Tax implications in Germany when selling Gold (XAU).

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I think it’s important for your german customers to know that exposure in gold (XAU) has tax implications.

Here is a translated excerpt of a post:

" […] The argument would be different if, similar to the Wisdom Tree Gold Bullion (see the 2020 Federal Fiscal Court ruling), Revolut actually allows investors to individually own portions of commodities. This would need confirmation from Revolut. In this case, it wouldn’t be subject to capital gains tax, and the entire investment would be considered a commodity investment. However, I cannot find this in Revolut’s description."

Revolut Support states the following: “Revolut is not allocating individual Precious Metals accounts at this time. Once purchased, the Precious Metals are securely stored in a ‘pooled’ account. We maintain our own internal ledger, which records your exposure that is reflected in the Precious Metals account in your Revolut app”

Given this statement, the court ruling of 2020 does not apply and you need to pay capital taxes on your gains when selling XAU.

This makes it very unattractive to buy gold or other metals which, when bought physically, can be sold tax free in Germany after a year.

This means that when you buy physical Gold in Germany, you only have to hold it over a year to realize gains tax-free. When you buy Gold with Revolut, you need to pay 25% taxes on gains, making it much less of a good investment.

All German users would benefit from it if Revolut could change their system in a way that allocates physical gold to individual users.

That’s probably not going to happen, but I thought maybe it’s worth considering / knowing.

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Here’s a question: owning and storing are two different things. Revolut does not allocate individual accounts, but gold is individually and identifiably allocated to an owner, no?

Revolut’s stock trading account (for EEA customers) works in a similar way. Stocks are held in a pooled brokerage account. Gains from stock trading are, of course, subject to taxation, independently from individual or pooled storage.

Here’s what I find conflicting: Once purchased, the Precious Metals are securely stored in a ‘pooled’ account.

So physical Gold is stored. How about individual allocation?

We maintain our own internal ledger, which records your exposure

The German text:

Die Argumentation würde anders verlaufen, wenn analog zum Wisdom Tree Gold Bullion (siehe BFH-Urteil aus 2020) tatsächlich Revolut dem Anleger individuell zuordenbare Anteile an Rohstoffen verwahren läßt.

the English translation from your post:

The argument would be different if, similar to the Wisdom Tree Gold Bullion (see the 2020 Federal Fiscal Court ruling), Revolut actually allows investors to individually own portions of commodities.

This seems to be a faulty translation. The German author writes individually allocated, not individually owned.

So we established that Revolut does store (via a third party) physical precious metal. The question would be, based on the argument from the German author, if Revolut stores individually identifiable and individually allocated pieces of precious metal. And to me it sounds this requirement is met.

Storing stuff in pooled accounts is no indication for not owning. Think of how lawyers can hold funds in the name of third parties. Or how Revolut stores all the money of their customers in the UK. With its e-money license, all funds of UK customers are stored in pooled accounts with third party banks. Revolut then keeps the record of the funds allocation in their own ledger. The money is still legally owned by Revolut’s customers.

So, bottom line is I am not fully convinced that the requirements for tax benefits aren’t met, based on the arguments presented here. (I did not conduct my own research.)

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I’m neither a lawyer nor a tax consultant, so I have very limited knowledge and it’s difficult to find information online.

I think the problem is the pooled gold. Say they store a 1KG gold bar. If a user owns 1g of it, that’s denoted in their ledger, but there’s no 1g gold bar allocated to that individual. There only exists a 1KG gold bar. The users own a share of that 1KG gold bar, but they don’t have a physical gold bar allocated to them. To make this possible Revolut would have to have 1000 x 1g bars and individually allocate them to the user.

I assume that’s possible even with a third party managing the physical gold, but it would probably be more costly due to the increased need for small bars.

I am not entirely convinced either and you could probably go to court and win, if you’re lucky or have a good lawyer.

It’s definitely something one has to be aware of. I’m entirely unsure how I would add this to my tax declaration. Not sure if it’s illegal to declare it as physical gold.

