Диалог с ChatGPT - как се изчислява капиталовата печалба в UK и US когато сделките с акции се правят в друга валута
How to calculate the price of the stock I am buying and selling if the stock is bought and sold in a different currency (not the currency of my country) if I am a tax resident in UK?
Calculating the price of a stock that is bought and sold in a different currency can be a bit complex, especially when factoring in exchange rates and taxes. Here are the general steps you can follow to calculate the price of the stock in your local currency:
Determine the exchange rate between the currency you are using to buy the stock and the currency in which the stock is traded. You can do this by checking the current exchange rate on a financial website or by consulting a currency conversion tool.
Once you know the exchange rate, you can calculate the price of the stock in your local currency by multiplying the stock price in the foreign currency by the exchange rate.
When you sell the stock, you will need to repeat this process to determine the sale price in your local currency. You will also need to factor in any fees or commissions charged by your broker for the sale.
As a UK tax resident, you will need to account for any gains or losses on the sale of the stock in your tax return. You will also need to determine whether any foreign exchange gains or losses need to be included in your tax calculation.
It's important to note that currency exchange rates can fluctuate rapidly, so the price you pay for the stock in your local currency can change even within a single day. Additionally, taxes and regulations regarding foreign investments can vary depending on the country in which the stock is traded and your country of residence, so it's important to consult with a financial advisor or tax professional for personalized guidance.
Which currency rate I should use when I am calculating the price of the stock I am buying? At the date of the trade or at the day of the settlement?
The currency rate you should use when calculating the price of a stock you are buying depends on the settlement date of the transaction.
If you are buying the stock on a spot basis, which means the transaction will settle within a few business days, you should use the currency rate on the trade date. This is because the price of the stock is agreed upon at the time of the trade, and the settlement date is when the actual exchange of funds and shares takes place.
On the other hand, if you are buying the stock on a forward basis, which means the transaction will settle on a future date, you should use the currency rate on the settlement date. This is because the price of the stock is agreed upon in advance and the exchange rate on the settlement date will determine the actual amount of funds exchanged.
It's worth noting that currency exchange rates can fluctuate rapidly, so the price you pay for the stock in your local currency can change even within a single day. Additionally, it's important to consider any fees or commissions charged by your broker when buying or selling stocks in foreign currencies.
Which currency rate I should use when I am calculating the price of the stock I am selling? At the date of the trade or at the day of the settlement?
Similar to when buying stocks, the currency rate you should use when calculating the price of a stock you are selling depends on the settlement date of the transaction.
If you are selling the stock on a spot basis, you should use the currency rate on the trade date. This is because the price of the stock is agreed upon at the time of the trade, and the settlement date is when the actual exchange of funds and shares takes place.
If you are selling the stock on a forward basis, you should use the currency rate on the settlement date. This is because the price of the stock is agreed upon in advance and the exchange rate on the settlement date will determine the actual amount of funds exchanged.
It's important to note that currency exchange rates can fluctuate rapidly, so the price you receive for the stock in your local currency can change even within a single day. Additionally, you should consider any fees or commissions charged by your broker when selling stocks in foreign currencies, as this can impact the final price you receive.
Do I sell the stock on a spot basis when I am using a popular trading platform like etrade or Interactive Brokers? What is the difference between a spot basis and forward basis?
When you trade stocks on a popular trading platform like E*TRADE or Interactive Brokers, the default settlement method is usually on a "T+2" or "two-day settlement" basis, which is a spot basis. This means that the actual exchange of funds and shares will take place two business days after the trade date.
On a spot basis, the price of the stock is agreed upon at the time of the trade, and the exchange of funds and shares takes place a few business days later.
On the other hand, a forward basis involves agreeing to a price for the stock today, but settling the transaction on a future date. This can be useful for investors who want to lock in a price for a stock they expect to increase in value, or for hedging against currency fluctuations.
The main difference between spot and forward settlement is the timing of the exchange of funds and shares, as well as the exchange rate used to calculate the final price. With spot settlement, the exchange rate used is based on the rate at the time of the trade, while with forward settlement, the exchange rate used is based on the rate on the settlement date.
It's important to note that while some brokers default to spot settlement, you may be able to select a different settlement method depending on the broker and the security being traded. It's also important to be aware of the risks and costs associated with forward settlement, as this can vary depending on the specifics of the transaction.
