In Fincanva simulations, taxes are modeled to reflect their real-world impact on investment returns. The platform uses a layered approach, combining automatic withholding taxes with user-defined capital gains and dividend tax rates to ensure accuracy and realism.
How the Tax Simulation Works
- Withholding Taxes
When a dividend is received, Fincanva automatically applies a withholding tax.- Withholding taxes are pre-mapped and constantly updated by Fincanva and cannot be modified by the user.
- These rates are country-specific and depend on your fiscal residency.
- We have mapped withholding tax rules for United States (US) and Italy (IT) residency.
- Users with "Other" residency currently default to US withholding tax rates for simplification purposes.
- In the future, Fincanva will expand support to include more countries and tax treatments.
- Capital Gains and Dividend Taxes
After simulating trading actions (buying, selling, holding), Fincanva applies the tax rates that you configure in your simulation settings:- Short-term capital gains tax rate
- Long-term capital gains tax rate
- Dividend tax rate
These settings allow you to customize how post-trade profits and distributions are taxed according to your personal situation.
How to Customize Your Tax Settings
Please refer to the following article to handle tax settings in Fincanva: How do I change tax settings in Fincanva?
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