Taxes on the stock market

The topic of paying taxes on the stock market looks confusing and even frightening to the novice investor. In fact, there is nothing complicated or supernatural about taxes on the securities market: every investor is obliged to pay personal income tax on profits from 13% transactions. But there are some peculiarities that you need to be aware of.

How the share sale tax works

For example, if you own Rosneft shares and their exchange rate has increased, you only have to pay tax when you sell them. If the shares remain in your possession, no tax is withheld from you.

When shares are sold, the tax is calculated based on the difference between the amount received upon sale and the money that was spent to buy, hold and sell the shares. That is, to put it simply, from the money received for the sale of shares, the price when they were bought, all sorts of commissions and costs, up to the fees for the use of the trading platform are deducted.

For example:

In December 2019 investor Ivanov bought 1,000 shares of Gazprom at 200 rubles per share and paid 200,000 rubles for them. Additionally, investor Ivanov spent on:

• broker's commission (0.05% of the transaction amount) - 100 rubles;
• exchange commission (0.01% of the transaction amount) - 20 rubles;
• account maintenance - 150 rubles monthly.

After 6 months. Gazprom shares The price of the shares went up to 250 rubles apiece, and Ivanov sells them, receiving 250,000 rubles and paying a commission to the broker of 125 rubles (0.05%) and to the stock exchange of 25 rubles (0.01%).

Calculating how much of the investor Ivanov will have to pay tax on profits is very simple:

• the amount received in the sale of shares: 250 thousand - 200 thousand = 50 thousand rubles;
• the costs were: 100 + 20 + 150*6 + 125 + 25 = 1070 rubles
• the amount on which the tax will be calculated: 50,000 - 1070 = 48930 rubles.

Accordingly, investor Ivanov will have to pay from the amount received Personal income tax in the amount of 13%which amounts to 6361 rubles.

"The investor will get 48930 - 6361 = 42569 rubles.

Who withholds tax on the stock market from the investor

Let's be clear about dividends right away. As a rule, on payment of dividendsthe tax is withheld by the issuing companyand the investor receives the net amount. In other cases, the broker acts as a tax agent.

It is the broker's responsibility to calculate the tax correctly and pay it to the budget on time. However, the broker can only perform his functions if there is sufficient money on the investor's account. If there is not enough money on the account, the company must apply to the tax authorities, and then the payment of the tax falls entirely on the investor.

You should know that brokers do their best to avoid any claims and disputes with the tax authorities. If such situations arise, the broker may withhold a larger amount as insurance.

For example, in 2012 clients of a well-known broker faced a "loss tax". The broker, with reference to the letter of the Ministry of Finance, calculated taxes separately for long and separately for short positions without balancing. As a result, even if the loss from some positions exceeded the profit from other positions, the broker calculated tax for clients in 13% of the amount received on profitable positions.

When exactly is tax withheld

The broker withholds tax from the investor in the following cases:

• At each withdrawal of funds or shares from the investor's brokerage account. If the amount or package of securities withdrawn exceeds the investor's tax base, tax is withheld 100%. If less, the tax is 13% of the withdrawal amount. If it is stocks or other securities, the withdrawal amount is calculated on the basis of their purchase price, and the tax is paid from the money remaining on the brokerage account.
• At the time of each end of the tax period. As of December 31 of each year, the broker calculates the tax base for his clients. If an investor has already withdrawn money or securities during the year, these taxes are also taken into account. The tax itself, as a rule, is deducted from the brokerage account during January automatically, if there are enough funds on the account for that.

At the same time, there are several peculiarities that an investor needs to know:

• If, at the time of automatic deduction of tax in January, there is not enough money on the brokerage account, but there are open short positions on shares (options or futures), the broker may close some of them by using the funds used for collateral in these positions to pay the tax.
• If an investor withdrew money from the account throughout the year, paying tax each time, but subsequently suffered a loss, the broker is obliged to make a recalculation at the end of the year. The money that was overpaid can be returned through the broker or by contacting the tax authorities yourself. The refund procedure is somewhat lengthy and may take several months.

What to do if the stock made a loss

If at the end of the year an investor received a loss from operations with shares, it is possible to transfer it to future tax payment periods. By doing so, it is possible to reduce the amount of future tax payments.

To do this, the investor must obtain a certificate of loss from the broker, and along with it file a tax return himself.

Features of the futures market

An investor should know that on the futures market, gains and losses in derivatives transactions are calculated depending on which group of financial instruments they belong to:

• futures and options on stock indices and securities. Losses and gains from transactions in this group of derivatives are offset against the results of transactions with bonds and stocks.

• other futures and options. For this group, the results of transactions are irrelevant.

How does it work? For example, an investor made a profit on stock transactions, but incurred a loss on currency futures trading. As a result, the investor will pay tax on profits from transactions in stocks, while losses from currency futures transactions will be carried over to the next year.

Peculiarities of the tax on shares

The tax base for stock transactions is calculated using the First In - First Out method. This implies that the order of sale of securities corresponds to the sequence of their purchase.

For example, an investor:

• bought 20 at the beginning of the year Sberbank shares at 150 rubles apiece,
• in the middle of the year - another 10 shares at 200 rubles apiece,
• at the end of the year - another 10 shares, but already at 250 rubles.

After that, the Sberbank share price rose to 300 rubles, and the investor sold 25 shares from his stake. The calculation of the tax base will be as follows: 25*300 - (20*150 + 5*200).

Losses and profits made on trades in securities admitted to trading and not admitted to trading are not balanced. Let's assume that the investor will make a profit on the first stock and a loss on the second stock, which are equal to each other. In spite of the fact that the investor is actually left "with his own money", the income tax will have to be paid.

If the securities are the subject of a gift, the recipient will have to pay tax in 13%. Only first-degree relatives are an exception. If the securities are inherited, there is no tax on them.

If the company that issued the bonds has declared bankruptcy and made no payments on the obligations, such losses, unfortunately, are not taken into account when calculating the tax base.

Total: taxes in the stock market are mostly automatic, through a broker, but there are nuances that are important to be aware of, so that communication with the tax authorities was calm and confident.

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