THE GOLD

The fascination with gold began approximately 6,000 years ago. The first mining operations date back to ancient Egypt, around 3000 BCE.

Today, the global gold reserves are estimated at 218,000 tons.

It is estimated that only 50,000 to 65,000 tons of gold remain to be extracted, representing 20 to 25% (source: World Gold Council).

France reauthorized gold trading after World War II, limiting it to physical gold products listed on the Paris Stock Exchange. Official listing began in 1948 and ended on Euronext in 2004.

Total annual gold demand has exceeded 18,600 tonnes over the past five years. This demand stems primarily from jewelry (approximately 60%), industrial applications (a stable 12%), particularly in the new technology sector, such as electronics and nanotechnology, and investment gold. Demand for investment gold has been growing steadily for the past seven years and now represents between 20% and 30% of total demand. In 2024, total investment gold demand reached over 1,100 tonnes, an increase of more than 25% compared to 2023.

Since 2008, there has been a significant surge in investor interest in gold following the collapse of Lehman Brothers.

Investing in gold plays a significant role in the wealth management strategies of many Europeans, who primarily see it as a safe haven against economic uncertainties, inflation, and geopolitical crises. Traditionally associated with stability and preserving purchasing power, gold attracts both individual savers and institutional investors. Since the 2008 financial crisis, its appeal has grown, particularly during turbulent periods such as the 2020 pandemic and recent geopolitical tensions. In Europe, investment takes several forms: physical gold (bullion, coins, jewelry) held for its tangible security, but also “paper” gold through financial products such as ETFs or certificates. In a context of often low or negative real interest rates, gold remains perceived as insurance against currency depreciation. Overall, for many Europeans, it represents a cornerstone of diversification and long-term wealth protection.

In Europe, gold occupies a special status: it is generally considered a distinct asset class, straddling the line between financial investment and safe haven. Its taxation is largely harmonized at the European level, although each country retains its own tax mechanisms.

What is considered “investment gold”?

The European directive defines investment gold very precisely. To qualify for VAT exemption, a product must fall into one of the following categories:

1. Gold bars and ingots

• Purity of at least 995/1000
• Weight recognized by international markets (1 kg, 100 g, 50 g, 1 ounce, etc.)

2. Gold coins

Coins must simultaneously meet the following conditions:

• Purity of at least 900/1000
• Minted after 1800
• Having been or being legal tender in their country of origin
• Being sold at a price not excessively exceeding the value of the gold they contain

VAT: a largely harmonized framework

Since the 1998 European directive, investment gold has been exempt from VAT in the European Union.
This exemption applies to both purchase and sale, thus facilitating trade within the European market.

However, gold not classified as “investment gold” (jewelry, costume coins, gold objects, undersized ingots, etc.) remains subject to VAT in most countries.

Capital Gains Tax: Varies by Country

Capital gains tax differs from one country to another:

• Some countries apply standard capital gains tax on securities (as with stocks).
• Others use a flat-rate system calculated on the sale amount.
• Some offer allowances based on the holding period.
• Still others, such as Germany, may completely exempt capital gains after a certain holding period.

Thus, a European investor may encounter very different tax regimes depending on the place of purchase, storage, or resale.

For example, in Luxembourg, capital gains on investment gold (physical or precious metals) are not taxed under current legislation. In other words, there would be no direct capital gains tax on the sale of physical gold under certain conditions.

Luxembourg is often cited as an “attractive” country for investment gold due to this potential capital gains tax exemption. However, as with any asset, it is strongly recommended to keep proof of purchase (invoices, certificates, proof of ownership) in case the tax authorities request evidence of the purchase price or the nature of the asset.

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