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Articles

Global Tax Changes 2025

Global Corporate Tax Rates 2025

Taxation Changes EU 2025

Capital Gains Tax Rates EU 2025

Capital Gains Tax Rates in Europe in 2025

 

 
As Europe evolves economically, the landscape for investors continues to shift, particularly when it comes to taxation on capital gains. Understanding how these tax rates work is crucial for individuals, businesses, and financial planners looking to navigate the region’s diverse tax regimes. In 2025, capital gains tax (CGT) rates across Europe remain varied, influenced by local fiscal policies, investment strategies, and broader economic objectives.

In this overview, we’ll explore the key capital gains tax rates across several European countries, including some of the lowest tax jurisdictions in the EU, and offer insights for investors looking to optimize their returns.

What is Capital Gains Tax (CGT)?

Capital Gains Tax is a tax on the profit made from selling certain types of assets, such as stocks, real estate, or business shares. The tax is typically levied on the difference between the selling price and the purchase price of the asset. In Europe, CGT is a primary means of generating revenue for governments and can vary significantly between countries, depending on the asset type, holding period, and the taxpayer’s status.

Capital Gains Tax in Key European Countries (2025)

Let’s take a closer look at the capital gains tax rates in several prominent European nations as of 2025, including some of the countries with the most favorable rates for investors.

1. United Kingdom
Rate: 10% for basic rate taxpayers, 20% for higher rate taxpayers (up to £12,300 tax-free annual allowance for individuals).
- Key Points: In the UK, capital gains tax depends on income levels. Higher earners face the 20% rate, while lower earners benefit from a lower rate. The first £12,300 of capital gains is tax-free, though there are concerns that this threshold might be reduced in upcoming budgets.
Real Estate: Capital gains from property sales are subject to a higher tax rate of 18% for basic-rate taxpayers and 28% for higher earners.

2. Germany
Rate: 26.375% (including solidarity surcharge).
Key Points: In Germany, capital gains tax is applied uniformly across most asset sales, including shares and real estate. However, there are exemptions for real estate held for more than 10 years. The taxation of capital gains from stocks is subject to the "Abgeltungsteuer" (flat tax), which includes a 25% tax rate, plus the solidarity surcharge.
Real Estate: Gains from the sale of property are tax-free if the property has been held for more than 10 years.

3. France
Rate: 30% (Flat Tax) for most assets.
Key Points: France has a flat 30% tax rate on capital gains, which includes both income tax and social charges. This rate applies to most forms of capital gains, including stocks, bonds, and real estate. However, there are some exemptions and deductions, such as for long-term holdings and primary residences.
Real Estate: The sale of a primary residence is generally exempt from CGT, but second homes and investment properties are taxed at the standard rate.

4. Spain
Rate: Progressive rates from 19% to 23% based on gains.
Key Points: Spain applies a progressive capital gains tax system with rates ranging from 19% for the first €6,000 in gains, up to 23% for gains exceeding €50,000. The tax rate on real estate capital gains is typically the same, but there are exemptions for individuals over 65 years of age when selling their primary residence.
Real Estate: There are exemptions for individuals who sell their primary home and reinvest in another property, as well as various allowances for older sellers.

5. Switzerland
Rate: Varies by canton, typically between 0% and 40%.
Key Points: Switzerland’s capital gains tax is highly dependent on the canton where the individual resides. Most cantons impose relatively low taxes on capital gains, with a few imposing higher taxes for assets held for less than six months (known as speculative gains). Capital gains from the sale of real estate can be subject to local taxes, with rates varying greatly by canton.
Real Estate: Taxes on the sale of property are common, and they can be significant in some cantons, though there are long-term exemptions if the property is held for a specified period.

6. Italy
Rate: 26% for most assets.
Key Points: Italy applies a flat 26% tax rate on capital gains from the sale of financial assets, including stocks and bonds. However, the tax rate is different for real estate transactions and can be higher depending on whether the property is considered part of your primary residence.
Real Estate: The sale of a primary residence is typically exempt from CGT, but second homes or investment properties may incur taxation.

7. Netherlands
Rate: 30% on the return from assets (not directly on capital gains).
Key Points: The Netherlands has a unique approach to capital gains taxation. Instead of taxing the actual gain on the sale of an asset, it taxes the return on the asset. The taxable base is a presumed return on wealth, not the actual profit made from a sale.
Real Estate: The taxation of real estate follows similar rules, with primary residences generally being exempt, but second homes and investment properties subject to the standard tax regime.

8. Portugal
Rate: 28% for most assets.
Key Points: Portugal’s capital gains tax rates are relatively straightforward, applying a flat 28% tax rate on profits from the sale of assets like stocks, bonds, and real estate. There are exemptions for real estate transactions involving primary residences, especially if the proceeds are reinvested in other properties within a specific period.
Real Estate: Gains from the sale of a primary residence are generally exempt, but this is subject to certain conditions.

European Countries with the Lowest Capital Gains Tax Rates (2025)

While many European countries have relatively high capital gains tax rates, some jurisdictions offer significantly lower rates, making them attractive for investors seeking to minimize their tax liability.

1. Belgium
Rate: 0% on most assets, 33% for speculative gains.
Key Points: Belgium offers an incredibly favorable CGT regime for long-term investors. Capital gains derived from the sale of stocks, bonds, and other financial assets are generally tax-free, unless the gains are considered speculative. Speculative gains, defined as profits from assets sold within six months of acquisition, are taxed at a rate of 33%. This makes Belgium an attractive option for those with long-term investment strategies.
Real Estate: The sale of property is only subject to CGT if it is considered a speculative investment or if the property was sold within five years of purchase. After this period, capital gains on real estate sales are typically exempt.

2. Hungary
Rate: 15% flat tax.
Key Points: Hungary applies a flat 15% tax rate on capital gains, which is among the lowest in the European Union. This rate applies to both financial assets and real estate. Hungary’s low rate makes it a compelling choice for investors in the region.
Real Estate: Real estate held for more than five years is exempt from capital gains tax, further enhancing Hungary’s appeal for long-term property investors.

3. Estonia
Rate: 0% (if the capital gain is reinvested in a business).
Key Points: Estonia is one of the most investor-friendly countries in Europe when it comes to capital gains taxation. While the general tax rate on capital gains is 20%, Estonia offers significant exemptions for reinvested gains. If capital gains are reinvested into business operations, there is no tax liability. This policy is particularly attractive for entrepreneurs and business owners looking to grow their enterprises in the region.
Real Estate: Capital gains from the sale of property are taxed at the standard rate, though there are exemptions if the property is used as a primary residence.

Key Trends and Considerations for 2025

1. Harmonization Efforts:
While tax rates vary greatly across Europe, there are growing efforts from the European Union to harmonize certain aspects of capital gains taxation. This is particularly relevant for cross-border investors and those holding multinational portfolios. However, full harmonization of tax rates remains unlikely in the near future.

2. Real Estate Exemptions:
Many countries, such as France, Spain, and Portugal, continue to offer favorable tax treatments for primary residences. These exemptions are designed to encourage homeownership, but they also create opportunities for tax planning.

3. Environmental & Social Impact:
Some European countries, such as Sweden and France, have begun to integrate green tax policies, offering reduced tax rates or incentives for environmentally friendly investments. Expect more European countries to follow this trend in 2025, incentivizing investments in sustainable assets.

4. Digitalization of Taxation:
Many European countries are streamlining their tax reporting systems through digital platforms, making it easier for investors to file and pay taxes on capital gains. This digital push is expected to continue through 2025, helping to reduce administrative burdens.