Capital GainsTax
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.
- 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
In plain words
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.
Where it matters
What affects the tax
- The difference between sale and purchase prices
- Not the whole transaction value
- Type of asset
- Tax resident
- Under your country’s rules
- Not by citizenship
- Holding period
- Exemptions
- Main home in some countries
- Change of residence
- CFC rules
- Exit tax on leaving
How to plan the tax
- 01Determine residence
- 02Calculate the tax and reliefs
- 03Assess a change of status before the deal
- 04Take account of exit tax and CFC rules
- 05The optimal scenario
What you need to know
- The profit (price difference) is taxed, not the whole transaction value
- The tax is determined by residence, not citizenship
- A second passport does not cancel the tax by itself
- Rates and reliefs vary widely between countries
- 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
What this means for a BRIDGES client
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.
Frequently asked questions
01 /Will a second passport cancel capital gains tax?
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.
02 /Is the whole sale price taxed?
No, only the profit — the difference between the sale and purchase prices. In some countries costs are deducted from it and reliefs applied.
03 /Are there countries without this tax?
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.
04 /What is exit tax?
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.
05 /Does the holding period matter?
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.
06 /When should the deal be planned?
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.
See also
Read next
This material has undergone editorial review by BRIDGES.
Planning a large sale?
We will calculate capital gains tax under your residence and show where a change of status before the deal gives a saving.