How this calculation of the prices is made in the US (for US residents)?
In the US, the calculation of prices for stocks traded in foreign currencies is similar to the process in other countries.
When buying or selling a stock in a foreign currency, the price of the stock will be quoted in the foreign currency, but the transaction will ultimately be settled in US dollars. The exchange rate used to convert the foreign currency into US dollars will depend on the settlement date of the transaction.
For example, if you buy a stock on a spot basis, the price of the stock will be agreed upon at the time of the trade, and the settlement will occur two business days later. The exchange rate used to convert the foreign currency into US dollars will be based on the rate at the time of the trade.
If you buy a stock on a forward basis, the price of the stock will be agreed upon in advance, but the settlement will occur on a future date. The exchange rate used to convert the foreign currency into US dollars will be based on the rate on the settlement date.
When trading on US-based platforms, such as E*TRADE or Interactive Brokers, the default settlement method is typically on a T+2 basis, which is a spot basis settlement. However, as I mentioned earlier, the settlement method and timing can vary depending on the specifics of the transaction and the broker used.
It's also important to consider any fees or commissions charged by the broker for trading stocks in foreign currencies, as this can impact the final price you pay or receive.
Does the prices calculated like you described used to calculate the capital gain or loss?
Yes, the prices used to calculate the capital gain or loss on a stock transaction are typically based on the exchange rate at the time of the trade or settlement, depending on the settlement method used.
When you sell a stock that was purchased in a foreign currency, the proceeds from the sale will be in the foreign currency, and you will need to convert these proceeds back into your local currency to calculate your capital gain or loss. The exchange rate used to convert the foreign currency into your local currency will depend on the settlement date of the transaction, as described earlier.
To calculate your capital gain or loss, you will need to compare the proceeds from the sale in your local currency to the original cost of the investment, also converted into your local currency using the exchange rate on the purchase date or settlement date, depending on the settlement method used. The difference between the sale proceeds and the original cost, adjusted for any fees or commissions, will give you your capital gain or loss in your local currency.
It's important to keep accurate records of the exchange rates used and any fees or commissions charged by your broker when trading stocks in foreign currencies, as this information will be necessary for calculating your taxes and reporting your capital gains or losses to the relevant authorities.
So, assuming I am trading stocks on a spot basis I should use the currency exchange rate at the trade date and this way I should calculate my capital gains?
Yes, if you are trading stocks on a spot basis, you should use the currency exchange rate at the trade date to calculate your capital gains or losses.
To calculate your capital gain or loss, you would convert the proceeds from the sale of the stock back into your local currency using the exchange rate on the settlement date, and then subtract the original cost of the investment, also converted into your local currency using the exchange rate on the trade date.
For example, let's say you bought 100 shares of a foreign stock on January 1, 2023, for 10,000 euros, and sold them on March 1, 2023, for 12,000 euros. The exchange rate on the trade date was 1 euro = 1.25 US dollars.
To calculate your capital gain or loss in US dollars, you would first convert the sale proceeds of 12,000 euros to US dollars using the exchange rate on the settlement date:
12,000 euros x 1.20 (exchange rate on the settlement date) = 14,400 US dollars
You would then convert the original cost of the investment of 10,000 euros to US dollars using the exchange rate on the trade date:
10,000 euros x 1.25 (exchange rate on the trade date) = 12,500 US dollars
Finally, you would subtract the original cost from the sale proceeds to calculate your capital gain:
14,400 US dollars - 12,500 US dollars = 1,900 US dollars
In this example, your capital gain would be 1,900 US dollars, based on the spot exchange rate at the time of the trade.
Why you use the exchange rate on the settlement date? You previously said that the trade date is used when trading stocks on a spot basis.
I apologize for the confusion. You are correct that when trading stocks on a spot basis, you should use the exchange rate on the trade date to calculate your capital gains or losses, not the settlement date.
To clarify the example I gave earlier, if you bought 100 shares of a foreign stock on January 1, 2023, for 10,000 euros, and sold them on March 1, 2023, for 12,000 euros, the exchange rate on the trade date (January 1) would be used to convert the original cost and sale proceeds into your local currency for the purpose of calculating your capital gains or losses.
