The German government has announced plans to introduce a capital gains tax of 15 per cent to boost tax revenues and plug a massive budget hole.
German equity investors are currently exempt from capitalgains tax provided they hold shares for at least a year and the centre-left government had been seeking a way to raise badly needed funds without angering the financial markets.
"From an international perspective, we have found a verymoderate solution. The 15 per cent we've now agreed upon is less than in many other countries," Social Democrat General Secretary Mr Olaf Scholz said.
But equity-market analysts said the tax would harm investment in Germany.
The news confirms reports that the new taxes would apply to both equity and real estate investments - the latter are now exempt from capital gains tax after 10 years. The new rules could take effect from February 21st, 2003.