Withholding Tax and Precious Metals

Germany's Abgeltungsteuer (flat-rate withholding tax) was introduced on 1 January 2009 and taxes income from capital assets – interest, dividends and realised capital gains on securities – at a flat rate of 25 % plus solidarity surcharge and, where applicable, church tax (effectively approx. 26.375 % or approx. 27.99 % with church tax). For investors in gold, silver and other physical precious metals, however, different tax rules apply that can be considerably more favourable.

Physical Precious Metals: Outside the Scope of Withholding Tax

Bars, coins and granules of physical precious metals are not capital assets within the meaning of § 20 EStG. Gains from their sale are therefore not subject to withholding tax, but instead fall under private disposal transactions pursuant to § 23 EStG. This means:

• If the holding period is more than one year, the gain is fully tax-free – regardless of the amount.
• If the holding period is less than one year, the gain is subject to the individual income tax rate (not the flat withholding tax rate of 25 %).
• A tax-free allowance of €1,000 per year applies (from the 2023 assessment year; previously €600) across all private disposal transactions combined.

Comparison: Physical Metal vs. Paper Gold

Note: Certain physically backed ETCs (e.g. Xetra-Gold, Euwax Gold II) also benefit, in the view of the tax authorities, from the one-year rule, since an individual right to delivery of physical metal exists. The tax classification of individual products may change – always consult the current issuance prospectus and, if in doubt, a tax adviser.

Calculating the Taxable Gain

Where a sale occurs within the one-year period, the taxable gain is:

Disposal gain = Sale proceeds − Acquisition costs − Ancillary costs

Deductible ancillary costs include dealer commissions, minting premiums and transaction fees. Where the same metal has been purchased multiple times, the FIFO principle (First In, First Out) applies: the units acquired first are treated as sold first – relevant for calculating the holding period and the cost basis. The historical gold price at the time of purchase can be found in the price archive.

Loss Offsetting

Losses from private disposal transactions (e.g. a sale at a loss within the one-year period) may be offset only against gains from the same category of income – not against income from capital assets or other categories of income. Carrying losses forward to future years is permitted.

Practical Recommendations

1. Keep purchase receipts – document the date, quantity, cost price and ancillary costs for each transaction.
2. Track the one-year period – a single day's difference determines whether a gain is tax-free or taxable.
3. Make use of the tax-free allowance – for small gains within the one-year period, utilise the €1,000 allowance.
4. Choose products consciously – physical metal and physically backed ETCs with a delivery right differ fundamentally in their tax treatment from paper-based gold ETFs.

The tax impact on your return can be estimated using the tax estimator. For a long-term investment strategy, the savings plan calculator helps to illustrate the cost-averaging effect.

Not a substitute for tax or investment advice. Individual tax consequences depend on personal circumstances – please consult a tax adviser.

In Brief

Physical precious metals are not subject to withholding tax: after a holding period of at least one year, disposal gains are fully tax-free. For shorter holding periods the individual income tax rate applies – the flat withholding tax rate of 25 % does not apply.