Zakat on stocks

[amyamelia]

Salaam all, like the title already says I want to know how to calculate zakat on stocks.

I made a research and found many ways this are which made sense too me.

Short term holding(1 year approximately ):
You have to pay on the whole current stock price 2,5% Zakat.
Example: You have 100 stocks and the share price is 100€ on the day you calculate and give your zakat. Then you have to pay on the 10.000€ 2,5% zakat. Which is 250€.

Long term:
First option;
You only have to pay on the current assets of the stock the zakat.
Example: 10.000€ worth on stocks.
The company has 60% of current assets. So the amount which is zakatable is 6000€. 2,5% on 6.000 is 150€.

Some people say. I also have to take the currents assets in ratio with the market cap. But i am not sure if I understood it right.

The second long term option: Also paying 2,5% on the whole amount of stocks. 10.000€ worth on stocks than 250€ zakat like the short term holding option.

However, the dividends have to be seen like cash and be paid zakat 2,5% regardless of the option u use.

How do you calculate your zakat? Which option is the best? Calculating 2,5% of the whole amount and being safe?

Edit: changed non current assets to current assets

 

[winterangel]

@amyamelia We built a free tool last Ramadan that uses the same calculation method that you described. You can check it out here: http://zakat.zoya.finance

 

[cjl]

@winterangel Thanks for this! But can I ask how did you and your team arrive at the conclusion that this is the correct way of zakat for passive investments? I’ve been trying to understand how zakat works for investments but have been very confused so to be on the safe side been paying it as if it’s a cash value. Would be nice to know if I can find understand the reasoning behind the decision?

 

[winterangel]

@cjl We used Joe Bradford’s Simple Zakat Guide as our reference (he’s one of our shariah advisors). It also seemed like the most sound calculation method compared to some of the others.

 

[ramonbeliever]

@winterangel Do we need to pay zakat on rsus which were acquired less than a year ago?

 

[cjl]

@winterangel Thank you! I’ll try and get the book to get a better understanding.

 

[amyamelia]

@winterangel Lifesaver, thank you.

 

[hclau]

@winterangel What do you mean by actively trade? Let’s say I keep adding to my portfolio monthly, but I sometimes trim a position and add to another, does that make me an active or a passive trader?

 

[tfmartin]

@amyamelia Sorry brother, I haven’t read all this but IFG had an article on this click here

 

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