How to report investment income on your tax return: a step-by-step guide for investors

Who has to report investment income

Your tax return is how you tell the tax office what you earned and how much tax you owe. As an investor, you usually have to report if, in the past year, any of the situations below applied to you.

This is the general pattern. Your country's rules decide, so check them before you file.

What counts is the company you signed your contract with, not the name of the app. A broker based abroad usually does not withhold your home country's tax, so you declare it yourself. If you're not sure, ask the broker.

Which documents you need from your broker

Most brokers give you a yearly tax report early in the year: a list of your sales with the buying and selling price, fees, and the dividends you received with the tax withheld at source. You'll usually find it in the documents or reports section of your account.

• the yearly tax report, or a statement with all of last year's trades;
• the list of dividends, with the gross amount and the tax withheld abroad;
• the official exchange rates your country requires, to convert foreign amounts.

How to work out your net gain and the tax

For each sale, the gain is the selling price minus what you paid, including fees. Add up the year's gains and, where your country allows it, subtract the losses. Tax is charged on the net result. Convert foreign amounts at the rate your tax office requires.

If the year ended with a net loss, there is usually no tax on gains. In many countries you can report the loss and carry it forward to future years, within limits. Check how the rule works where you live.

For foreign dividends, you usually subtract the tax already withheld in the company's country and pay only the difference up to your home rate. US dividends are explained in the W-8BEN guide.

Check for other charges on investment income

Some countries add other charges on investment income, such as social or health contributions, or apply them only above a yearly threshold. Others give you a tax-free allowance first.

1. AllowanceA tax-free amountsome countries don't tax the first part of your gains or dividends
2. RateThe tax on the resta flat rate or your income tax bracket
3. ExtrasContributions or surchargesin some countries, on top of income tax

Your tax office's website lists the allowances and rates for the year you are declaring.

Fill out and file your return

Most countries let you file online, through the tax office's website. If you don't have an account there yet, you set it up once.

1. Log in to your tax accountFind the yearly return for the tax year you are declaring.
2. Check your personal detailsName, tax number and address. Many are already pre-filled.
3. Enter your investment incomeIn the section for capital gains and foreign income, enter the country, the type of income (gains from selling securities, dividends) and the amounts in your currency: income, costs and tax already paid abroad.
4. Add any allowances or creditsClaim the tax-free allowance if there is one, and the credit for foreign tax withheld.
5. Check and submitCompare the result with your own calculation, then submit and keep the confirmation.
6. Pay by the deadlinePay the tax due online or at your bank, by your country's deadline.

How each type of income is taxed is explained in the guide to investment taxes.