One in five can't afford a vacation. And so that it will soon be one in four, in 2024 the CO2-#Steuer tax will be increased. What we need are tax cuts now!
#steuern
+++ Advance lump sum 2022 and 2023 +++
In a contribution of @Johannes_J the letter of the BMF (Federal Ministry of Finance) and the prime rate as of 02.01.2023 is mentioned. Regarding this and my reference about the payment ("or better" not to be made this year) there was the demand, how exactly this now plays a role for accumulating and distributing ETFs.
Below is a lay tax law explanation on the subject of prime rate and advance lump sum.
What is the prime rate for calculating the advance flat rate?
The prime rate is a variable interest rate according to which assessments for capital services are to be made in Germany and Austria. In Germany, the Deutsche Bundesbank is responsible for setting it, which carries out the calculations for it every six months (at the beginning of each six-month period) on the basis of the European Central Bank's specification and makes them officially known.
The prime rate used to calculate the upfront lump-sum payment is based on German government bonds with a maturity of 15 years.
Due to the official announcement, the interest rate takes on a special character, as it is the only official market interest rate.
The prime rate is a so-called valuation interest rate and is used, for example, in the calculation of interest on arrears and penalties for court judgments.
In addition to the above applications, the prime rate is decisive for determining the annual advance lump sum on capital-linked investments.
What is the upfront lump sum?
The advance lump sum is a regulation introduced by the Investment Tax Act of 2018 (InvStG) for the taxation of investment income. The consequence of the taxation is that lump-sum taxes are already levied annually in advance, i.e. in advance, on the future profit.
The consequence of this advance lump sum is that it is offset in the year in which the investment is sold and only the amount not covered by the advance lump sum is taxed on the capital gain.
The aim of the advance lump sum is to eliminate the tax deferral for the investors. Critically, however, it should be noted that this is not completely eliminated, especially if the prime rates are low and only a small portion is already taxed in advance, thus making the tax deferral more distant, especially with regard to the later tax burden of the taxpayer investing.
How does the calculation of the advance lump sum work?
For the advance lump sum, the base income is calculated, then the base income is compared with the increase in value of the capital investment and the tax payable is calculated on the basis of this.
Example based on a scenario of the increase in value in 2023 with the prime rate for 2023 set at 2.55% as of 02.01.2023 (Assumption: Accumulating ETF with at least 51% equity component, e.g. MSCI WORLD/EM or ACWI) :
Value of the capital investment as of 01.01.2023:
10.000€
Value of the capital investment at 01.01.2024:
10.500€
Increase in value:
500€
Base yield: 10.000€ x 2,55% (prime rate) x 0,7 (70% of prime rate) = 178,50€
1) The base yield is lower than the increase in value of 500€ of the previous year, therefore applies:
Use of the base income as a taxable upfront lump sum.
Example:
Capital gains tax and solidarity surcharge payable thereon: 26.375%.
Special tax feature:
If it is an equity fund with at least 51% of shares, this can be partially exempted with 30% and only 70% must be taxed. This then usually includes World, ACWI and EM - ETFs but also other equity funds.
Invoice:
0,26375 x (0,7 x 178,50€) = 32,96€ Taxes to be paid
2) If the increase in value of the capital investment is lower than the basic income, the increase in value is used as an advance lump sum.
Calculation:
0,26375 x (0,7 x 500€) = 92,31€
Tax to pay
Summary:
The advance flat rate is payable by all investors. However, the upfront lump sum is only due for investments in the area of funds and ETFs. Gains from individual shares will still be taken into account for tax purposes upon disposal. ETCs with physical deposit are also exempt from the advance flat rate.
As can be seen above, there are a) two different scenarios when calculating the tax (i.e. depending on the amount of base income and capital appreciation,; 1 or 2) and b) the tax treatment of capital investments in funds and ETFs.
The tax treatment also depends on whether it is an equity fund (whether ETF or classic) with at least 51% of shares, a mixed fund (i.e. less than 51% of shares, e.g. bonds mixed with shares) or a mixed fund (e.g. bonds mixed with shares), here applies: share proportion higher than 25%= 15% partial exemption, below full taxation) or other funds (e.g. pure bond funds or commodity funds without physical deposit).
On the Internet you can find various calculators that can make a calculation for the respective year. Please refer to the sources below.
Here, a distinction is also made between distributing and accumulating ETFs and funds.
For the year 2021 and 2022, there were no upfront lump sums, as the prime rates were negative in each of the years (most recently -0.05%, as of 02.01.2022) and therefore no upfront lump sum could be calculated.
Since on 04.01.2022 (thus today) the BMF has fixed the prime rate with effect from 02.01.2023 at 2.55%, it is certain that in the case of the increase in value of your shares of the ETFs or funds held on 01.01.2023 for comparison 01.01.2024 this prime rate is used as the basis for the base yield.
