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Many people with interests in capital companies hold shares that they sell for various reasons. The question often arises whether and how to account for the sale of such shares. The answer is fairly simple, although finding it is not so obvious.
Sale of shares: how to settle the tax?
Many people with interests in capital companies hold shares that they sell for various reasons. The question often arises whether and how to account for the sale of such shares. The answer is fairly simple, although finding it is not so obvious.
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First, the basics: if we hold shares as a natural person, we should look for answers on settling related transactions in the Personal Income Tax Act. There are two key points:
- Article 17(1)(6) says that the paid disposal of shares (their sale, for example, for cash) is classified as income from capital. This means we should report all related income on the PIT-38 form, which covers precisely this type of income.
- Another important matter is in Article 19: income is determined from the values stated in the agreement drawn up for the share sale. Crucially, it must be market value; otherwise the tax authority may ask for explanations and ultimately determine the amount with an expert's help. There is nonetheless some discretion in determining the value: judgments show that authorities accept, for instance, a multiple of 5x EBITDA attributable to a share. For tax purposes, we consider income after deducting the costs of selling those shares.
If you found this article interesting, explore our tax advisory services and read how we can help you:
Summary
Once shares have been sold and a suitable agreement consistent with market conditions has been drawn up, the values must be entered on the form. If shares were sold through intermediaries, such as a broker, we (and the tax office) should receive a PIT-8C by the end of March 2024; its values go in boxes 19 and 20 of PIT-38. For shares sold, for example, through a notary, we should calculate the figures ourselves and enter them in boxes 21 and 22 of PIT-38. Remember that the filing deadline is 30 April 2024, so anyone who has not done so should hurry.
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