,000 EUR (2021 number; 100,000 EUR for married couples). Your net worth exceeding 50,000 EUR is effectively taxed at around 1.50%. The exact percentage depends on your net worth and how it's distributed between bank savings and investments. Calculating the exact amount of tax you need to pay on Box 3 assets can be difficult. Fortunately, there are several online calculators available to do the maths.
The wealth tax becomes quite onerous once you hit higher brackets. A simple way to mitigate the issue is to take out a larger mortgage. Your primary residence isn't included in Box 3, and the interest payments are deductible.
When do capital gains taxes apply?
When are capital gains not tax-free in the Netherlands? According to Section 3.4 in the Dutch Income Tax Law, income from activities that fall outside the scope of "normal asset management" will be considered professional income and, therefore, taxable.
The specific section contains several conditions, but what mainly counts is the number of transactions, whether the taxpayer is a professional trader, and how much time is spent on the activity (is it full-time employment?). For example, someone who does not hold a full-time job but spends all their time day trading is likely to be qualified as a professional.
Sources and further reading
- Deloitte, International Tax: Netherland Highlights 2022 (PDF), 2022
- Taxsavers.nl, No capital gains tax in the Netherlands, 2022
- Tokentax.co, Guide to Crypto Taxes in the Netherlands, 2022
Like its Czech neighbour, the castle-rich republic of Slovakia features a fairly tax-friendly climate. According to the Slovak Income Tax Law §9, capital gains from securities owned for more than one year are exempt from taxation. The law also explicitly mentions options, although these are generally considered securities by nature.
According to the Slovak robo advisor Finax.eu, shares or ETFs are the best investments to invest in from a tax point of view, as the rules for other types of assets do not provide the same benefits.
Sources and further reading
- Finax.eu, Kompletný prehľad zdaňovania príjmov z investícií, 2022
Slovenia takes a very generous stance on capital gains. The country's tax system distinguishes between gains from securities and gains from other types of movable property. But not to worry– both are taxed at favourable rates. Residents in the home of Mount Triglav do pay above-average income taxes when compared to the rest of the EU. If you are self-employed, you can dodge the tax bullet by using the advantageous lump sum program, which lets you deduct 80% of your revenue as expenses.
Capital gains tax on securities
Capital gains taxes on securities work as follows: If you hold your investments for less than 5 years, the tax rate is 25%; for a holding period of 5 to 10 years, the rate is 20%; for a holding period of 10 to 15 years, the rate is 15%; for a holding period of 15 years or more, the rate is 0%.
The system obviously encourages long-term investing. Dividends are taxed at 25% regardless of the holding period. If you're investing in ETFs, the accumulating type (non-dividend distributing) is obviously preferable.
Capital gains tax on other types of movable property
Profits from disposing of movable property are generally exempt from taxation in Slovenia. The details can be found in Article 32 of the Slovenian Income Tax Act ("ZDoh-2"). The law states that income from disposing of movable property is not taxable, with the exception of securities and derivatives, which have their own set of rules, and under the condition that the activity is not regarded as professional in nature.
For example, profits from selling gold and silver as a private individual are exempt from taxation. The same applies to cryptocurrencies. In its tax guide on cryptocurrencies, the Slovenian authorities give an example of a person who invested 500,000 EUR in 2017 across 20 trades. Over 10 days split across 20 orders, the person later sells off their entire holdings for 1,500,000 EUR. The profits were not taxable as the individual acted on their own, did not have any specialised knowledge, and because there were too few trades for it to be regarded as a business activity.
Sources and further reading
- Slovenian Ministry of Finance, Taxation in Slovenia 2022 (PDF), 2022
- Financial administration of the Republic of Slovenia, Disposal of securities, other holdings or investment coupons, 2022
- PwC, Slovenia: Tax Overview, accessed November 22, 2022
Individual investors in Switzerland pay no capital gains tax on profits from shares, mutual funds, ETFs, bitcoin, artworks or any other type of movable asset. If a personal property can be moved (digitally or physically relocated) from one place to another, the proceeds from selling it are generally exempt from taxation throughout the whole Confoederatio Helvetica. The primary exception to this rule is if you are trading in a professional capacity or if investment income makes up the majority of your income.
The Swiss tax system
Similar to the U.S., Switzerland is a federation without a single, unified system of taxation. While there are taxes at the federal level, like in the U.S., the country's 26 Cantons and around 2,220 municipalities each have a high degree of sovereignty in tax matters. The result is a layered system of tax laws that can sometimes be so confusing that even the Swiss authorities are happy to joke about it.
The way it works in most cantons is that you will receive one yearly bill for your federal taxes, which is usually the smallest of your taxes. For state taxes, you will typically receive one bill per month. Similarly, you will also receive one monthly bill for municipality taxes. There is also a mandatory church tax in most states (a relic of the past, according to some), and there are even oddities like the yearly dog tax, the "Hundesteuer". You'll need to be on top of all of them if you don't want to get charged interest on late payments.
A brief history of capital gains taxes in modern Switzerland
At the federal level, Switzerland does not tax private investors on sales profits from investments such as shares. However, at the cantonal level, every state is free to do so, though none chooses to. Prior to 1996, when the last canton abolished it, most Cantons did actually levy and collect capital gains taxes.
In the years leading up to the new millennium, stock prices increased rapidly (hello, dot-com bubble crisis), and the Swiss left saw an opportunity to request a referendum to reintroduce the tax at the federal level. With a federally universal tax, we can assume the idea was that Cantons could not have to compete with each other in not imposing it.
