What is Capital Gains Tax?

Capital gains tax is the tax due on the profit realised when you sell an asset — shares, bonds, real estate, crypto or a business — for more than you paid for it, with rules that differ sharply across European jurisdictions.

A capital gain equals sale price minus purchase price minus eligible transaction costs (brokerage, legal fees, capital improvements). Short-term gains (held less than a year) are often taxed more heavily than long-term gains, and primary residences are usually partially or fully exempt.

Switzerland is unusual: private investors pay no federal capital gains tax on movable assets such as shares and ETFs, only on real estate (cantonal Grundstückgewinnsteuer). Germany levies a 25% Abgeltungsteuer plus solidarity surcharge on most investment gains, with a EUR 1,000 annual allowance. France applies a 30% flat tax (PFU) on most capital gains. Italy charges 26% on financial-asset gains and 26% on most real-estate gains held under five years.

Plan around holding periods and loss-harvesting. Many systems let you offset losses against gains in the same year (and carry them forward). Selling losers before year-end to reduce a taxable gain is a standard year-end tactic.

Formula

Capital gain = Sale price − Cost basis − Allowable expenses

Example

A French investor sells EUR 50,000 of shares for EUR 80,000 after three years. The EUR 30,000 gain is taxed at the 30% PFU = EUR 9,000. A Swiss private investor with the same profit on listed shares pays zero CGT.

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Related terms

Withholding Tax

Withholding tax is an amount that the payer (employer, bank, custodian) deducts from a payment to a beneficiary and remits directly to the tax authority on the beneficiary's behalf, as a prepayment of the beneficiary's eventual tax bill.

Wealth Tax

Wealth tax is an annual tax on the net worth of an individual — total assets (real estate, investments, cash, vehicles) minus liabilities — levied in a handful of European countries including Switzerland, Spain, Norway and (limited) France.

Tax Residency

Tax residency determines which country has the primary right to tax your worldwide income, based on rules such as days physically present, location of permanent home, centre of vital interests and family location.

Double Taxation

Double taxation occurs when the same income or capital is taxed twice — most commonly by two different countries claiming taxing rights — and is mitigated through bilateral tax treaties and domestic relief mechanisms.

Frequently asked questions

Are Swiss private capital gains tax-free?+

Yes for movable assets if you qualify as a private investor; professional traders are taxed as self-employed income.

How do I prove the purchase price?+

Keep broker statements, custody records and contract documents. Without proof, the tax office may estimate.

Can losses offset gains?+

Yes in DE, FR, IT (within rules) — usually only against other capital gains, sometimes carried forward.