In my last post, I explained to you with an example that the current practice of tax authorities to limit the offsetting of losses in futures trading is likely illegal and at the very least outrageous.

However, since a decision from the Federal Constitutional Court is still pending, I recommend that you do not fall under the clauses of the „Future Financing Act“ in the first place.

Then you won’t have to file a lawsuit against it, which is costly and time-consuming. Fortunately, avoiding this is easier than you think. Read my tips today to find out how.

How to avoid the limitation of loss offsetting in futures trading

Firstly, the regulation that allows for a maximum deduction of 20,000 EUR per year from profits only applies to futures trading.

The Federal Ministry of Finance (BMF) clarified what exactly constitutes futures trading in mid-2021. Namely, primarily options trading, foreign exchange forward transactions, contracts for difference (CFDs), and futures.

However, CFDs were previously very popular among private investors. Due to their tax disadvantages, this popularity has since declined significantly. But what can you still trade without fearing major tax disadvantages?

These financial instruments remain advantageous for you

So which instruments can you continue to trade without the nonsensical limitation of loss offsetting? The BMF has also made this clear: stocks. And for derivatives (those with leverage): certificates (including leveraged certificates) and warrants.

Here, you can continue to offset losses and gains first. Only the remaining profit is then subject to taxation.

But be careful: you can only offset stock gains with stock losses and derivative losses with derivative gains. The tax office wants this to be nicely calculated and taxed separately by type.

By the way, a lawsuit is also pending against this regulation. The outcome is uncertain.

But now you know how to avoid tax disadvantages in trading until the Federal Constitutional Court has clarified the mess that the German Bundestag has passed.

By the way, in my stock market newsletter Voigts Global Profits, we have always traded with stocks and leveraged certificates. So the issue of tax disadvantages never arose, otherwise, I would have recommended my readers other instruments.