Private Disposal Transaction

The private disposal transaction (colloquially still often referred to as "speculation tax") is governed by § 23 of the German Income Tax Act (EStG). It covers profits that private individuals realise from the sale of certain assets – and it is relevant to every precious metal investor who buys and subsequently sells physical gold, silver, or other metals.

Core Principle: The Holding Period Decides

The heart of § 23 EStG is the one-year rule: if precious metals are sold at a profit within one year of purchase, that profit is taxable as miscellaneous income. After the one-year period has elapsed, the disposal gain is tax-free – regardless of the amount of the gain.

The period begins on the date of the purchase contract (not delivery or payment) and ends on the date of the sale contract.

What Counts as a Disposal Gain?

The taxable gain is calculated, in simplified terms, as follows:

Disposal gain = Sale price − Acquisition costs − Deductible expenses

Acquisition costs include not only the purchase price but also direct ancillary costs such as postage, insurance premiums during transit, or bank charges for the purchase. Deductible expenses include safe-deposit box fees, custodial fees, or advisory costs that can be attributed to the sale.

If multiple tranches of the same metal were purchased at different points in time, the FIFO principle (First In – First Out) applies for tax purposes: the units acquired first are deemed to have been sold first. This can be relevant to determine whether the one-year holding period has already elapsed for a given lot. More information can be found in the entry on the FIFO Principle for Precious Metal Sales.

Tax-Free Allowance of 1,000 Euros

Gains from private disposal transactions remain entirely tax-free if the total gain from all such transactions in a calendar year does not exceed the tax-free allowance of 1,000 euros (up to the 2022 assessment period: 600 euros; from the 2023 assessment period: 1,000 euros pursuant to the Annual Tax Act 2022). Important: this is an allowance threshold, not an exemption amount – if it is exceeded by even one euro, the entire amount becomes taxable.

Loss Offset

Losses from private disposal transactions may only be offset against gains from other private disposal transactions in the same or future assessment periods. Offsetting against other types of income (e.g. employment income) is not permitted. Unrecouped losses can be carried forward to subsequent years via a loss carryforward; a loss carryback to the previous year is excluded by statute for § 23 EStG – unlike other types of income – (§ 23 para. 3 sentence 8 EStG).

Distinction from Withholding Tax

The withholding tax (25% plus solidarity surcharge and, if applicable, church tax) applies to capital income such as dividends or interest. Gains from the sale of physical precious metals, however, fall under § 23 EStG and are taxed at the personal income tax rate – which, depending on total income, can be significantly higher. Further distinctions are discussed under Withholding Tax and Precious Metals.

Practical Notes

• Retain purchase receipts and sale receipts for at least seven years (statutory retention obligation for tax purposes).
• For over-the-counter cash transactions (cash payment without a custody account), the documentation obligation rests with the buyer.
• For cash transactions of 2,000 euros or more, the Anti-Money Laundering Act applies, requiring identity verification (§ 10 para. 6a GwG).
• Historical precious metal prices can help reconstruct the acquisition cost if receipts are missing – however, only a verifiable receipt is recognised for tax purposes.

The potential tax effect of a sale within the one-year period can be estimated in advance using the Tax Estimator.

Note: This article is for general information purposes only and does not constitute tax or legal advice. For your individual tax situation, please consult a qualified tax adviser.

In Brief

Physical precious metals may be sold tax-free after a holding period of one year; for shorter holding periods, § 23 EStG applies with a tax-free allowance of 1,000 euros per year. Accurate documentation of purchase and sale dates is essential.