The opposition, the no-tax side, fought the proposal and won. It argued that individuals were already taxed on their capital in the form of the wealth tax, and an additional tax upon sales would lead to indirect double taxation. Moreover, research showed that tax on capital gains only raised revenues by 1%, of which a large part would be offset by increased costs in the tax administration.
Taxation of movable property in Switzerland
Here is a direct quote in from the Swiss federal tax authority’s tax guide (in the German original language) conforming the tax-exemption of capital gains: “Sowohl bei der dBSt (Direkte Bundessteuer) als auch in allen Kantonen sind Gewinne, die bei der Veräusserung von beweglichem Privatvermögen wie Wertpapieren, Gemälden etc. entstehen, steuerfrei.” In English: capital gains are tax-exempt, whether from public stocks, collector's coins, bitcoin, etc., provided these gains were made by selling movable assets in a private capacity.
Dividend-distributing stocks and funds (ETFs etc.) are subject to a temporary 35% withholding tax. However, this amount is later refunded to you by the Swiss federal tax authority. Investors must add the gross dividends (total amount of dividends before the withholding tax is deducted) to their tax return. If you file your returns correctly, the temporary withholding tax is returned with the next tax bill.
Taxation of immovable property in Switzerland
Immovable property refers to property that cannot be easily moved or dismantled. In daily life, land and real estate. In Switzerland, capital gains from immovable property are taxed at the cantonal level. The tax rate varies from canton to canton and depends on how long you owned the property and how large the profit is. To reduce property speculations, the cantons tax property gains achieved in less than two to three years more than gains achieved from owning property for five or more years. A longer holding period reduces the taxable basis and the tax rate.
The Swiss wealth tax: The stealthy unrealised gains tax
While Switzerland doesn't tax capital gains directly, it nevertheless does so indirectly via the wealth tax ("Vermögenssteuer"). The wealth tax is a tax residents of Switzerland pay on the sum of their assets minus debts, no matter whether the profits from assets have been realised or not. It includes the value held in bank accounts, cash, stocks, bonds, paintings, rare metals, property, etc. Anything of value that can be sold on the free market, essentially. The wealth taxes are determined on a net basis, i.e. a taxpayer can deduct all personal liabilities from the wealth tax base of assets. This includes most types of debts, including mortgages and other loans. This is one reason why most people in Switzerland never pay off their mortgage and perhaps why some are happily overleveraged in the property market.
The exact wealth tax rates and allowed deductions vary across cantons. For example, the canton of Nidwalden has a fixed wealth tax rate of only 0.0665%, which is the lowest in Switzerland, while Geneva imposes a maximum wealth tax rate of approximately 1%—the highest in the country. Many cantons have a tiered system, where individuals with little or no wealth pay no tax, while individuals with substantial fortunes pay more. A married couple in Zurich owning assets worth less than 154,000 CHF, for example, would pay zero wealth tax.
The Swiss wealth tax has been in place since 1840. There used to be a federal wealth tax, but today the tax is levied only at the cantonal level. Swiss national law prohibits the cantons from abolishing the wealth tax as they have with the capital gains tax, but they are free to set any rate they want. It seems very unlikely that the wealth tax will be abolished any time soon, as it accounts for almost 4% of national revenue. Since many types of debts are deductible from the value with no cap, including mortgages and other types of loans,
Sources and further reading
- HSBC, Tax in Switzerland: Your guide to tax in Switzerland, accessed November 22, 2022
- PostFinance, Paying tax on shares in Switzerland, accessed November 22, 2022
- PwC, Switzerland: Tax Overview, accessed November 22, 2022
- Eidgenössische Steuerverwaltung, Das schweizerische Steuersystem [The Swiss Tax System] (PDF), 2019 (archived version)
- Wealth Tax Commission, Wealth Taxation in Switzerland (PDF), 2020
- Vontobel, Crypto tax in Switzerland, accessed November 22, 2022
Which countries in Europe have the lowest capital gains tax?
21 European countries and territories do not tax individuals on capital gains from shares: Andorra, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Gibraltar, Greece, Greenland, Guernsey, Isle of Man, Jersey, Liechtenstein, Luxembourg, Monaco, Netherlands, San Marino, Serbia, Slovakia, Slovenia, and Switzerland. However, some of these have certain requirements that must be met in order to qualify for tax exemption.
What country in Europe has the highest capital gains tax?
Denmark has the highest capital gains tax rate on shares in Europe at 42% maximum rate, followed by Norway with 35.2%, the Faroe Islands at 35%, and Finland at 34%.
Does Portugal have capital gains taxes?
Yes, Portugal does have capital gains tax. The tax rate depends on the type of asset and the amount of time that it has been owned. Realised capital gains from securities, including shares, ETFs, and bonds, are taxed at 28% in Portugal, although there are exceptions for certain types of investments.
Does Belgium have capital gains taxes?
Yes, Belgium has a capital gains tax, however private individuals are often exempt from it if their investments are for personal use and not for professional purposes. Article 90 of the Belgian Tax Code details the conditions for this exemption.
Does Switzerland have capital gains taxes?
No, private individuals in Switzerland are not taxed on capital gains from the sale of stocks and other financial assets. However, most Swiss cantons impose a wealth tax on the value of certain assets held by individuals, including stocks and other financial assets, and this may be assessed on a yearly or occasional basis.
- 23 February 2023: Updated with details about Greece