Tax advisor: Reduce taxation with investment losses in the 2022 Personal Income Tax return

In the following lines we will explain how to pay less to Hacienda with investment losses in the 2022 tax return. Last year’s data show that both European equity and fixed income funds lost between 8 and 10%. However, this bad data may serve to offset this year’s tax bill from investments, both in the return and in future tax years.

The amount to be paid is influenced by the applicable rates and how well the investments have been made. From next year, the savings rates scale will be increasing to 28% the amount to be taxed if more than 300,000 euros of capital gain is obtained.

How to offset investment losses?

To compensate the losses in the investment, the balance of the operations is calculated within each of the categories, which are either movable yields or capital gains.

Let’s take an example: if a taxpayer acquired 100 shares worth one euro each and subsequently sold them at two euros, he will obtain a capital gain of 100 euros.

If the taxpayer had not made any other investments during the whole year, he would have to pay 19 euros in IRPF (savings base) and would have a remaining balance of 181 euros. However, if the same taxpayer had invested €200 in a cryptocurrency and then sold it for €100, the loss resulting from the investment in cryptocurrencies would offset the gain from the sale of shares, leaving a total balance of capital gains or losses of €0 and he would not have to pay tax on this concept.

How to compensate between the different savings categories?

If capital losses predominate over capital gains, the gains from dividends or fixed income can be used to reduce the gains up to a maximum of 25%. This mechanism can be used in the opposite direction; to compensate capital gains with negative income from movable assets.

When it comes to offsetting losses in future years, it is important that they are first used within their own category. For example, if there are capital losses, then they should be offset against capital gains first and, if possible, against income from movable capital. In this way, large losses incurred in 2022 could decrease tax payments in future years.

Additionally, if you choose to invest in mutual funds, it is possible to defer the payment of taxes as long as you keep the investments in the fund.

B Law & Tax International Tax & Legal Advisors.

 https://www.blaw.es/

“En B LAW&TAX somos especialistas en asesoramiento fiscal internacional tanto a empresas como para particulares. Si desea ampliar la presente información, estaremos encantados de poder atenderle en el 917817194 o en info@blaw.es”