On the other hand, it would be a shame to pay 25% taxes if you wouldn’t have to.

Until I have a definitive answer to this I probably won’t buy more gold or silver on Revolut.

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I did not conduct my own research. I was just looking if the arguments hold up.

The German author says that the following requirements should be met for the exception:

  • Revolut indeed lets a third party store physical precious metal
  • Shares of it are individually allocated (not “owned” or “stowed away”).

The author refers to shares, not pieces.

Those two requirements seem to be literally addressed in Revolut’s statement:

Revolut is not allocating individual Precious Metals accounts at this time. Once purchased, the Precious Metals are securely stored in a ‘pooled’ account. We maintain our own internal ledger, which records your exposure that is reflected in the Precious Metals account in your Revolut app.

Based on the presented statements, I would argue the 2020 ruling should apply.

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I would argue the same way. The question is if that holds up in court.

Is this something I can ask a lawyer or would I need to hire a tax consultant? I can try and call legal insurance.

I will update the post accordingly once I have reliable information. If someone from Germany has gold on revolut and a tax consultant he could ask, that would be very helpful.

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The author does not address the question of account pooling. Tax consultants should be able to help out here (some of them are lawyers: “Fachanwalt für Steuerrecht”). But not every tax consultant will have experience with this.

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So I talked over an hour to a lawyer specialized in tax law and we worked through the court ruling of this 2020 case:

The essence is that as long as Revolut is obliged to buy physical gold from the majority of the capital made available to them. It’s considered a benefit in kind and not a capital benefit and is considered equivalent to buying and selling physical gold.

Edit: Apparently the lawyer wasn’t aware of another ruling in 2021 (see link below). This ties the physical delivery of gold to tax excemption.

This means you indeed have to pay 25% capital gain tax if you sell gold in Germany which was bought through revolut.

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Thanks for the update.

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There is another ruling of the BFH which is more explicit.

Please see 12. April 2021, VIII R 15/18

This explicitly states that the discriminating factor is the physical delivery of gold which is requirement to be exempted from capital tax as per § 20 Abs. 2 Satz 1 Nr. 1, Abs. 4 EStG

This unfortunately means that unless Revolut offers to physically deliver you the gold you bought you need to pay capital gain taxes once you sell your XAU.

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I am not sure. It’s an ETF. The court says “Nach § 19 Abs. 3 InvStG 2004 sind Gewinne aus der Rückgabe oder Veräußerung von Anteilen an einer Kapital-Investitionsgesellschaft, die nicht zu einem Betriebsvermögen gehören, als Einkünfte i.S. des § 20 Abs. 2 Satz 1 Nr. 1 EStG zu besteuern.”

The court considered gold here a “special asset” (Sondervermögen). The plaintiff didn’t invest in gold but in an investment vehicle (Kapital-Investitionsgesellscaft) that exclusively invested in gold.

Similar to how real estate funds (almost) exclusively invest in real estate. You’re not investing in real estate but in “company shares” of a company that owns real estate. (I am simplifying.)

It’s not clear to me how and if this relates to Revolut’s gold investment product. The ruling lists the right to have physical gold delivered. But the main argument seems to hinge on the legal setup of the investment vehicle as an ETF, an exchange traded fund. Investments in gold with Revolut aren’t publicly traded.

I don’t think this ruling can be applied in full. The court might come to a similar conclusion in Revolut’s case, but there are considerable differences that might make a difference.

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I see your point. But that ruling explicitly references two other cases which weren’t ETFs but bearer bonds. The second reference case is exactly like the Situation we have with revolut with the only difference being the right to physical delivery.

Honestly, I think this would be something that requires another ruling by the BFH, but in case you realize gains >10 k there’s a chance the tax office might sue you. If you lose the case you need to pay 25%+ and court fees.

Not sure if it’s worth the risk. I’d rather buy physical gold until someone goes to court with this or until revolut adds delivery.

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