Shares. Taxation of income from selling shares
Shares (company's stocks, equities, securities) represent the part-ownership of a company. Buying shares means to make an investment in a particular company.
Tax on shares shall be paid only when they are sold. It does no matter if they are shares of a Finnish or foreign company, whether is used Finnish or foreign account or whether the company is listed or unlisted.
There are two options to calculate the amount of profit or loss from selling shares:
- deduct the purchase price + expenses incurred in making a profit from the selling price of the shares, or
- deduct the deemed acquisition cost: 40% of the selling price of the shares if you owned them for at least 10 years and 20% for those who owned the shares for less than 10 years
- It is very simple to understand which one of the methods is more profitable to use - just making some simple calculations.
The losses incurred due to the sale of shares is deducted primarily from the capital gains, and if there are no gains then the deductions can be made from all of capital income. If there are no capital income at all or this income less than the losses from the sale of shares, the deduction of losses can be transferred to the following 5 years. Note, that losses are not deductible in case of total purchase price of shares have been sold during a calendar year was EUR 1,000 at maximum. Sales losses incurred due to shares do not affect the taxation of earned income.
The FIFO (First In – First Out) method is applied to the sale of shares from securities accounts. This rule means that if you sell shares of a company that have been bought at different times, they are sold in the order of purchase – the oldest first. Nevertheless, if you have two or more electronic stock portfolios, you can sell shares in a different order - shares from a newer portfolio at first and then the shares in an old one.
More information on taxation of income from selling shares can be found at Finnish Tax Administration website.