Using the exchange rate of 1 euro = 1.25 US dollars on January 1, 2023, the original cost of the investment would be:
10,000 euros x 1.25 (exchange rate on the trade date) = 12,500 US dollars
And the sale proceeds would be:
12,000 euros x 1.25 (exchange rate on the trade date) = 15,000 US dollars
Subtracting the original cost from the sale proceeds would give you a capital gain of:
15,000 US dollars - 12,500 US dollars = 2,500 US dollars
Again, I apologize for any confusion caused by my earlier response. Thank you for bringing this to my attention.
Is it true that US taxpayers can choose between using the trade date and the settlement date when calculating the price of the sale in USD?
No, it is not true that US taxpayers can choose between using the trade date and the settlement date when calculating the price of the sale in USD.
The US tax rules require taxpayers to use the trade date for determining the exchange rate and the US dollar value of a transaction involving a foreign currency. This means that the exchange rate in effect on the trade date must be used to convert the foreign currency price of a security to US dollars for the purpose of calculating gains or losses on the sale of that security.
However, it is important to note that the US tax rules allow certain taxpayers who maintain their books and records in a functional currency other than the US dollar to use the exchange rate in effect on either the trade date or the settlement date, as long as they use the same method consistently from year to year. This applies only to taxpayers who use the accrual method of accounting and meet certain other requirements.
For most individual US taxpayers, who use the cash method of accounting, the exchange rate on the trade date is the only acceptable exchange rate for calculating gains or losses on the sale of securities denominated in a foreign currency.
Which rule is applicable to natural persons who are US taxpayers and US residends?
For natural persons who are US taxpayers and US residents, the general rule is to use the exchange rate on the trade date for determining the US dollar value of a transaction involving a foreign currency. This means that the exchange rate in effect on the trade date must be used to convert the foreign currency price of a security to US dollars for the purpose of calculating gains or losses on the sale of that security.
The use of the trade date exchange rate applies to individuals who use the cash method of accounting, which is the most common method used by individual taxpayers. Under the cash method, income and expenses are recognized when they are received or paid, respectively. In the case of a securities transaction, the gain or loss is recognized when the transaction is settled, which is typically within a few business days after the trade date.
It is important to note that the rules for determining the US dollar value of foreign currency transactions can be complex, and taxpayers may need to consult with a tax professional to ensure compliance with the applicable rules.
Is it true that if the settlement date is within two business days of the trade date, the taxpayer may choose to use the settlement date exchange rate?
No, it is not true that a US taxpayer may choose to use the settlement date exchange rate if the settlement date is within two business days of the trade date.
The US tax rules require taxpayers to use the exchange rate on the trade date for determining the US dollar value of a transaction involving a foreign currency, regardless of the settlement date. This means that the exchange rate in effect on the trade date must be used to convert the foreign currency price of a security to US dollars for the purpose of calculating gains or losses on the sale of that security.
While the settlement date may be within two business days of the trade date, the exchange rate on the trade date is still the only acceptable exchange rate for determining the US dollar value of the transaction for tax purposes. This is true even if the actual settlement date is different from the original settlement date that was agreed upon at the time of the trade.
It is important for taxpayers to be aware of and comply with the applicable tax rules for determining the US dollar value of foreign currency transactions to ensure accurate reporting of gains and losses for tax purposes.
Does international accounting standards consistent with this calculation of the prices based on the trade date?
Yes, international accounting standards are generally consistent with the use of the trade date for determining the exchange rate and the foreign currency value of a transaction for accounting purposes.
Under International Financial Reporting Standards (IFRS), which are used by many countries around the world, the exchange rate in effect on the trade date is used to translate the foreign currency value of a transaction to the reporting currency of the company for financial reporting purposes. This is consistent with the general principle of using the date of the transaction to determine the appropriate exchange rate to use.
However, it is important to note that the specific rules and requirements for foreign currency transactions under IFRS may differ from those under US tax rules or other regulatory frameworks. Companies that operate in multiple jurisdictions may need to comply with multiple sets of rules and requirements for foreign currency transactions, which can be complex and require careful consideration and analysis.
