Tax-Free Allowance (Capital Gains)

Anyone who sells physical precious metal — gold, silver, platinum, or palladium — at a profit inevitably asks: do I have to pay tax on this? The answer depends on two factors: the speculative holding period and the tax-free allowance. The latter exists to prevent minor profits from creating disproportionate tax burdens.

Legal Basis

Profits from the sale of physical precious metals fall under private disposal transactions pursuant to § 23 para. 1 no. 2 EStG (German Income Tax Act), provided less than one year has elapsed between purchase and sale. After this one-year period has elapsed, profits are tax-free – regardless of their amount.

If the one-year period is not observed, taxation applies at the personal income tax rate. This is where the tax-free allowance comes into play: if all private disposal profits in a tax year together fall below the threshold, the tax liability is entirely waived.

Important: This is a tax-free allowance (Freigrenze), not a tax-free amount (Freibetrag). If it is exceeded by even one euro, the entire profit becomes taxable – not just the amount above the threshold.

Development of the Allowance

The increase to 1,000 euros was introduced by the Annual Tax Act 2022 (JStG 2022) and applies to sales from 1 January 2023.

Calculating the Capital Gain

The taxable profit is calculated as follows:

Capital Gain = Sale Proceeds − Acquisition Costs − Deductible Expenses

Acquisition costs include the purchase price plus all ancillary costs (shipping, insurance, bank fees, premium). Deductible expenses can include, for example, a proportionate share of safe or storage costs. When multiple tranches are purchased, the FIFO principle (First In, First Out) applies: the units purchased first are deemed to have been sold first.

Practical Example

1. Purchase of 50 g of gold in March 2025 for 4,200 euros (including ancillary costs).
2. Sale in September 2025 for 4,900 euros (holding period < 1 year).
3. Profit: 700 euros — below the tax-free allowance of 1,000 euros → no tax liability.
4. Had the profit been 1,100 euros, all 1,100 euros would be subject to tax at the personal income tax rate.

The current gold price and price trends shown in the historical price history can help you choose the right time to sell. The tax estimator also provides a useful projection.

Special Features and Common Mistakes

• Cross-year profits: The allowance is assessed per calendar year. Losses from other private disposal transactions (e.g. foreign currencies) can be offset, but only within the same category of income.
• Loss offsetting: Losses from private disposal transactions cannot be offset against other types of income; they can only be offset against equivalent profits in the same or future years.
• Multiple positions: Anyone who sells both gold and silver in the same year must add up all profits and losses under § 23 EStG. Only the total is compared with the allowance.
• Withholding tax does not apply: For physical precious metals, the flat-rate withholding tax (25%) does not apply; instead, the individual income tax rate applies – which can be advantageous or disadvantageous.
• Documentation obligation: Purchase receipts, invoices, and bank statements should be retained for at least ten years.

In Brief

The tax-free allowance of 1,000 euros (since 2023) protects smaller precious metal profits from income tax – but only as long as the one-year holding period has not been observed and the threshold amount is not exceeded. Anyone holding larger positions or trading regularly should carefully document purchase and sale data and, if in doubt, seek tax advice. This article does not replace individual tax advice.