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I am wondering about an aspect of taxes on shares. What exactly is taxed? How is the fee of my bank factored in? (Is it at all?). I am asking specifically for the German take on this, but I assume this is done more or less the same everywhere.

Assume I buy 10 shares from company X at a price of 10€ each. My bank (and/or stock exchange) charge me in total 10€ in fees. So after all, I have now 100€ value in shares for which I payed 110€.

Now assume I sell these shares after their value went up. Let's assume that I sell them for a price of 11€ per share. So I get 110€ for my shares. Anyhow, again, I am charged 10€ in fees.

So how is this taxed?

On the one hand, I made 10€. On the other hand, I payed 2*10€ in fees. Are the fees subtracted from what I "earned"?

  • In the first case, the state assumes that I made 10€ and taxes me on that - even though I essentially lost 10€. So - assuming ~26% taxes - I lost 12,60€.

  • In the second case, the state acknowledges that I lost 10€ - and I don't get to pay any taxes.

Or, in other words:

If I buy shares in 2020 for A € and pay B € in fees for this transaction, then go and sell everything in 2030 for C € and pay D € in fees, what exactly is going to be taxed?

  1. (C-D)-(A-B)? Sounds fair and reasonable to me.
  2. C-A? Not so nice depending on the fees.
  3. A-B? Nightmare. Doesn't take into account that I had to spend money to buy the shares in the first place.
  4. A? Nightmare plus I get to pay the fees on top.
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    This will be very jurisdiction specific, relating to the specific rules about taxes on capital gains. – Ganesh Sittampalam May 21 at 11:18
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    I wonder if there is any jurisdiction where the end answer is not C-(D+A+B), though the precise terminology that leads to this result may vary from place to place. (This is not among the OP's option, though I suspect it was what he meant to write in (1)). – Henning Makholm May 21 at 11:42
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Your options 1 - 4 seem a bit convoluted, as none of them reflect reality, and the latter two don't consider the sale price at all.

Generally, in the German tax system, you pay taxes on income/gain, and your cost for creating this income/gain is deductible from it, if the cost was unavoidable and directly connected. Yes, there are lots of details where the law is slightly different (it is unavoidable that you come to work, but that cost is not generally deductible, etc.), but for online trading, it applies and that makes it very simple:
You pay taxes on sale price - buying price - cost, so for your letters C-A-B-D, or with the numbers you gave: 110 - 100 - 10 - 10 = -10. This would be an overall loss, and you actually can deduct the 10 Euro loss from other gains (if you have any).

The same concept applies in the US; and probably in most if not all other countries, but I don't know that for sure.

  • By my understanding, it's the same in the UK as well. The cost of dealing (including stamp duty if applicable) is factored into whether you made a profit or loss. – TripeHound Jul 18 at 13:27
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In addition to @Aganju I'd like to mention that your gains are taxed flat by 25 % (German "Abgeltungssteuer"), so they are not taxed with your personal tax rate that depends on your overall income and would normally be higher than 25 %.

Since capital gains fall under this deducted tax rate, you're not eligible to claim your costs (German "Werbungskosten") for these gains.

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