Can you confirm that in case of trading stocks in different currency with online platforms like E-Trade and Interactive Brokers the International Financial Reporting Standards are consistent with using the trade date instead of the settlement date when calculating the buy and sell prices for the purpose of calculating the capital gains taxes?
Yes, under International Financial Reporting Standards (IFRS), which govern financial reporting for many countries around the world, the exchange rate in effect on the trade date is generally used to translate the foreign currency value of a transaction to the reporting currency of the company for financial reporting purposes.
While the rules for tax reporting may differ from those for financial reporting, it is generally consistent with IFRS to use the exchange rate on the trade date for the purpose of calculating capital gains taxes on stocks traded in different currencies, even when using online platforms like E-Trade and Interactive Brokers.
However, it is important to note that the specific rules and requirements for foreign currency transactions under IFRS may differ from those under US tax rules or other regulatory frameworks, so taxpayers should consult with a tax professional to ensure compliance with the applicable rules.
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Доколкото съм запознат по традиция данъчната декларация се попълва аналогично на начина, по който ChatGPT твърди, че се смята капиталовата печалба съгласно законите на UK и US.
Тоест датата на придобиване/продажба се смята датата на сделката когато поръчката за покупка/продажба, подадена през електронната платформа, е изпълнена (за целите на преизчисляването в лева и изчисляването на капиталовата печалба/загуба). Тоест датата на сетълмент не се взима предвид, взима се предвид датата на изпълнение на поръчката.
Датата на сетълмент има значение за целите на определяне кой акционер да получи дивидент (който е вписан като собственик на record date получава съответния дивидент). Но за целите на изчисление на капиталовата печалба се взимат валутните курсове към деня когато са изпълнени съответните поръчки.
По мое мнение законодателят се е опитал да копира законите на водещите държави, но не е успял ясно да го формулира в ЗДДФЛ.
Една съществена разлика между законите на България и UK е, че в UK се взима предвид разходът за такси и комисионни.
За да компенсира това българският законодател през 2023 година е решил, че трябва да се въведат нормативно признати разходи от 10%. Така ще е една идея по-справедливо (по-добре е от нищо), обаче без да се затрудняват сметките (т.е. няма да се занимаваме да смятаме точно колко са ни разходите, а просто ще се възползваме от 10% намаление).
Законопроектът за обществено обсъждане е тук. За съжаление със същия законопроект искат да свалят и тавана на плащанията в брой: Отново правят опит да намалят тавана на плащанията в брой - на 5 000 лева.
Написаното от ChatGTP потвърждава ли се? Давам примери.
В тази статия разказват как някой се е оплакал за това, че се смята цената на придобиване по валутния курс към датата на придобиване, а не по датата на продажба:
In a report published in May 2021, the Office for Tax Simplification asked the Government to consider whether gains or losses on foreign assets should be calculated in the relevant foreign currency and then converted into sterling. However, on 30 November 2021, the Government confirmed that it does not intend to make this change.
Следователно тази статия потвърждава това, което разбрах от диалога с ChatGTP.
В друга статия от Канада също се потвърждава този метод на преизчисление.
All values in your income tax return must be entered in Canadian currency, but don’t simply convert your USD$1,950 capital gain into Canadian. You must convert all of the funds involved in the transaction into Canadian currency, not just the final amount.
Let’s say the exchange rate was 1.5521 on the day you purchased your stock. Your original purchase price would therefore be USD$4,000 X 1.5521 = CAD$6,208.40. On the day you sold your stock, the exchange rate was 1.3500. Since your commission fee was charged on the day you sold, your commission fee is USD$50 X 1.3500 = CAD$67.502. Converting your selling price of USD$6,000 using the same exchange rate, your final selling price is USD$6,000 X 1.3500 = CAD$8,100.00.
В Канада разходите за такси и комисионни намаляват данъчната основа, но в българския ЗДДФЛ това изрично е забранено.
Статия за САЩ, където потвърждават, че се гледа цената на придобиване по курса на валутата към датата на придобиване:
When filling out these forms, you’ll need to use the active exchange rate at the time of purchase and the time of sale. If you can’t recall the active exchange rate, you can look it up using a historical currency table.
Не уточняват кога е датата на придобиване - към датата на изпълнение на поръчката или датата на сетълмент.
Интересно, че основната опция е да гледаш пазарната цена, не средната цена по исторически данни.
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