Every investment carries certain risks, but, if there is something one hundred percent sure, it is that, in addition to commissions, you will have to pay taxes. “In the end, what really interests us is what is going to be clean not only after discounting the costs, but also the taxes, because, after collecting the benefits and paying the costs, we still have to checkout in the Treasury, and not all investments have the same taxation. This is what we could call requeteneta profitability”, explains finance expert Natalia de Santiago.
For example, imagine that you invest 10,000 euros in the Ibex 35. With a return of 8% you should receive 800 euros in your account. On the other hand, as your operation includes costs of 1.5%, that profitability is reduced to 6.5% and in reality you will only earn 650 euros. But the so-called nominal return does not include another cost that almost no one gets rid of: taxes. Your investments are taxed in the income statement and the percentage of taxes you pay will make the difference between the nominal and real returns on your investments greater, the Fundación MAPFRE analysts point out.
How many taxes will you pay for your investments in the income statement? The answer will depend, in large part, on the specific product in which you invest. “That is why it is very important to know how our investments are taxed before contracting them, because a more favorable tax system can compensate us for more modest returns, and vice versa”, comments De Santiago in Invest with little. In this sense, the Treasury divides investments into two large groups: capital gains and losses and returns on movable capital.
The first group gathers most of the investments. They are gains and losses from investing in stocks, investment funds, ETFs, index funds, warrants, CFDs, and also the sale of your home and investment in cryptocurrencies. There are several gold standards in the taxation of capital gains and losses, Fundación MAPFRE tells. The first is that you pay when you sell the good or asset. If your fund or your shares are rising, but you keep them in your portfolio, you pay nothing unless you receive a dividend or other type of reward. You only pay taxes when you sell the property, that is, when you obtain the profit.
Another key to this type of investment is that you pay for profit or loss, which is normally calculated by the difference between the purchase value and the sale value. That is, you have to subtract the price at which you acquired the good from the price at which you sell it. In addition, they work according to the FIFO rule of First in, First Out. This means that the first shares or units of the fund you bought are sold first, something important if you invest periodically.
Also, in this type of investment, the losses outweigh the gains and vice versa. This point helps you plan the payment of taxes. You can subtract the losses from the profits you have had, first for each product and then between them, explain the experts at Fundación MAPFRE. An example: if you have made €2,500 on your shares, but have lost €1,500 on cryptocurrencies, you can reduce the gains by subtracting the losses. Thus, for the Treasury it will be as if your capital gains were only 1,000 euros.
Income from movable capital is the money you receive from dividends on the shares or funds in which you invest, current accounts and interest-bearing accounts, treasury bills and debt in general, loans and life insurance. One of the differences with capital gains and losses is that with this type of product you normally do not have to calculate what the profit is, because it is already given to you. These returns on movable capital also offset each other.
After calculating your capital gains and losses on the one hand and the income from movable capital on the other, it will be time to put the two together. In other words, add the two parts that make up the savings income. Thus, if you accumulate capital losses, you can subtract up to 25% of the returns on capital from those losses and vice versa. You will allocate the rest of the losses in that income year, but you will have to do so in the following four years.
The sum of the two groups of investments is what you will pay taxes on, becoming your tax base of savings. To this amount, the Treasury progressively applies a scale made up of four sections: up to 6,000 euros (you will pay 19%), between 6,000.01 and 50,000 euros (21%), between 50,000.01 and 200,000 euros (on the 23 %) and more than 200,000.01 euros (26%). For example: if you have earned 10,000 euros with an investment, you will not pay 21% for it, only for 4,000 euros. This represents the difference between 10,000 and 6,000 euros of the first tranche.
In addition to taking advantage of the possibility of offsetting capital gains and losses, there are other ways to save on taxes and optimize the taxation of your investments. The most powerful and simple is not to pay taxes until the end, which is known as tax deferral. However, delaying the payment of taxes as much as possible is only possible with some financial products such as investment funds, PIAS, pension plans, Unit Linked and PPAs.
These products allow you to move your investment without having to pay taxes on it. For example, you can change PIAS without paying taxes on the earnings you accumulate and the same with an investment fund or a pension plan. This way you avoid paying between 19% and 26% in tax each time you want to make a change in your portfolio to adapt it to your personal situation or that of the market. For example, you can go from an equity fund to a fixed income fund without paying taxes.
As pointed out by Fundación MAPFRE, tax deferral can help you have more money at the end of the road and even obtain more real returns, since the same investment –with or without this deferral– will evolve differently over time. . In any case, if we have doubts, before making any decision "it is best to consult a tax advisor, because, in addition, how and when you dispose of your investments can influence what you end up paying in taxes, and it is important to know this so as not to put the leg and pay more unnecessarily”, concludes de Santiago.
