Should I pay taxes without withdrawing the money?

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#1

Hello all,

I have a question regarding paying taxes on profit in Germany.
Let’s say that I’ve started trading 10 months ago with 1000 USD in the investing account and made several transactions (selling/buying stocks) and the initial 1000 USD increased to 3000 USD. So, I’ve made 2000 USD profit in the application and still have opened positions now but I’ve not withdrawn my money from the account since the start of the trading.

My question is, should I pay taxes on the 2000 USD profit in the app even though I haven’t yet withdrawn the profit?.

Another question is: If I withdrew 1000 USD from the account and left the 2000 USD profit in it (as opened positions), does this considered the initial 1000 USD that I deposited in the beginning and shouldn’t pay taxes on it?

Many thanks in advance!

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#2

I know taxes should be paid after withdraw the money to your bank account, not sure. It’s better to ask a financial advisor in your country.

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#3

If you sold shares and made profit, you pay tax regardless where your money is kept.

4 Likes
#4

In Germany, you pay taxes every year on your every realized gain and loss. Regardless of where the money is and kept.

2 Likes
#5

Many thanks for your reply :slightly_smiling_face:!
I’m afraid that I didn’t get your point regarding the gain and loss. So, if I paid taxes on the 2000 USD gained profit. What happens if the profit was decreased in the next year from 2000 USD to 1000 USD? Does this mean that I will get some money back from the taxes in the next year? Imagine also that the profit was decreased to 0 USD in the next year and was increased again to 2000 USD in the year after it, does this mean that I’ll have to pay taxes again on the 2000 USD?

Many thanks in advance!

#6

Please explain in more detail. You incur a tax liability (or a loss which may be set against gains) as soon as you close a position. So it does not make sense to talk of profit increasing and decreasing from year to year.

#7

I’ll try to explain it with example.
A: If I started with 1000$ and closed the positions with 1000$ profit (Now I have 2000$ in the account)
So, This means that I should pay taxes on the 1000$ profit I made in the end of the year (Year 1).
B: Imagine that I opened new positions in the new year and lost all the profit I made (*Now I have 1000$ in the account), should I then get any money back from the taxes by the end of the year (Year 2)?
C: Imagine that I made 1000$ profit again in the next year (Year 3) (now I have again 2000$ in the account) should I pay taxes against this profit by the end of the year (Year 3)

Considering that I have not withdrawn any money from the brokerage account all this period!

#8

If you loose on a realized position, and have a realizes position with profit, you can write off the loss with the tax paid on the profitable taxed position. For the same year.

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#9

Taxes do not depend on whether or not you have withdrawn money from your account. Tax gains and losses are created whenever you close a position. Losses can be deducted from gains in the same year and, depending on rules, can also be carried forward to use against gains in a subsequent year,

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#10

You sell your shares, you pay.
You don’t sell, you don’t pay.

1 Like
#11

Hi, related question here:

How does tax work out with multiple positions being bought/sold in same stock. e.g.
Buy 1 share X on 1st Feb 2020 : price 100 Euros
Buy 1 share X on 2nd Feb 2020 : price 110 Euros
Average price now would be 105 euros

Sell 1 share X on 5th Feb 2020 : price 120 Euros

Does Germany follow FIFO method to calculate CG tax? So in that case CG would be 120-100 = 20 Euros.