What does this mean for "me" exactly?
If you have an increase in value of your ETF or funds, keep your clearing account on 31.12.2023 by at least the expected tax amount. The tax is usually paid by your broker from 02.01. of the following year (i.e. 2024)!
Since it is a sovereign levy, your settlement account will also go into the negative if the coverage is not given. The penalty interest is usually very high at the broker (especially in case of overdraft of a settlement account), which is why you should ensure sufficient coverage.
In general, you should plan for the payment of the tax in November or December and pay it in accordingly. The payment will then be implemented fully automatically by the broker.
Should you not have any increase in value of the shares held from 01.01.23 to 01.01.2024 (because everything went down the drain), the advance lump sum is also omitted. Additional shares acquired during the year do not play a role for the time being and will only be taken into account with the next advance lump sum in 2024.
Addition:
Exemptions and therefore no tax burden if...
- your exemption order is not exhausted,
- you have submitted a non-assessment certificate, or
- general losses that have not been offset offset the tax burden.
Important note in this matter:
This information is purely layman's opinion and published with the state of my personal knowledge.
I have neither a tax education, nor do I know your personal tax peculiarities, nor is there any tax advice here. I inform purely to self purpose and in the sense of the community guidelines. A claim on correctness and completeness does not exist. Only your tax advisor can give you tax advice!
Sources:
Partial exemption of funds: https://www.fondsclever.de/ratgeber/fonds-wissen/teilfreistellung-bei-fonds/
Advance lump sum in law:
https://www.buzer.de/gesetz/12129/a199930.htm
Prime rate: https://de.m.wikipedia.org/wiki/Basiszinssatz
Publication on prime rate for advance lump sum and its calculation 02.01.2023 from BMF: https://www.bundesfinanzministerium.de/Content/DE/Downloads/BMF_Schreiben/Steuerarten/Investmentsteuer/2023-01-04-basiszins-zur-berechnung-der-vorabpauschale-gemaess-paragraf-18-absatz-4-InvStG-basiszins-zum-2-januar-2023.pdf?__blob=publicationFile&v=1
Tax calculator for advance lump sum:
https://www.finanzfluss.de/rechner/vorabpauschale-berechnen/
Hello all,
today a little thought experiment.
Even though we at getquin are probably in a comparatively liberal bubble, I would be interested in your thoughts on the subject of taxes.
Primarily, I'm referring to the topic of income taxes with the corresponding subtypes such as capital gains taxes etc.
What would your "desired model" for taxes look like, which would still not cause massive losses in tax revenues?
About the data:
Median income Germany among employees subject to social security contributions 44,074€ (1).
About 6.6 million people received social assistance or basic benefits in 2022. (Incl. top-ups, benefits for asylum seekers, etc.) (2)
My idea in a nutshell would be the following:
Pensions: No taxation up to 50% of the median income of employees subject to social security contributions.
The idea: the current cost of living for pensioners tends to be lower than for employees. Especially for health measures, there are many different subsidies that can be accessed to reduce the individual burden.
Furthermore, exemption limits for co-payments etc. are calculated primarily on the basis of taxable income.
Salaries:
Tax allowance for income from non-self-employed work of just under €10,000 raised to 50% of median income.
Employees usually have more opportunities to increase their salaries than pensioners and are therefore subject to a lower basic tax allowance in percentage terms. At the same time, they are able to reduce their real tax burden more than retirees due to income-related expenses, etc.
Part-time workers can thus de facto be further relieved and in some cases even exempted from tax.
This helps single parents in particular and strengthens the incentive not to rely on a main earner in the family. (This is a dying model, but quite common in my non-representative circle. There, most of the female partners who take care of the children say that it is not worth working because the taxes are too high).
Furthermore, the higher basic tax-free allowance also massively increases the incentive to work compared to welfare recipients, since you can keep more of your money and thus massively increase your prosperity in contrast to "social parasites" (deliberately overstated).
Especially on the topic of incentives to work as opposed to encouraging a lack of motivation to work, I see extremely high opportunities for society.
Even unskilled workers are constantly sought, but not found, because the salaries and taxes partly push or bring one to the income level of a welfare recipient.
On the subject of social welfare, by the way, I assume a simplified model of the one-third rule.
1/3 does not want to work
1/3 cannot find (acceptable) work
1/3 cannot work at all (health reasons)
Investment income:
Tax exemption after a holding period of 20 years (FiFo).
Abolition of capital gains taxes and taxation of capital gains below the holding period at the personal income tax rate.
Tax allowance from current 1,000€ high to 5% of median income. (So about 2,200€)
What is the assumption behind the 5% of median income?
