A new capital gains tax has caused a massive drop in trade on the Vienna stock exchange this year, according to data published on the exchange's website. The Vienna bourse reported a trading volume of 4.41 billion euros ($6.39 billion) in May 2011, 42 percent down from the same month last year.
In May 2009, despite a world-wide economic and financial crisis, trading volume on the Vienna exchange stood at 6.15 billion euros. "We did some investigating and spoke to market players, and it emerged that the capital gains tax, especially, had led to smaller turnovers and to poorer market sentiment," Vienna stock exchange manager Michael Buhl told the economic daily WirtschaftsBlatt Thursday.
For the full year 2010, the bourse saw a trading volume of 72.32 billion euros. In comparison, in the first five months of 2011, it was just 26.84 billion euros, the stock exchange said in its monthly report in May. Since January, a 25-percent tax has been immediately imposed on any capital gains from stocks, loans, derivatives and investment and property funds.
Until then, profits had been taxed within one year. As a result of the tax, the share of Austrian investors has dropped from some 37 percent before the tax was passed, to 26.3 percent in May, according to the WirtschaftsBlatt. Talk of higher banking taxes or the introduction of a financial transaction tax also contributed to the drop. "These discussions are unsettling not just for private and institutional investors at home, but also for international investors," noted Buhl.