Investing in gold is particularly popular in times of high uncertainty and inflation. The price of the precious metal has reached new highs since 2020. The various types of gold investment differ considerably from a tax perspective. The classic form of gold investment is gold coins and bars. Profits are only taxable if there is no more than one year between purchase and sale. After this speculation period has expired, the gains are tax-free.
ETCs and ETFs as a flexible alternative to physical gold investments
Exchange-traded commodities (ETCs or "certificates") offer an alternative for investors who do not wish to own physical gold. These make it possible to participate in the price development of gold without having to physically store the precious metal. Depending on the structure of the ETC, gains and losses can either be subject to withholding tax as capital gains regardless of the holding period or treated as an investment in physical gold, meaning that gains are tax-free after one year. In order for ETCs not to be subject to withholding tax, they must be fully backed by gold and only grant the investor a physical delivery claim.
What investors should consider for ETCs and physical gold
Gains realised before the end of the one-year period are subject to the often higher personal tax rate. Mirroring the tax exemption after one year, realised losses cannot be claimed for tax purposes. It should also be noted: Errors are often made when calculating the deadline. Anyone who acquired gold on 24 July 2023 can only sell it tax-free from 25 July 2024. ETFs that invest exclusively in gold are another possible gold investment. These products replicate the performance of gold. Gains and losses are always subject to withholding tax.
Sebastian Meinhardt
Partner, Financial Services, Tax Asset Management
KPMG AG Wirtschaftsprüfungsgesellschaft
Gold mining shares: a complex form of investment with tax nuances
Ultimately, investors can acquire gold mining shares, but their prices depend on many factors and therefore do not directly reflect the development of the gold price. From a tax perspective, these are normal shares, meaning that dividends and capital gains are subject to withholding tax.
Anyone deciding to invest in gold should weigh up the benefits and risks and also consider the different tax rules.
