You do not need to pay tax for owning shares. You pay tax on shares when you sell them.
The same rules usually apply to the taxation of selling shares regardless of whether they are shares in a Finnish or foreign company or whether the trading takes place through a Finnish or foreign book-entry account. Whether the company is listed or non-listed does not affect taxation, either.
Sales can generate profit or loss
When you sell shares, you usually gain a sales profit, i.e. a capital gain, or incur a sales loss, i.e. a capital loss. When calculating the amount of profit or loss, deduct the following from the selling price of the shares:
The purchase price you paid for the shares and the transfer tax
The expenses incurred in making a profit, such as brokerage and handling fees.
If you have received the shares as a gift or an inheritance, you can deduct the taxable value used in the taxation of gifts or inheritance from the selling price. Read more on calculating profit and loss in the detailed tax instructions ‘Arvopaperien luovutusten verotus’, section 4 ‘Luovutusvoiton ja -tappion laskeminen’ (in Finnish).
The deemed acquisition cost can be used instead of the purchase price and the expenses incurred in making a profit
When calculating the amount of profit or loss, you can deduct the deemed acquisition cost from the selling price of the shares, instead of deducting the purchase price of the shares as well as the expenses incurred in making a profit or the taxable value of gift and inheritance tax.
- If you have owned the shares you sell for less than 10 years, the deemed acquisition cost is 20% of the selling price of the shares.
- If you have owned the shares you sell for at least 10 years, the deemed acquisition cost is 40% of the selling price of the shares.
Read more about the deemed acquisition cost from the detailed tax instructions ‘Arvopaperien luovutusten verotus’, section 4.2.2 ‘Hankintameno-olettama ja omistusaika’ (in Finnish).
Please note that if you use the deemed acquisition cost, you cannot deduct the purchase price of the shares and the expenses incurred in making a profit from the selling price of the shares.
You have two options:
either the purchase price + expenses incurred in making a profit (or the taxable value)
or the deemed acquisition cost
Example: Antti purchased 1,000 shares in the company Yhtiö Oy in 1994. The purchase price of the shares was FIM 4 per share, or FIM 4,000 in total. Antti paid FIM 40 as a brokerage fee for purchasing the shares. This means that the acquisition price of the shares was FIM 4,040, or EUR 679.47.
Antti sold the shares in question in 2022. The selling price was EUR 2.50 per share, or EUR 2,500 in total. The selling expenses included in the expenses incurred in making a profit are EUR 25.
At the time of the sale, Antti had owned the shares in the company Yhtiö Oy for at least 10 years. This means that the deemed acquisition cost was 40% of the selling price, i.e. EUR 2,500 × 40% = EUR 1,000.
The amount deducted from the selling price based on the deemed acquisition cost (EUR 1,000) is higher than the total amount based on the actual purchase price and expenses incurred in making a profit (EUR 679.47 + EUR 25 = EUR 704.47). Therefore, it is better to calculate the sales profit in taxation by deducting the deemed acquisition cost from the selling price. In that case, the taxable sales profit is lower, i.e. EUR 1,500 (EUR 2,500 – EUR 1,000).
If Antti had only purchased the shares in 2014 and already sold them in 2022, he would have owned them for less than 10 years. In that case, the deemed acquisition cost would have been 20% of the selling price, that is, EUR 2,500 × 20% = EUR 500.
In this case, it would have been better with regard to Antti’s taxes if he had used the total amount of the actual purchase price and the expenses incurred in making a profit (EUR 704.47) instead of the deemed acquisition cost (EUR 500). After deducting it from the selling price, the taxable sales profit would have been lower: EUR 1,795.33 (EUR 2,500 – EUR 704.47).
Sales profit is normally taxable income
When you sell shares at a profit, you pay tax on the sales profit according to the capital gains tax rate.
If, however, you have sold shares during the calendar year for a total of EUR 1,000 at maximum, you do not have to pay taxes on the sales profit. The sales price of EUR 1,000 includes all sales during the year, not just the sale of shares. Tax-exempt sales are not included.
Further information is available in the detailed tax instructions ‘Kokonaan tai osittain verovapaat myynnit’, Chapter 2.
The sales loss is deducted from your capital income
If you incur a loss due to the sale of shares, it is primarily deducted from the capital gains. If such gains do not exist, the deduction is made from all of your capital income.
If you have no capital income or if said income is lower than the sales losses to be deducted, the deduction is transferred to the following 5 years.
Sales losses are not deducted at all, however, if the total purchase price of shares you have sold during a calendar year was EUR 1,000 at maximum.
Please also note that sales losses incurred due to shares do not affect the taxation of your earned income. This means that it does not entitle you to a credit for a deficit.
The FIFO principle applies to the sale of shares from securities accounts
The FIFO principle must always be applied to the sale of shares from securities accounts: First In – First Out. If you have shares in the same company that were purchased at different times, they are sold in the order of purchase – the oldest first.
The FIFO principle is securities account-specific, however. If you have shares of the same company in several electronic stock portfolios, you can sell shares from a newer portfolio before an old one, if you wish.
Read more about the FIFO principle in the detailed tax instructions ‘Arvopaperien luovutusten verotus’, section 21 ‘Arvopaperien luovutusjärjestys’ (in Finnish).
Check your pre-completed tax return
Check that the information on the sale of shares and on dividend revenue is shown correctly on the pre-completed tax return you receive in the spring.
If you have sold shares or other securities through a foreign remote intermediary, also report the profit or loss from these transactions.
The administrator of Pyynikki Craft Brewery Ltd’s bankruptcy estate has issued a notice, dated 22 December 2022, stating that no distributions will be paid out to the company’s former shareholders. If you owned shares in this company now bankrupt, you can include a deduction claim in your 2022 pre-completed tax return based on losses of capital.
The capital loss is in this case equal to the amounts of money that you paid when you bought the shares. You can add any expenses you paid in connection with the purchase to your deduction claim, i.e. brokerage fees and the like are seen as part of the capital loss. Some shareholders received their shares as an inheritance or gift. If you are among them, your capital loss is equal to the shares’ confirmed tax values in inheritance taxation or gift taxation.
How to claim the deduction when submitting your tax return
Because the bankrupt Pyynikki Craft Brewery Ltd was not stock-exchange listed, fill in the amount of the loss under Capital gains (instead of the Profit from selling securities section).
- If the capital loss is already calculated on your pre-completed return, please check the amounts carefully. Because of the bankruptcy, the pre-completed information shows “€0.00” as the selling price. Check the amounts of purchase prices and expenses related to the purchase shown on your pre-completed return. If necessary, make corrections.
- If the only amount appearing on your tax return is the selling price (€0.00), you must enter the purchase price and expenses into the appropriate fields in MyTax.
- If nothing appears on your tax return regarding your shareholding in Pyynikki Craft Brewery Ltd, you must enter the purchase price, expenses connected to the purchase, and selling price into the appropriate fields in MyTax. Enter the “selling” price of €0.00 and enter 22.12.2022 for the date.
If you cannot log in to MyTax to enter the information, complete and submit Form 9 Capital gain or capital loss.
For more detailed instructions, see: The pre-completed tax return – how to file in MyTax or on paper, look up the sub-heading “Capital gains”.