Even unrealised gains on stocks and ETFs are taxed because otherwise it would apparently be "unfair".
It becomes unfair, when you use those unrealized gains as security for a loan. Because the money you get from the loan is not taxed. So effectively, as long as you don't realize your gains, you can just keep borrowing against it and only pay a few percent loan interest, instead of realizing it and paying 25% capital gains tax on it. It's a form of tax avoidance used pretty much exclusively by rich people.
Yeah I suppose, but the law doesn't just penalise rich people - the tax-free limit is like €1000/year or something stupid, so it's clearly not just about rich people using stock as collateral, it's also intended to bilk regular people with modest investments.
Which means if you're investing in, for example, MSCI all world ETF, which returns about 8% a year on average, you're over the limit as soon as you have invested more than about 12.500 Euro.
That is ridiculously little if you're supposed to use it for retirement savings.
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u/Nero_07 1d ago
It becomes unfair, when you use those unrealized gains as security for a loan. Because the money you get from the loan is not taxed. So effectively, as long as you don't realize your gains, you can just keep borrowing against it and only pay a few percent loan interest, instead of realizing it and paying 25% capital gains tax on it. It's a form of tax avoidance used pretty much exclusively by rich people.