CFD losses are not compensated with profits (german account german cap tax)

[codeguru]

Hi, I have a question that might devide where I continue to trade here or not.

I am resident in Germany, taxable here and trade on IG. 

Since I started I have around 5K Euro in losses ... for example today I closed a position with 700 E profit but there was tax deducted.

That cannot be... German capital gains tax law says 20K of CFD losses can be compensated with CFD profits inside of the year.

Can someone explain me that please? On my account statement I found countless positions with a) loss 50 Euro. b) profit 50 Euro , then cap tax 17 Euro deducted... 

Either the online overview is broken then I must aks from where to get a correct account statement?

Edited August 12 by codeguru
typo

[codeguru]

finally found it...  in Germany there is a legal restriction that you can only compensate 20.000 Euro of losses with profits in CFD trade. 

Theoretically a person can have two CFD accounts so the person could use this 20K rule in two brokerage accounts.. and becaue in Germany everything is totally over regulated brokers are not allowed to compensate this in the account.

This cuts out 28% of liquidity for traders which do have losses. IG will provide a tax statements on the deducted taxes of the winning deals and a second statement "statement of losses" with the lost deals. The compensation is done afterwards in the tax declaration and granted by the tax authority "Finanzamt".

There are good news, the highest german financial court ruled already that this law is against the consitution but until the law and it's executive regulations are changed it is still applied by IG.

The only way out is to trade CFD elsewhere in a country where the broker will not deduct taxes after declaring that you are taxalbe in Germany. Then the tax is not paid upfront but afterwards. it is not IG to blame... they are just 100% compliant with law. But the law is not compliant with the constitution...

Source: published ruling of Bundesfinanzhof July 2024 (VIII B 113/23).

There is one more lawsuit pending at the constitional court (Bundesverfassungsgericht) that one of the constitutions paragraphs is violated (fundamentals of equal treatment). 

Finally this will lead into CFD loss/profit compensation inside of the account (again) when the people in Berlin are not too busy... latest (and most stupid) movement is to cut the welfare by 20 Euro... obviously this is more important than fixing the CFD law.

 

Edited August 12 by codeguru