Capital gains tax (CGT) is tax on the profit you make when you sell or dispose of an asset that has risen in value, such as shares, property, or a business. The gain, not the total sale price, is what is taxed: it is the disposal proceeds minus the acquisition cost and allowable expenses. Many systems also grant an annual exempt amount before CGT applies.
Example: you buy shares for 10,000 and later sell them for 18,000. The gain is 8,000. If an annual exemption of 3,000 applies, only 5,000 is taxable, and CGT is charged on that figure at the relevant rate.
Rates and rules vary widely. The UK charges CGT above an annual exempt amount with different rates for property and other assets. The US separates short-term gains, taxed as ordinary income, from long-term gains taxed at preferential rates. Italy, Germany, France, and Spain commonly tax investment gains as part of a flat capital-income or savings regime, often around 26% to 30%.
Holding period, residency, and reliefs all change the outcome. See tax residency and tax bracket, and compare regimes with our compare taxes by country tool.