Legal Framework for Gold: The VAT Exemption on Investment Gold

Gold coin with Australian kangaroo design, 1 kg of pure gold, 2010 vintage, premium quality.

What qualifies as investment gold, and what is its VAT status?

Investment gold is defined as:

• gold bars, ingots or wafers with a minimum fineness of 995 thousandths, weighing more than 1 gram,
• gold coins minted after 1800 with a minimum fineness of 900 thousandths.

For investment gold coins, the VAT exemption is further conditional on the coin being issued as legal tender in its country of origin, and on the selling price not exceeding the current spot price of gold by more than 80% (market price). Investment gold therefore means VAT-exempt gold bars or gold coins. For bars, a key condition of the exemption is that the gold purity must be 99.5% or higher. The taxation of investment gold was harmonized across the European Union from the year 2000. The EU's objective in making investment gold VAT-exempt was to facilitate gold savings for European citizens.

Hungary adopted the investment gold VAT exemption rules following its EU accession in 2004, as part of the harmonization of Hungarian and EU law. The relevant provisions are set out in sections 234-243 of Act CXXVII of 2007 on Value Added Tax.

Investment gold bars and ingots

Investment gold bars, ingots and wafers are most commonly produced from fine gold, meaning gold of 99.99% purity. This is the origin of the term: four nines gold. Gold bars are typically manufactured by precious metals refineries. The size range starts at 1 gram wafers and extends up to 400-ounce bars. Numerous mints and refineries produce gold bars. For a list of accredited bar manufacturers, the London Bullion Market Association (LBMA) website is the authoritative source. The LBMA maintains the Good Delivery List and oversees compliance with its quality standards.

In Europe, the most popular gold bar products come from Swiss manufacturers (Argor, Valcambi, Metalor, PAMP), the German refinery Heraeus, and the Belgian refinery Umicore. In the United States and Canada, the leading products are from the same Swiss refiners, as well as Asahi and the Royal Canadian Mint. In Australia, Perth Mint bars are the most sought after.

Unlike gold coins, the bar market exhibits a degree of regionality. American manufacturers, for instance, find it difficult to break into the European market. Swiss refiners enjoy the broadest global recognition, with Valcambi, Argor and PAMP maintaining a significant presence in Far Eastern markets as well.