All certified expenses in connection with the acquisition of securities are deemed to be the acquisition costs of securities.
Upon transfer of securities, in addition to the acquisition cost, the certified expenses directly related to the sale or exchange of securities (e.g. fees, commissions, etc.) may also be deducted from the sales price.
In each specific case such expenses must be considered individually, for the concept of expenses directly related to the transfer of property is not legally specified. Directly related expenses may be the expenses made for concluding a particular transaction where such expenses are inevitable.
Maintenance fees of a security account and other overhead management costs in connection with the securities are not recorded as expenses. Taxpayers have to bear such expenses irrespective of the sales transaction of securities, and deduction of such expenses from income or including them in the loss is not possible.
When it is possible to take into account the option premium, if the option was used for acquisition of shares?
The option premium may be included in the acquisition cost of shares when the shares obtained by means of option are transferred. Since 2014 you can declare the option premium as at the expiration date of the option also in the case the option is not exercised and the underlying asset will not be purchased.
By declaration of securities, in addition to the gains received during a period of taxation, also the loss from the transfer of securities may be taken into account.
Consequently, gains or loss from transfer of securities means:
- upon sale – difference between the acquisition cost and the sales cost of a security;
- upon exchange – difference between the acquisition cost of a security exchanged and the market cost of a security received as a result of exchange;
- taxation of new holdings acquired by exchange as a result of a merger, division or transformation of companies or non-profit associations shall take place upon transfer of the holdings, while the difference between the acquisition cost of an exchanged holding and the sales price of a received holding will be subject to taxation. Similar conditions apply to taxation of the gains derived from transfer of units that were acquired through the exchange of units of an investment fund of a State which is a Contracting Party to the EEA Agreement.
Is income tax charged for the exchange of units of different investment funds managed by the same management company?
The exchange of units of various funds to be administered by the same management company and the replacement of the holding during the merger of the investment funds is not subject to income tax. Such exchange transactions need not be declared.
What time is deemed to be the acquisition time of the units of an investment fund, if, by calculation of the acquisition cost the FIFO method is applied, and the units were exchanged exempt from tax?
The acquisition time of the units transferred in the course of an exchange exempt from tax is deemed to be the acquisition time of units.
By calculation the acquisition cost of a partial transfer of securities of the same class in different periods at different prices consistently one of the following methods should be followed:
- FIFO (First In, First Out) – transfer takes place in the order of purchasing;
- weighed average method – the acquisition cost of one transferred security is calculated by dividing the amount of the acquisition costs of securities of the same class existent at the moment of transfer by the number of securities of the same class.
How is the acquisition cost calculated in the case of a split, i.e. the nominal value of shares has changed but share capital remains the same?
The acquisition cost of the shares which have been split has to be divided according to the split ratio. For example if the split ratio is 2-for-1, i.e. in place of one earlier acquired share there are two shares after the split, the acquisition cost is divided by 2.
How is the acquisition cost calculated in the case of issuing new shares and increasing share capital?
Acquisition cost is the expenditure incurred when obtaining shares. If shares are received from an employer at a favourable price and the employer will be liable to pay fringe-benefit tax on these shares, the employee can, on the basis of a certificate issued by the employer, consider the amount taxed by the employer as the acquisition cost of the shares. If shares are received free of charge, there is no acquisition cost.