Updated
GL-C-04
Glossary · Taxes and residency
Capital Gains Tax - Capital gains tax
Tax on the profit from selling an asset — real estate, shares, a stake in a business. The rate and reliefs depend on the country of tax residency, not on citizenship.
01 / In 30 seconds
The short answer
- What it is
- A tax on the profit from selling an asset — real estate, shares, a stake in a business
- Where it applies
- When selling valuable assets, exiting a business, investing
- What it depends on
- The country of tax residence, not citizenship
- Are there reliefs
- Yes: holding period, type of asset, exemptions in some countries
- Can you prepare
- Yes: work out in advance where and how much you will pay on a sale
02 / In plain words
What Capital Gains Tax means
Capital gains tax is a tax on the profit you make when you sell an asset for more than you paid: real estate, shares, a stake in a company, sometimes cryptocurrency. It is not the whole transaction value that is taxed but the difference between the sale and purchase prices.
How much you pay and where is determined by your tax residence, not your citizenship. A second passport does not cancel the tax by itself: as long as you are a tax resident of your country, the profit on a sale is taxed under its rules. Rates and reliefs vary widely — in some countries the tax is high, in others it does not exist at all or falls with a long holding period.
That is why large sales are planned in advance, together with a change of residence and CFC rules. Sometimes relocating and changing tax status before the deal saves substantial sums, and sometimes there is an exit tax on leaving the country that must also be taken into account.
A case from practice
An investor sells a stake in a company at a large profit. Under their current residence, capital gains tax is high. Having worked it out in advance, they see that changing tax residence before the deal, even allowing for exit tax, gives a tangible saving. The key is to plan everything before the sale, not after.
Where it matters
- Selling property abroad
- Exiting a business, selling a stake
- Selling shares and securities
- Large investment transactions
- Changing tax residence
- Planning before an asset sale
03 / What it covers
What affects the tax
Base
- The difference between sale and purchase prices
- Not the whole transaction value
- Type of asset
Who pays
- Tax resident
- Under your country’s rules
- Not by citizenship
Reliefs
- Holding period
- Exemptions
- Main home in some countries
Link
- Change of residence
- CFC rules
- Exit tax on leaving
04 / How it works
How to plan the tax
Determine residence
Calculate the tax and reliefs
Assess a change of status before the deal
Take account of exit tax and CFC rules
The optimal scenario
05 / Key facts
What you need to know
01
The profit (price difference) is taxed, not the whole transaction value
02
The tax is determined by residence, not citizenship
03
A second passport does not cancel the tax by itself
04
Rates and reliefs vary widely between countries
05
Large sales are planned together with a change of status
Common mistakes
- Assuming a second passport will cancel the tax
- Selling an asset without calculating the tax in advance
- Ignoring holding-period reliefs
- Forgetting exit tax when changing residence
- Not taking account of CFC rules on foreign companies
06 / Expert advice
How to prepare in advance
Before a large sale, work out where and how much capital gains tax you will pay under your current residence, and whether there are holding-period reliefs. Sometimes changing tax status before the deal saves substantial sums — but exit tax on leaving and CFC rules must be taken into account. Planning before the deal, not after, decides the outcome.
What we do for you. We calculate the tax consequences of a large transaction in advance: what it comes to under your current residence, what a change of status would give, whether there is an exit tax and how CFC rules will apply. You make the decision with the full picture, not after the fact.
Dmitry NagyTax consultant, international taxation and compliance (ex-Big4)
07 / Questions
Frequently asked questions
No. The tax is determined by your tax residence, not your citizenship. As long as you are a resident of your country, the profit on a sale is taxed under its rules.
No, only the profit — the difference between the sale and purchase prices. In some countries costs are deducted from it and reliefs applied.
Yes, some jurisdictions have no capital gains tax or reduce it sharply for long holding periods. But what matters is where exactly you are tax resident.
A tax some countries levy when you leave their residence — as if you had sold your assets at the moment of departure. It is taken into account when planning a change of status.
Often, yes: in many countries the tax falls or disappears with a long holding period. The exact rules depend on the country and the type of asset.
Before the sale, not after. A change of residence or the use of reliefs works only in advance, while the deal has not yet closed.
Related terms
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