Impact of universal German capital gains tax on portfolio rebalance
Posted: Sun Sep 23, 2012 12:41 pm
Hello,
I am new here as well as to PP - which I would like to start right now - and have a very specific question: since 1/1/2009 there is a capital gains tax of 26,75% in Germany on *any* investment profit, no matter how long the timespan between investment and realization.
That means, however, that each time the portfolio is rebalanced, that tax skims off the profits. The performance of the PP should be hampered significantly by that tax, as every rebalancing gets a hit. After the next federal election in the coming year, that tax is likely to increase to about 30% or 33% in the given political climate (some major parties already plan to).
What action can be taken regarding PP rebalancing to minimize the impact of that tax? Are there structured products which are more efficient because rebalancing is internalized and thus not taxed?
Best regards,
DKalder
I am new here as well as to PP - which I would like to start right now - and have a very specific question: since 1/1/2009 there is a capital gains tax of 26,75% in Germany on *any* investment profit, no matter how long the timespan between investment and realization.
That means, however, that each time the portfolio is rebalanced, that tax skims off the profits. The performance of the PP should be hampered significantly by that tax, as every rebalancing gets a hit. After the next federal election in the coming year, that tax is likely to increase to about 30% or 33% in the given political climate (some major parties already plan to).
What action can be taken regarding PP rebalancing to minimize the impact of that tax? Are there structured products which are more efficient because rebalancing is internalized and thus not taxed?
Best regards,
DKalder