Taxation levels across Europe can vary greatly from country to country. For financial companies seeking to choose the best location for their business for tax purposes, understanding these differences can help greatly.
There are a few important details companies need to understand about taxation in Europe, especially if these companies engage in trading financial instruments, such as stocks, forex, and more.
Capital gain taxes are especially important for companies engaging in trading. While every company is subject to corporate taxation in Europe, these companies may also be subject to long-term or short-term capital gains taxes on their trading income.
Some of the largest countries in Europe, such as the UK, Germany, France, Spain, and Italy, attract thousands of expats every year, which also makes their taxes more closely scrutinized for those who wish to open or already operate trading businesses in these countries:
Understanding the capital and corporate tax rates in European countries is essential for financial firms and may ultimately affect the viability of starting such businesses in the country. For example, paying taxes on FX gains in these countries can contribute to an overall higher tax burden for financial companies.
While European countries are generally known for their high tax rates, some countries do not charge any capital gains tax and instead focus on corporate income tax. In the case of Monaco, however, neither of these taxes are applicable.
Notable European countries that do not levy capital gains tax include Switzerland, Belgium, and Luxembourg, while Slovakia and the Czech Republic charge income taxes on the sale of securities. This favorable tax treatment contributes to making these countries more attractive for expats looking to do business in Europe than others.
Other European countries still charge a capital gains tax, but at a considerably lower rate than some of the larger economies on our list. For example, Poland levies a capital gains tax of 19%, while Denmark has a rate of 22%, which are both lower than the rate charged by Germany.
Conversely, countries like Austria charge a capital gains tax of 27.5% on the sale of securities, which is higher than most countries in Europe.
It must be noted that capital gains taxes are only applicable when the sale of a security results in a profit.
Capital gains taxes can vary greatly between European countries and gathering reliable data is essential for individuals looking to start trading businesses in any of the countries on the continent.
Financial audit firms, such as the Big 4, are reliable sources of taxation data for countries in Europe and around the world.
For example, you can view the taxes levied in Germany by finding the country in the PwC countries directory.
These firms provide breakdowns of tax codes of various countries on the official websites free of charge and first-time business owners can gather the required information in only a few clicks.
