Since the introduction of the final withholding tax in 2009, you can no longer claim income-related expenses for income from share trading. However, you do not need to actively take care of paying the tax, as this is done by the broker. However, due to the church tax and the solidarity surcharge, the 25 percent of the final withholding tax can quickly become an amount of almost 28 percent. As a trader, you should take this into account. In addition, some brokers handle it differently when and how the final withholding tax is collected.
The broker or the bank offsets all profits as well as losses that you have made from trading in shares and other securities. Only the pure profit is taxed at the end with the final withholding tax. As a single person, you can benefit from the 801 euro tax-free allowance; for married couples, the tax-free allowance is twice as high, i.e. 1602 euros. Interest from call money or time deposit accounts is also taken into account here and is subject to tax. So that you do not have to reclaim the tax-free amount at the end of the year through income tax, you can apply for an exemption - in this way, the tax-free amount is not even paid to the responsible tax office.
Danger of tax evasion lurks
Especially with smaller and international brokers, there is a great danger that you as a trader from Exness Asia will be guilty of tax evasion. Such brokers usually do not pay the final withholding tax on their own, but take the trader to task for it. In this case, you have to report the trading income to the tax office on your own. Some traders, however, do not do this and want to save themselves the flat rate tax in this way. However, you should definitely refrain from doing so, as this is tax evasion that can be prosecuted under criminal law. You should therefore definitely declare your own income in your tax return.
Alternatively, the broker will pay the taxes later, which offers you an advantage. The tax delay offers you the potential to use the entire capital for your trading over a longer period of time. However, this period should not be too long, otherwise the tax payment can also be forgotten. In addition, it may be the case that you lose the previous profits and then still have to pay the taxes. Thus, you may get into debt and end up with less money at your disposal. This can be a risk.
Conclusion: The final withholding tax on trading reduces the attractiveness of share trading
On the whole, the flat rate tax naturally offers a lower potential return, since you have to pay a flat rate of 25 percent of your earnings to the tax office. However, this offers a certain degree of comfort, as you do not have to pay the final withholding tax yourself - as a rule, this is done by the responsible broker with whom you trade. However, there are also other solutions so that you are responsible for paying the tax. In such a case, however, you quickly run the risk of being guilty of tax evasion. Therefore, this aspect should be taken into account when choosing a broker.