Capital Gain

When you buy shares, a fund, or property and later sell at a higher price, the difference between your sale price and your original purchase price (your cost basis) is a capital gain. The gain is described as "realised" once you complete the sale. An unrealised gain, sometimes called a "paper gain," simply means the asset has increased in value but has not yet been sold.\n\nIn most countries, capital gains are subject to tax. Whether a gain is taxed as ordinary income or at a separate, often lower, rate depends on how long the asset was held. In the United States, for example, long-term capital gains (assets held more than one year) are taxed at 0%, 15%, or 20% depending on taxable income and filing status, while short-term gains (assets held one year or less) are taxed at ordinary income tax rates. Tax rules vary significantly by country. From 1 January 2026, Belgium introduced a capital gains tax on financial assets transferred by natural persons, with an exemption of up to EUR 1 million per five-year period.\n\nThe relevant tax authority in a given country sets the rules. In the United States that is the IRS (with rates monitored by the SEC for securities regulation purposes). In the United Kingdom it is HMRC. Expats should always verify which country's rules apply to them based on their tax residency, not just their nationality.

The UAE, Saudi Arabia, Qatar, Bahrain, Kuwait, and Oman do not currently levy a personal income tax or capital gains tax on individuals' investment portfolios. For English-speaking expats resident in the GCC, this means gains realised on shares, ETFs, or other financial assets are generally not taxable locally. This is one of the structural advantages of building and managing a portfolio while based in the Gulf.\n\nHowever, tax residency rules in your home country may still apply. Many expats remain tax-resident in the US, UK, or other jurisdictions and are therefore subject to those countries' capital gains tax rules on worldwide income, regardless of where they live. US citizens, for example, remain liable to the IRS on capital gains wherever they reside. If you are unsure of your tax residency status, consult a qualified tax adviser familiar with both GCC residency rules and your home country's obligations before realising large gains. Do not rely on this glossary entry as tax advice.