Hello,
I've spent a lot of time reading back over threads and now I think I know how Deemed Disposal works. Could someone tell me if this is right or wrong?
If you buy one unit of the same accumulating EU Domiciled ETF per year over 8 years, and to keep things simple we'll say it increases in value €10 every year:
2012: €120--------2015: €150--------2018: €180
2013: €130--------2016: €160--------2019: €190
2014: €140--------2017: €170--------2020: €200
In 2020 on the date exactly 8 years after I purchased the fist unit I have two options:
1. Make a deemed disposal of all units, and pay the 41% tax due:
Total Cost of 8 Units: €1240
Total Value in 2020: €1600
Profit: €360 so tax due at 41% = €147.60
Since I have made a deemed disposal on all units this allows me to forget about things for another 8 years
2. First in First Out: Make a deemed disposal of the one unit I bought 8 years ago:
2012: Cost €120
2020: Value €200
Profit: €80 so tax due at 41% = €32.80
This means I will have to do again next year, and every year that I own the fund.
Can anyone confirm if this is correct?
A lot of people say that making tax returns on ETF's is extremely complicated, but if Option 1 is possible it doesn't seem to me too difficult to do every eight years.
Thanks
Enthrope
I've spent a lot of time reading back over threads and now I think I know how Deemed Disposal works. Could someone tell me if this is right or wrong?
If you buy one unit of the same accumulating EU Domiciled ETF per year over 8 years, and to keep things simple we'll say it increases in value €10 every year:
2012: €120--------2015: €150--------2018: €180
2013: €130--------2016: €160--------2019: €190
2014: €140--------2017: €170--------2020: €200
In 2020 on the date exactly 8 years after I purchased the fist unit I have two options:
1. Make a deemed disposal of all units, and pay the 41% tax due:
Total Cost of 8 Units: €1240
Total Value in 2020: €1600
Profit: €360 so tax due at 41% = €147.60
Since I have made a deemed disposal on all units this allows me to forget about things for another 8 years
2. First in First Out: Make a deemed disposal of the one unit I bought 8 years ago:
2012: Cost €120
2020: Value €200
Profit: €80 so tax due at 41% = €32.80
This means I will have to do again next year, and every year that I own the fund.
Can anyone confirm if this is correct?
A lot of people say that making tax returns on ETF's is extremely complicated, but if Option 1 is possible it doesn't seem to me too difficult to do every eight years.
Thanks
Enthrope