Taxation of the shares for the 2017 income
Before the end of the year it is good to review what tax treatment will have our investments in the stock market . Like any income, profits in equities are also subject to tax on the income statement .
Investing in the stock market is an option that has a number of advantages over other investments but involves not only study the market to avoid losses but also need to know the taxation of such shares.
Keys to exchange earnings statement for 2017 Income
To make the most profit on investments must know how taxed the shares in the so – called taxable personal income tax savings . But first let ‘s clarify some concepts:
What is an action?
According to the “Finance Claras” dictionary, stock in a company, is the proportion of capital of a corporation . The action is a security and is entitled to a proportionate share in the profit sharing and their corresponding equity share in the dissolution of society. Action also entitles preferential subscription of new shares and voting rights at general meetings.
Type of shares
Different types of actions: can be nominative or bearer , and fully or partially paid . In Spain , if the company is limited , action rather than each party called social participation .
What exchange operations have to declare?
- Stocks buyselling
- Dividends obtained by actions. These include the scrip-dividends , which is to replace part of the cash dividend by issuing new shares against reserves, and this year bring new tax.
Taxation of shares 2017
1. Taxation of capital gains from the sale of shares in personal income tax 2017
What I have to declare my actions?
When we operate in the market we can obtain:
Capital gains: when the difference between what I have invested and won is positive . That is, when the sale of securities title is a higher price than we’ve bought. This difference (purchase price selling price = +), as long as it is positive, is what we should pay taxes.
Patrimonial loss: when the result of this calculation is negative . That is, when we have obtained less to zero profit.
Tributaremos c ompra sale of shares only benefits : you only pay for the total profit net of losses and four year term for compensation. Capital gains from the sale of shares are considered capital gains taxed as income from savings. That is, with a tax rate ranging from 19% to 23% in three tranches: up to 6,000 euros, the capital gain taxed at 19%; between 6,000 and 50,000 euros, 21%; and from 50,000 euros, 23%. However, no retention time when the gain occurs. Only you paid to the Treasury to make the statement of income.
Taxation of dividends
The payment of dividends has suffered in recent years changes in tax treatment . In 2015, the novelty was that disappeared exemption on income tax for the first 1,500 euros received as dividends. The collection is considered capital gain and is currently taxed at 19% for amounts up to 6,000 euros. Between 6,000 and 50,000 euros is paid to 21%, and from 50,000 euros, must be taxed by 23% to the tax. It is the same taxation involving the proceeds from the sale of shares.
The main novelty for the year 2017 applies to pre- emption rights which carry rigged and capital increases that are prevalent in the ‘scrip dividend’: pass directly taxed as a regular dividend. So far, the income earned lowered the purchase price, thus taxation at the time the shares were sold was deferred. Since January, it is considered a gain that is taxed according to the percentage corresponding amount. Retention is done by the depository.
Example prepared by the General Council of Economists
A company launches a ‘ scrip dividend ‘ (compensation formula that gives the investor the opportunity to cash in shares or cash), with capital. As a shareholder, you have three options:
- Receive free share for every action you have (the proportion varies with conditions that marks each company).
- Sell allocation rights on the market, listed, for example, to 0.70 euros.
- Sell the rights to the entity at a fixed price of 0.60 euros.
As a shareholder you are a holder of 400 shares you acquired at 10 euros. How and when would pay to the Treasury?
If you choose the first option you will receive 400 free shares. 400 you had you were valued at 4,000 euros and 800 happen to have the same total value of 4,000 euros. However, each title rather than post it to 10 euros for the purposes of the purchase price become valued at 5 each (4,000 / 800).
If you take the second option, you will sell 400 rights to receive 280 0.70 euros. If the operation had taken place in 2016 was 400 shares valued at 4,000 euros they will be valued at 3,720 euros (4000-280). If the operation will take place in 2017 there is no reduction in the purchase price.
He also receive a gross 280 euros, but the net will be 226.80 euros (280 to 53.20 euros retention), like a dividend.
If you sell the rights to the company will receive a gross amount of 240 euros and a net 194.40 (holding 240-45.60), to be treated as income from capital. Shares will continue valued at 4,000 euros.
How to account for the sale of shares?
To find out how to account for the sale of shares the FIFO system is used (first in, first out). Therefore gives rise or fall as stocks, only we pay the accumulated gains when we sell the securities . That is, if we buy titles in 2012.2013, 2014, 2015 … Until the sell will not have to pay taxes. If buy and / or sell by parts, the first to sell will go calculating the results regarding the first to buy.
For example, if you buy 100 shares at 20 euros in 2015 and 200 shares 30 euros in 2016, if subsequently sell 150 shares at $ 40 in 2017, the calculation of the gain will be:
Investment: (100 x 20 euros) + (x30 50 euros) = 2.000 + 1.500 = 3.500 euros
Sale: 150 x 40 euros = 6,000 euros
Gain: 6000-3500 = 2,500 euros.
Rest: I remain in the portfolio bought 150 shares of the second package to 30 euros without running an unrealized gain of 1,500 euros (not even declare until you sell).
2. Taxation of capital losses from the sale of shares
How to offset gains and losses in income tax?
When the transaction between the purchase price of the shares and the selling price is negative not have to pay taxes but you must include in the statement as part of the taxation of shares . This will make you benefit from this handicap and compensate with gains.
This operation is called “offset gains and losses in income tax” and applies to investments in stock market and mutual funds or ETFs . That is, if you earned 2,000 euros on the stock market but have lost 1,000 euros in ETF’s are compensated.
To offset gains and losses in income tax you have four years. That is, if in 2013 we lost 100, in 2014 we lost 100, in 2015 we lost 100 and 500 won in 2016, we can compensate and pay taxes only for those 200 euros of profit.
3. Other expenses you can include in the statement of your actions in income tax
The benefits you have earned you can subtract deductible expenses such as:
- Administrative expenses and deposit of securities: services of financial institutions.
- Buying and selling commissions
4. What if the shares are foreign?
Taxation of the sale of shares of foreign companies is the same as the Spanish , only that you pay more in commissions , as we have seen in the previous point, you can deduct. In addition, we must add or subtract capital gain or loss arising from currency exchange.
5. What happens to the shares acquired before 1994?
If you have shares before 1994 you can also apply known as abatement coefficients , which allow you to pay less taxes.
According to the Personal Income Tax Tax Guide 2016 , the coefficients applied abatement of 25% , in the case of shares traded per year exceeding rounded up two old from acquisition to 31/12/1996 (2 years and 1 day equals 3 years, 3 years and 1 day to 4 years …) and part generated from that date to which no coefficients are applied.
Therefore, once the capital gain calculated by the general system must distinguish two parts:
- Part generated before January 20, 2006 (subject to reduction only);
- The portion generated after January 20, 2006, which does not enjoy reduction.