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Schäuble Eyes End To Capital Gains Flat Tax

07 May 2013   (0 Comments)
Posted by: Author: Ulrika Lomas
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Source: Ulrika Lomas (Tax-News.com, Brussels)

German Finance Minister Wolfgang Schäuble has indicated that he will consider the idea of abolishing the withholding tax levied on capital gains – when the time is right.

Once a global information exchange mechanism in place, the Government will be able to discuss the idea, Finance Minister Schäuble revealed in an interview with Die Zeit. Schäuble nevertheless stressed that there is still a long way to go before this objective is realized, despite the significant progress made over the last few months.

Although highlighting the fact that he has never been "a big fan" of the levy, which was introduced by his predecessor Peer Steinbrück, Schäuble nevertheless conceded that "in a globalized world it is difficult to tax capital using conventional methods."

Capital gains in Germany are currently taxed at a flat rate of 25%, meaning that income from capital is often taxed at a considerably lower rate than income from work.

In the run up to the September elections, the Social Democrats have called for the withholding tax rate on capital gains to be increased. In contrast, the Left Party and the Green Party have called for the flat tax to be removed and for capital gains to instead be subject to income tax.

The withholding tax system for capital gains was introduced in Germany at the beginning of 2009. Defending the measure at the time, the Government explained that the provision was simple and encouraged individuals not to relocate their wealth abroad.


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