Support for the Tobin Tax

Sadly, several European countries including Spain and France tax transactions with stocks: Tobin tax - Wikipedia. If I don’t record the tax anywhere, my profitability and cost basis get distorted. If I record it in the brokerage field, I need to be careful at tax time so I don’t declare it as a true brokerage cost. We need a specific field for this so it can be recorded properly.

@carsanbo Is this tax related to capital gains made off of trades? Or in relation to dividend payments?

Neither, I’m afraid. What is taxed by this is the value of a buy transaction itself, excluding brokerage costs.

In the countries where such laws exist, they don’t just apply to residents, but to anyone who buys a stock of a company above a certain market cap that is domiciled in the country, regardless of where it is traded and where the buyer is located. So if you open a position in Iberdrola (a Spanish utility) or in Danone (a French food company), you will have to pay a percentage of the overall value of the buy transaction, even if you reside in Australia and are buying an ADR in the US.

Here are the details in the case of Spain: - BOE-A-2020-12356 Ley 5/2020, de 15 de octubre, del Impuesto sobre las Transacciones Financieras. (in Spanish).

Since percentages and exceptions will vary from one country to the next, my suggestion would be to add a “Transaction tax” field to all transactions and let the end user enter the EUR ammount (or whatever currency this is in). These taxes should increase the cost basis of positions (and hrnce the returns), but should be excluded from capital gains reports.

Ideally, there should also be an “Applicable transaction tax %” field at the holding level where the user can set the applicable percentage so it’s automatically prepopulated in subsequent transactions, similarly to how it’s done with dividend withholding.

1 Like

I second this. E.g. in Belgium there is a (varying) tax on transactions. For instance on stocks, both buys and sells, it amounts to 0.35%. Compared to the very low brokerage fees, this has a big impact on returns. Currently the only way to deal with this is to add this amount to the brokerage fee. E.g. on a transaction of EUR 2000, the brokerage fee would be EUR 5 + EUR 7 for the transaction tax.

A second problem are FX fees: ideally this should be a separate field as well. (Again, there is no other solution than to add the brokerage fee.)