Investing in physical gold compared with other precious metals is practical in many ways: gold coins and bars require only limited space, investment in physical gold is anonymous, and sales and purchasing of investment gold is VAT free.
Physical gold has retained it’s value and purchasing power throughout the known history. Therefore it acts as an insurance against inflation and is a meaningful addition to an investment portfolio.
How is investment gold then defined and what does it mean that it is VAT free?
Definition of Investment Gold
The Finnish Tax Administration specifies investment gold products, including gold bars and plates and gold coins as follows*:
Gold Bars and Plates
Gold bars and plates with 995 purity and with confirmed weight in the gold markets can be considered as investment gold.
In practice, the gold bars and plates with standard weight are being traded in the most important gold markets of the world. The European Council has specified the most typical weights for trading as follows:
- 12,5 and 1 kilogram
- 500, 250, 100, 50, 20, 10, 5, 2,5, 2 and 1 gram
- 100, 10, 5, 1, ½ and ¼ ounce
- 10, 5 and 1 tael
- 10 tola
Bars and plates with other weights are also considered as investment gold products if they are being traded within a country.
In practice, a manufacturer’s certificate for example can be approved as an evidence that a product fulfils the requirements for investment gold. Demonstrating purity with a stamp is not a prerequisite for tax freedom if purity can be demonstrated by some other reliable means.
Also gold coins with purity of 900 milligrams, minted after year 1800, that are or have been used as legal payment methods in the country of origin, and the price of which is max. 80% greater than the trading value of the gold contained in the coin, can be considered as investment gold products.
Investment gold and VAT
Sales and purchasing activities of investment gold products are VAT free. According to the Finnish Tax Administration, the tax freedom can be applied only with such gold products that are being used as investment products due to their high content of gold.
Investment Gold in Private Taxation
Regarding income taxation of a private person, investment gold is treated like other investment products: capital tax is applied with capital gains. Thus also potential capital loss can be deducted.
*translation by Jalonom