Taxation is very important when choosing a financial product and is one more piece of information to take into account when investing our savings. When we make money with our investments, we must take into account that we have a partner who, when things are going well, is going to take a piece of the pie and when you do not obtain profitability, they are not going to be there to support you. Although the losses can be compensated. That partner we are talking about is the Spanish Treasury.

Although there are ways to postpone paying taxes, which we will see below, sooner or later you will end up going through the checkout. Of course, everything we talk about here will be legal forms and allowed by Spanish laws that the Treasury does not pursue. We do not recommend that you use illegal methods to avoid paying taxes.

How taxation works on the sale of shares

The fact of having shares does not mean having to pay taxes. You can hold the shares for a decade and you won’t have to pay taxes.After a €4,000 loss, the profit to be stated is €3,990.If shares perform poorly, you can offset capital losses with income from moveable capital up to 25%. . The shares are taxed on the basis of savings.

The profit or loss will be calculated by subtracting the money obtained from the sale, the purchase price and the expenses associated with the purchase and sale that you have had to pay. Depending on the profit obtained, you have to pay the following taxes:

From €0 to €6,000, the rate is 19%.
From €6,000.01 to €50,000, the rate is 21%.
From €50,000.01 of profit up to €200,000, the rate will be 23%.
From €200,000 to €300,000, the rate will be 27%
More than €300,000. the rate will be 28%

Example: I buy 1000 shares at €10 with a commission of €10, that is, €10,010. At the time of selling I get €18,000, I pay another commission of €10 and I keep €17,990. The tax return’s capital gain will be €7,990—€17,990 minus €10,010.I’ll pay 19% on €6,000 and 21% on €1,990 because taxation is progressive.are stock dividends taxable

How to compensate for property losses

Loss compensation is simple. After a €4,000 loss, the profit to be stated is €3,990.If shares perform poorly, you can offset capital losses with income from moveable capital up to 25%. Let’s go with an example:

I will be able to compensate 25% of €800 which is €200 and the remaining €300 I will be able to use in future years.

In case you continue to have negative performance, you have the option to offset them for 4 years.Thus, you can cut taxation by €2,000 if my final income is -€2,000 one year and €5,000 the next.Remember that the Treasury will not disclose this information in the declaration, so if you don’t write it down and add it, you won’t be able to repair losses from prior years. are stock dividends taxable

Let’s complicate it a bit more.

How is the FIFO criteria applied?

FIFO (First in, first out) requires you to sell shares in order of purchase (where they have the same value). Let’s explain it with an example:

After a few months, we sell 200 shares at 14 euros.To compute the capital gain, we will take the purchase price of the first 100 shares at 10 euros, add 100 shares purchased at 12 euros, and leave 50 shares at €12. It is not allowed to use the average of the 250 shares (€11.2) to calculate the return for the Treasury.

If the taxpayer buys the same securities two months before or after selling a share, the rule precludes a capital loss.

Conclusion: Fiscally, actions prevent the magic of compound interest from working because you have to pay 19, 21 or 23% every time you make a sale.are stock dividends taxable

How the taxation of investment funds works

The taxation of investment funds for the individual investor is fiscally more optimal than shares, being able to postpone the payment of taxes practically indefinitely. When selling the shares, the same rules and the same taxation apply as if it were a sale of shares. That is, the tax for capital gains is as follows:

From €0 to €6,000, the rate is 19%.
From €6,000.01 to €50,000, the rate is 21%.
From €50,000.01 of profit up to €200,000, the rate will be 23%.
From €200,000 to €300,000, the rate will be 27%
More than €300,000. the rate will be 28%

On the other hand, the FIFO criteria is applied and the losses are compensated the same as before the shares. So what’s the advantage over stocks?

Transfer between funds without the need to pay taxes, the great advantage

The transfer between investment funds is the great advantage of investment funds over other financial products. If you want to buy a company and you have to sell shares of another, you must pay taxes. If you prefer an investment fund or wish to diversify, the transfer does not tax earnings.

Therefore, with investment funds you can defer the payment of taxes until you want to have part of the money or all of it. All that money that you transfer without paying the Treasury is money that continues to multiply. The condition, for this advantage to be applied, is that the investment fund has a minimum of 500 participants.

In autonomous communities like Madrid with minimal inheritance tax, your children won’t have to pay capital gains if you leave them any or all of that money.excluding inheritance tax.capital gains

From Miccapital we recommend to the individual investor, to invest through investment funds for this advantage. We help you invest safely and without leaving your bank . Depending on your risk profile, we recommend the best products and we take commissions into account so that your profitability is always the maximum. You only pay if you make money. We charge €2 for every €1,000 you invest with a maximum of €20 from €10,000. why are we doing it like that? Because we don’t care how much money you have, we only advise you well.

How dividend withholding works

Dividends are taxed in the savings tax base at the same tax rates as shares and funds:

From €0 to €6,000, the rate is 19%.
From €6,000.01 to €50,000, the rate is 21%.
From €50,000.01 of profit up to €200,000, the rate will be 23%.
From €200,000 to €300,000, the rate will be 27%
More than €300,000. the rate will be 28%

Dividend collection is subject to withholding, that is, at the time of collection you will receive the money after paying 19, 21 or 23%. In principle, in the income statement, this data will appear but it is your job to make sure that they have accounted for all dividend withholdings.

If you have a foreign broker, it is possible that you receive gross dividends and, therefore, in the corresponding declaration you must settle accounts.

The sale of subscription rights, since 2018, carries the same taxation as a dividend.

Double taxation of foreign dividends

Overseas profits can be twice taxed in the nation of origin and Spain, allowing you to keep 40% or more of the amount.

Your broker determines this.Brokers and countries provide paperwork to minimize double taxation, however some take longer and cost more depending on the amounts you manage.double withholding.are disgustedck dividends taxable