Form 11 EU Government and Corporate Bonds through Trade Republic - Help needed please

G

GalwayBay

Registered User
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13
Hi all,
I was hoping someone would help me please as I cannot find this information anywhere.
I have been buying EU Government Bonds and EU Commercial Bonds through Trade Republic.
I buy Bonds for normally between 6-8 months and hold them until maturity, never selling the bond.
For example, I invest 10,000 in to a German Government Bond and receive back 10,150 at FINAL MATURITY and an interest coupon of 80 Euro after 6 months.
The 80 Euro would be taxed as Income but where do I enter this on the Form 11 online?
The 150 Euro would be taxed as a Capital Gain, even if I did not sell the asset but held until maturity or would this also be classed as an income and added to the 80 above?

Thank you very much for your time
 
Hi, a little more help would be very much appreciated.
I bought a few EU Government and Commercial Government Bonds through Trade Republic.
For example, 10,000 Bond and after 6 months at FINAL MATURITY I received 9900 back and a coupon payment of 300 Euro.
As the investment return is lower on the bond I assume I cannot transfer this as a loss rather have 200 Euro as a gain and thus it would be taxed as income rather than a Capital Gain on the Form 11?
Please advise,
Thank you,
Gareth
 
The OP did not mention Irish Government bonds only EU bonds so this may not be relevant

Gains and losses on Irish Govt bonds are ignored

Gains and losses on other EU bonds come under CGT
 
jpd said:
The OP did not mention Irish Government bonds only EU bonds so this may not be relevant

Gains and losses on Irish Govt bonds are ignored

Gains and losses on other EU bonds come under CGT
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Sorry, I missed that.
 
Hi ClubMan, thank you for your response. No, just checking would it be CGT or income tax and would there be a difference if it is an EU Bond?
 
Thank you guys, so for clarity, on an EU Bond held to maturity and bought second hand through a trader, if the pay back of the bond increases this is not income rather CGT? So effectively, the smart play is to buy short term bonds where the bonds value will be higher on maturity and aim to keep below the annual CGT allowance and pay income tax on the coupon/interest only?
 
The bond price depends on the interest rate at the time you purchase the bond.

Depending on the interest rate paid by the bond, this price could be lower, equal or higher than the value at redemption

If you are going to start buying bonds, you better follow a few lessons in bond pricing before jumping in
 
Or indeed any advice would be great as I factored in the return yield on the bonds, which were circa 4%, but to be fair, bit naive when now looking at CGT versus nominal tax rate
 
I bought Irish Govt bonds trading sub-par, as there in no CGT on the capital gain.

I am guaranteed to make a capital gain if I hold to maturity, and I will not pay any CGT on that capital gain.


Why Ireland doesn't apply CGT to holders of its own Govt bonds, and does to holders of Govt bonds from other countries, I don't know.
 


Annual or semi-annual coupon payments are income. These can be declared in the normal Form 12 or Form 11 income tax return.


Any capital gain or capital loss on disposal is subject to capital gains tax rules.

If applicable, a CGT return may be required.
 
Thank you, so if I bought an EU Bond for 10000 and at maturity received back 9900 as repayment and a coupon of 300 euro, would I be expected to pay income tax on the full 300 even though I had a loss on the repayment of the bond?
 
Yes, capital gains are separate to income.

They are taxed separately.

The 300 coupon is liable for income tax.

You can use the 100 euro capital loss on the bond against another capital gain, this year or in the future.
 
jpd said:
Yes, but you knew that before you bought it
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As I stated above, I was a bit naive about the tax consequences, looking solely at the return yield and the discount to par on the bonds and maturity date, so that effectively the return is the same albeit how it is returned across capital and interest and even previous interest on the bond paid out I did not look in to in too much detail. I also bought with fixed amount rather than Face Value. Live and learn! Thank you Protocol and Jpd
 
Protocol and Jpd, sorry again but need your advice here as Ive made a few mistakes above
I spent a few hours today going through the bond and took on your advice Jpd and fully immersed myself in this.

So
I paid 9864, discount to par for a 9905 DE Bond which was paid back. 9905 is the Face Value.
I paid ACCRUED INTEREST to the previous bondholder at the time of this sale - the amount was 135 euro.
The coupon I received was 173 Euro at maturity

So, please correct me if I am wrong -
41 needs to be declared as CGT. 9905 minus 9864
173 minus 135 Equals 38. 38 Euro needs to be declared as income

Commission Fee of 1 euro would also be a tax deductable on the income side.
Is this how you guys see it?

Thank you again
 
Commission fee is not deductible from the income, it is added to the purchase cost and so allowed against the capital gain

The accrued interest is deductible or not depending on whether you are being taxed on an accrual or receipts basis
 
jpd said:
Commission fee is not deductible from the income, it is added to the purchase cost and so allowed against the capital gain

The accrued interest is deductible or not depending on whether you are being taxed on an accrual or receipts basis
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Sorry Jpd, accrual/receipts basis - I will be adding income on Form 11, I assume under investments minus the accrued interest - Do I need to decide on accruals/receipts as I do not have a trade, nor am I self employed
 
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