When we buy investment gold, the main motivation is mostly safe savings and stable value. Gold has proven many times over the past decades that it has held its value steadily and can provide a tangible shelter in times of crisis. But buying is only the first step. It is equally important to be aware of domestic tax rules, as these will determine what you have to do when you later sell the bullion or coins you hold.
To move confidently on the subject, it is worth looking at what Hungarian law calls investment gold, the benefits of VAT exemption and how to calculate the tax payable on the sale.
What is investment gold in Hungary?
A bar or plate is considered to be investment gold if it is at least 995 thousandths pure and weighs 1 gram or more. This condition practically covers the vast majority of classic gold bars on the market. When you see the 999.9 mark on a product, you can be sure that the purity meets the investment grade standards.
The situation is slightly more complex for gold coins.
A coin is considered investment gold if it is at least 900 thousandths pure, has been legal tender in the country and is not of purely collector value. One condition is that its market value does not significantly exceed the value of the gold it contains.
The legislation states that the market price of a coin cannot be higher than the price calculated from the precious metal content of the coin, 80%. If a coin circulates for more than this, it is considered a numismatic piece rather than investment gold.
What are the benefits of VAT exemption?
A investment gold one of its biggest advantages is that it is VAT-free at the time of purchase.
In practice, this means that the purchase price does not include domestic VAT, so the gold is available at a much lower price than a conventional product. However, the VAT exemption is not automatic, it is only available if the item purchased meets the requirements for investment gold. For this reason, it is very important to keep the documents to prove that the product is indeed in this category.
For buyers, this is an extra assurance that if a gold bar or coin meets the criteria, it ensures that the Market will also be easier to sell. Most dealers will only buy back standardised items.
Sales and income tax (VAT)
When we sell our physical investment gold, the law is clear.
Under Section 58 of the Income Tax Act, income from such a transaction falls into the category of income from the transfer of movable property. This may seem complicated at first sight, but once you understand the logic it is easy to understand.
The best situation is when we can prove the acquisition value. Then our income is simply the difference between the selling price and the purchase price. If, for example, we sell a gold bar that we previously bought for HUF 800 000 for HUF 1 000 000, our income is HUF 200 000. This is the amount to be taken as a basis and on this we calculate the personal income tax 15%.
However, if you do not have the invoice or any supporting documents, the law applies a less favourable rule.
In this case, 25% of the sale price is considered as income, so without papers you pay tax not on the actual gain but on an automatically determined part.
So if you receive HUF 1 000 000 for the sale, the law considers HUF 250 000 as income, on which the 15% tax is added. This means a tax payable of HUF 37 500.
Taxation of gold: when is no tax due on the sale of gold?
It's worth knowing that if your total income from the sale of movable property in a given year does not exceed HUF 200 000, you will not have to pay tax. And if the annual income is less than HUF 600 000, no income will be assessed, i.e. such transactions do not need to be included in the tax return.
At the same time, it is important to be clear about what happens when these limits are exceeded. If, for example, we have a combined income of HUF 4 000 000 from several sales during the year, we will have to declare this in full on our income tax return and the amount will be subject to 15 % tax. In this case, we will pay HUF 600 000 tax.
But the good news is that there are no other taxes, so you don't pay any social security contributions, social insurance contributions or any other charges on the income from the sale of gold. The rule is simple: if your income exceeds HUF 200 000, you only have to pay the 15 % personal income tax, nothing else.
The difference between an invoice and no invoice can easily be measured in hundreds of thousands of euros, so keeping documents pays off in the long run. Since investment gold is not subject to the supervision of the MNB, the trader does not deduct tax for you. It remains our responsibility to file the tax return and pay the tax.
It is therefore worth checking what paperwork you have in place before any sale, and if it is a significant sale, consulting a tax adviser to make sure you are using the right rule.
Frequently asked questions about the taxation of investment gold
When selling investment gold, the same questions often arise, especially regarding the calculation of income and the obligation to declare it. The answers below will help you quickly understand what to look out for before selling a gold bar or coin.
No need. Investment gold is fully exempt from VAT if it meets the purity and form requirements laid down in the legislation. It is therefore important to always buy from a reliable distributor and to keep your invoice.
The most important document is the purchase invoice, because it proves the purchase price. If this is not provided, the 25% rule automatically applies, resulting in a higher tax base.
15% of the income is payable as income tax. The income is either the actual profit (sale price minus purchase price) or, in the absence of an invoice, 25% of the sale price.
In this case, no tax is payable. The limit applies to income, not earnings.
In such cases, no income is assessed, i.e. such sales do not have to be included in the tax return.
No. Investment gold is not supervised by the MNB, so the trader does not deduct tax. It is always our responsibility to file the tax return and pay the tax.
No. When you sell gold, the income is subject only to income tax, no other taxes apply.