A:

Capital gains are taxed quite differently in different countries. Some countries charge no capital gains tax. Most do include capital gains in taxable income but often at a different rate than that of regular income such as wages. The tax rate for capital gains can be either lower or higher than rates for regular income.

Capital gains are profits from the sale of a non-inventory asset at an amount higher than it was purchased for. Examples of non-inventory assets include corporate stock, a business, a piece of art and a parcel of land.

As of March, 2015, two countries that do not charge a capital gains tax are Barbados and Singapore. In Singapore, however, professional traders (those who buy and sell securities for a living) are an exception. For traders in Singapore, capital gains are regarded as income and taxed at the same rates as personal income.

In Estonia, all residents are taxed at the same rate for capital gains as for regular income. The tax rate in that country is 21% across the board.

In Austria, capital gains are taxed at 25%, but there is an exception known as Schachtelprivileg for sale of foreign entities with opaque taxation. This exception requires that participation exceeds 10% and the shareholder holds the shares for more than one year.

In Canada, only 50% of realized capital gains are taxable. These are then taxed at the individual's tax rate. Certain exceptions apply, however. For example, the sale of one's primary residence may be tax exempt.

In the United States, individuals and corporations pay taxes on the net total of their capital gains in their federal income taxes, although some exceptions exist. Short-term capital gains are taxed at a higher rate than regular income, whereas long-term capital gains are taxed at a lower rate. On the other hand, for some tax brackets, the federal government charges no taxes on long-term capital gains, which are defined as profits on assets that have been held for over a year before being sold.

RELATED FAQS
  1. Is there a difference between capital gains and dividend income?

    Selling something for a profit leads to capital gains. A payment made by a corporations to stockholders is a dividend. Both ... Read Answer >>
Related Articles
  1. Managing Wealth

    Understanding Capital Gains

    Capital gain refers to the increase in value of a capital asset or an investment security upon sale. In other words, if you buy company stock, real estate or fine art and then sell it for more ...
  2. Taxes

    Capital Gains Tax 101

    Find out how taxes are applied to your investment returns and how you can reduce your capital gain tax burden.
  3. Taxes

    Which Countries Have the Highest Taxes on High Incomes?

    These countries charge the highest taxes on high incomes.
  4. Taxes

    Countries with the Highest Income Taxes

    Before you move to one of these countries with the highest income taxes, think through the overall tax situation - and what you get for your money.
  5. Taxes

    Why America's Taxes Are Too Low

    The solution to America's economic woes may not be in lowering taxes further, but may, in fact, lie in increasing them.
  6. Taxes

    Understanding Taxes

    Taxes are mandatory fees that individuals and corporations must pay to their governments.
  7. Taxes

    How Tax Cuts Stimulate the Economy

    Learn the logic behind the belief that reducing government income benefits everyone.
  8. Taxes

    10 States With High Sales Taxes

    Most states have sales taxes of some kind for goods and services. Here's a rundown of the states that have the highest sales taxes.
  9. Taxes

    5 Tax-Efficient Portfolio Tips for High Income Earners

    High income earners can use these tips to make their portfolio more tax-efficient.
  10. Taxes

    9 States Where You'll Pay the Most in Taxes

    Which state you live in can mean thousands of dollars saved or lost in taxes each year. Here's a list of states to avoid when it comes to tax rates.
RELATED TERMS
  1. Capital Gains Tax

    A capital gains tax is a type of tax levied on capital gains ...
  2. Capital Gains Treatment

    The specific taxes assessed on investment capital gains as determined ...
  3. Taxable Gain

    A profit on the sale of an asset that is subject to taxation. ...
  4. Taxes

    An involuntary fee levied on corporations or individuals that ...
  5. Tax Exempt

    To be free from, or not subject to, taxation by regulators or ...
  6. Income Tax

    A tax that governments impose on financial income generated by ...
Hot Definitions
  1. Nostro Account

    A bank account held in a foreign country by a domestic bank, denominated in the currency of that country. Nostro accounts ...
  2. Retirement Planning

    Retirement planning is the process of determining retirement income goals and the actions and decisions necessary to achieve ...
  3. Drawdown

    The peak-to-trough decline during a specific record period of an investment, fund or commodity. A drawdown is usually quoted ...
  4. Inverse Transaction

    A transaction that can cancel out a forward contract that has the same value date.
  5. Redemption

    The return of an investor's principal in a fixed income security, such as a preferred stock or bond; or the sale of units ...
  6. Solvency

    The ability of a company to meet its long-term financial obligations. Solvency is essential to staying in business, but a ...
Trading Center