New tax guidelines for CFD traders

From 2021, new tax regulations will apply to futures transactions. Losses from these will only be able to be offset up to an amount of 10,000. This may also result in a tax burden if more losses than profits have been made. The tax changes should apply to CFDs and certificates, among others, and it is no longer possible to offset losses against the final withholding tax during the year. Brokers and traders will thus have to adjust as of 1 January.

Legality of the rules unclear

It is also questionable so far whether the tax changes are actually legal. As a rule, losses on investments in the capital market are taxed in this form. It is conceivable that investor protection associations will resist the tax changes and file a lawsuit against them. Sooner or later, courts may decide on the legality of the tax changes.

The discussions about the tax changes have been going on for months. Critics see the changes in the law as a violation of tax principles, especially of several principles of fair taxation. Among other things, they see a violation of the merit principle. This principle states that everyone should contribute to the financing of state services on the basis of their personal economic capacity. In the view of critics, the new rules also violate the objective net principle. This principle stipulates that only net income is taxed through income tax. Income-related expenses or business expenses are deducted before taxation.

Transitional regulation for 2021 under discussion

According to current announcements, for example, the Federal Ministry of Finance is now probably planning a transitional regulation for 2021. In addition, warrants and certificates are not to be classified as forward transactions and thus fall outside the general loss top. CFDs, in download Exness however, will continue to fall under the new regulations. How other leverage products will be treated has not yet been finally clarified. Futures will also fall under the new tax regulations.

It is currently also conceivable that the law will be completely overturned this year. This has probably been proposed by the Bundesrat. Above all, the changes in the loss account are to be reversed. If the Bundestag and the Federal Government agree to the Bundesrat's proposal, a decision could be made before the turn of the year and everything might remain as before.

Uncertainty among traders

At present, the situation is probably causing uncertainty among many traders. A decision could be made at the end of 2020, almost at the last minute. It is therefore important to follow the current developments and to inform oneself in time. In this context, not only brokers but also tax advisors are the contacts in case of doubt. Brokers are not allowed to advise traders on tax issues.

For months, traders and brokers have been hoping that the legislator would recognise this himself, which was possibly the case with the Federal Council in the meantime. Thus, there is still hope that the new rules will not be implemented. The legal path against the law with lawsuits before investor associations and traders, on the other hand, can take years.