Is Money Earned in the Stock Exchange Taxable?
Investors who buy and sell stocks on the stock market are curious about the taxation of their earnings. Is money earned in the stock market taxable? The answer to this question depends on the type and duration of the invested stock.
Earnings from stocks traded on Borsa Istanbul (BIST) are subject to withholding tax. However, the withholding tax rate has been determined as 10% for the stocks of the Securities Investment Trust (MKY) and 0% for the other stocks. Therefore, investors trading in BIST do not pay taxes on their stock trading gains. It only pays commissions to brokerage firms.
Gains from stocks other than BIST are taxed as "Value Increase Gain" according to the Income Tax Law. These gains consist of the difference between the acquisition and disposal of the stock. If the stock is sold within two years, 15% of this difference is paid as income tax. If the stock is sold after two years, this difference is exempt from tax.
In summary, whether the money earned in the stock market is taxable depends on whether the stock is traded on the BIST and its holding period. Earnings from stocks traded on BIST are tax-free. Gains from stocks other than BIST are subject to 15% tax if they are sold within two years. It is tax-free if sold after two years.