As median income rises, the savings rate would rise in parallel. In order for corresponding savings measures to be worthwhile for distributing variants, the tax-free amount should also increase accordingly.
By linking it to the median income, an increase in income can also provide direct relief in the case of profit realization.
2,200€ tax allowance is currently required for a dividend yield of 5% ($SPYD ), i.e. 1.87€ per share per year, an invested capital of almost 41,200€.
So almost exactly one year's median income.
Renting&leasing:
Still subject to regular income tax with appropriate allowances and opportunities to reduce tax burden.
"Rich tax rate":
Even if it doesn't go down well here in the Bubble, I am personally a very big fan of the wealth tax, i.e. the German additional top tax rate....
Currently, the wealth tax kicks in at a gross income of 277,826€ for singles and is 3% more than the highest income tax rate, so 42% + 3% = 45%.
Funfact: If one assumes only the income taxes, Germany is with the tax even behind the USA. The Scandinavian countries are also happy to take advantage of high incomes. Here one has to pay partly 56% income tax.
Belgium and Portugal also have higher "taxes on the rich.
My assumption here would be:
Increasing tax burden for incomes up to 5 times the median income. (At 5 times the median income, even the top salaries of chief physicians in 2021 would not be covered by the wealth tax. (3))
Beyond that, a 10% special tax would apply. (So from the amount that exceeds the 220,000€ gross income EXCEEDS.)
Why is now more strongly slammed at high incomes:
On the one hand, the relief for "lower income groups" must be financed. At the same time, I also see the social responsibility of high earners in the Federal Republic. Social contributions are capped very quickly in some cases. (Conversely, of course, pensions will also be capped at some point).
However, despite higher taxes, high earners also have far more opportunities to maintain and increase their wealth.
(Personally, I consider certain salaries to be extremely exaggerated and far removed from reality. Sure, a VW executive can earn good money if the numbers are right. However, the sums that are sometimes called up there are simply absurd for me, as they bear little relation to the performance in the company. I know: Strategic planning/alignment and leadership are extremely important in companies, as they represent the basic framework for successful processes and only with good planning can a company operate successfully in the long term and in a stable manner. My personal attitude towards professional athletes or actors is similar).
We see it here in the community itself:
The first few hundred euros sometimes turn out to be difficult, but once you have invested a few thousand euros, compound interest picks up extremely and the assets grow extremely.
This effect can be further leveraged by appropriate capital flows.
What are your ideas on the subject of income taxes?
(1) https://www.stepstone.de/e-recruiting/wp-content/uploads/2022/02/Gehaltreport-2022-1.pdf
Good evening my Bearler,
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I find it crazy every time I sell a stock.... In one fell swoop 25% of the gains gone. 🙄🙄🙄
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How do you guys treat your taxes in the portfolio? Just don't sell? 😜
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Be proud, be loud, be a bear! 🐻
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This post is for information purposes only and does not constitute an investment recommendation or advice. The post is an expression of my personal opinion. No liability is assumed for missing or incorrect information. Advertising, since naming.
#steuern are important for #staat to cover possible #kosten to cover. But for us #anleger they are a thorn in the eye. Nevertheless, I prefer to pay #gewinne taxes, since I then ha nevertheless what won. So carry #aktien
#etf
#p2p and others #investitionen to the #finanziellefreiheit contribute.
"Income tax is a penalty because you are useful and productive."
>> Should the tax exist at all? What do you think?
#geld
#steuern
#steuern
#job
#arbeit
#lohn
#gehalt
#nettogehalt
#bruttowarenwert
#ampel
#finanzen
#deutschland
From this, the following things have to be financed by oneself: food, incidental rental costs, clothing, luxury food, interior decoration, household appliances, health costs, transport, post and communication, education, leisure + culture, vacation and all other services. On top, a subsidy for housing costs could come if one is eligible.
If you get the full housing allowance, the rent and utilities will be omitted, leaving only the 502€ for doing nothing. I grew up in a family with social assistance or Hartz IV. Whoever claims that the citizen's income is a lot of money, has never had to live on so little money.
Taxes are robbery! 🆘
...but I got myself a part back. The day before yesterday Christian gönnt and today I put the money right under the people. 💸 I am allergic to money in the clearing account. After all, the money is supposed to work. 💪
I bought the following stocks:
52x Ares Capital
36x Store Capital
16x Medical Properties
9x Altria
4x CVS
So on the capital invested, here the tax refund, I get an annual (expected) dividend yield of about 6.5%. 🤑
At this point, therefore, again the call: Do a tax return! Give you nothing but take everything ✊
German tax - madness in four pictures 🇩🇪💶📉 Opinions?
#geld
#finanzen
#steuer
#steuern
#steuernsindraub
#berlin
#deutschland
#ampel