I can give you the example of Switzerland. Capital gains aren't taxed, but zeros are taxed as if they were bearing interests.
If you have an IRA and you do not like being bothered to watch the markets each day and reinvest your coupons, then zero-coupon bonds are for you ))
http://bonds.finance.yahoo.com/z1?b...0000&ytl=-1.000000&ytu=-1.000000&yu=-1.000000 Since my last post on 1/6,the bonds are now at $334.30...a rise of 18% in 4 1/2 months.
Some zeros, for example the Sea River Maritime* zeros of 2012 are "grandfathered in" and are exempt from the imputed rate taxation. *These bonds are guaranteed by Exxon and were issued as 30 year zeros in 1982. They beat the TEFRA act of 1982 which shut down this interest to capital gains conversion device.
Bonds like series EE and I, they have their advantages (i.e. inflation protection and low cost putability), which should not be taken lightly. Zeros, in addition, are the best way to play yield curve and credit spread games.
Since my last post on 1/6,the bonds are now at $350.80, a rise of 24% in almost 6 months. http://reports.finance.yahoo.com/z1...0000&ytl=-1.000000&ytu=-1.000000&yu=-1.000000