engleski

Does the optimal model for taxing capital gains exist?

In the broadest sense, the capital gain is the profit from all types of savings and financial investments as well as increase in the market value of real estate and other fixed assets. The purpose and objectives of this paper are therefore: defining the issues related to taxation of capital gains, reference to the existing tax rules on capital gains tax in some countries and the experience of other countries in taxing capital gains, what are the advantages and disadvantages of the introduction of taxes on capital gains and what are the general issues regarding a model of taxation of capital gain in Republic of Croatia. In some countries, capital gains are taxed under the same conditions as any other income, in other countries apply different tax rates on capital gains from income tax rates and in some countries, capital gains are not taxed at all. The purpose of the research is the systematization and comparison of different rules for taxation of capital gains and initiatives for the introduction of capital gains tax in Republic of Croatia. Therefore the main objective of this paper is to make a proposal on optimal model of taxation of capital gain that would, under certain conditions with certain assumptions provide the greatest benefit for the state, but also for each individual. It was concluded that there is no ideal system of taxation of capital gains, but of course that the tax system and tax policy measures should be in accordance with the needs and opportunities of the community in which they apply. The optimal model should be chosen with the help of detailed analysis and what needs to be fairer and more efficient. The most important thing is that optimal model should be considered in the context of the overall structure of the existing tax system as well as economic conditions in which a country is located. The perfect model probably does not exist, but the best in a given situation could certainly be realized. That could be concluded from the conducted research for all EU countries. The capital gain taxation isn’t harmonized on the EU level and there are a lot of differences in tax treatment of capital gains between EU countries. Three hypotheses regarding this paper were stated: H1: Most of the EU countries are taxing capital gains. H2: Most of the EU countries treat sales from immovable property and stocks or shares as capital gain. H3: Most of the EU countries are taking into consideration a time line of capital gains, adjustment for inflation and possible loss. First hypothesis was confirmed since 24 of EU countries have at least taxation of capital gains achieved from immovable property and financial asset. This is also confirming the second hypothesis. The third hypothesis wasn’t confirmed or it was confirmed for the part that most of the EU countries are making the difference between long – term and short – term capital gains. Adjustment for inflation and deduction of possible loss is considered only in a few EU member states. Another relevant issue that was raised in this paper is concerning threshold for capital gain taxation and from the research it could be seen that most of the countries don’t have amount of money to which extent the taxpayers are relived from paying tax on capital gains. According to the objectives set out in the abstract of this paper, the authors have achieved in defining the issues related to taxation of capital gains, in giving reference to the existing tax rules on capital gains tax in some countries, defining what are the advantages and disadvantages of the introduction of taxes on capital gains, what are the main issues in setting the optimal model for taxation of capital gains and what are the general issues regarding a model of taxation of capital gain in Republic of Croatia.

capital gains ; taxation ; Republic of Croatia ; bonds ; shares ; asset

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