Fixed assets – Dispute about securities capital gains tax

Finance Minister Magnus Brunner (ÖVP), as he says in the current “Trend” interview, wants to abolish the so-called securities capital gains tax this year. The announcement is now causing heated debates and is particularly annoying for the SPÖ and employee representatives. On the other hand, investors have long been calling for the abolition of the tax on capital gains, which has existed in its current form since 2016.

Income from capital gains, for example from the sale of shares, is currently taxed at 27.5 percent. If these are processed by local banks or lending institutions, they are collected directly by the bank and passed on to the tax authorities. Around 200 to 300 million euros flow from the securities capital gains tax to the federal government every year.

In total, the state received a good 1.34 billion euros in capital gains taxes such as dividend tax or securities capital gains tax in 2020. “Depending on how the year went on the stock exchanges, a lot comes together. We would definitely feel a loss of this income in the budget,” Dominik Bernhofer, head of the tax law department in the Chamber of Labor (AK), told the “Wiener Zeitung”. .

Different models

Until 2012, there was a one-year retention period for investments in Austria, which was abolished with the introduction of the securities capital gains tax. With the abolition of the tax, a (multi-year) tax-free speculation period could be reintroduced. The details are still being negotiated at government level.

There is a wide potpourri of rules across Europe, both in terms of taxation and holding periods for securities. In seven European countries – including Switzerland and the Czech Republic – there are no taxes on capital gains from securities. Elsewhere, tax rates vary from 42 percent in Denmark to 15 percent in Greece and Hungary. The average tax rate is 19.3 percent.

Unlike the AK, the director of EcoAustria, Monika Köppl-Turyna, welcomes the possible abolition. “One cannot say that those indirectly affected would not benefit from a reduction,” she told the “Wiener Zeitung”. Lowering the cost of capital would increase investment, which in turn would create more jobs.

Instead, she advocates the introduction of a retention period. “We want people to hold shares for as long as possible, which also creates planning security for companies,” she says. There are also very different models and retention periods across Europe for the speculation period for securities. In any case, Bernhofer considers the abolition to be wrong at this point in time. “With the current low interest rates, I don’t see any particularly large effects in terms of venture capital.” There is already a lot of money on the market that is looking for investment and returns. You can also see that in the high investments in tech start-ups in recent years, also in Austria.

Stock imbalance

In fact, share ownership in Austria is currently very unequally distributed. In 2020, the share assets of private households in Germany amounted to 61.24 billion euros. In the top income percentile, 11.3 percent of households hold stocks, while in the bottom fifth it is only 1.6 percent. That’s why the federal director of the SPÖ, Christian Deutsch, accused the ÖVP on Friday of only serving “the interests of the rich”. In fact, by international comparison, domestic households have relatively few securities assets. This is different in the Scandinavian countries, where up to a third of households own shares. The investment market is also an important part of private pension provision there. Köppl-Turyna believes that a retention period instead of a tax could make shares more attractive as a pension plan in Austria.

And there is another aspect that bothers the AK and the globalization-critical NGO Attac: that income from work is taxed much more heavily in this country than income from capital assets. Attac calls for equal treatment of all types of income and progressive taxation, regardless of whether it is income from capital gains or wage labor.(of)

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