Gold Tax Rate "Deterring Investor Sales" in France

France's complex tax regime asks for documents which 80% of owners don't have...

 

GOLD TAX rates in France are a worsening issue for private citizens holding the metal, according to a new survey.

 

A study published earlier this year said gold was considered the most profitable asset after real estate and life insurance, as good as equities and better than traditional saving accounts such as Livret A or Livret d’Epargne Logement.

 

But in a new study, published last month, investors say gold drops from third to seventh place on the list of most attractive assets when they account for France's new gold tax rate.

 

In January 2014, the tax on sales of investment gold rose from 8% to 10.5% of the realized value. Alternatively, investors can pay tax on the capital gain alone, charged at 34.5% of their profit. But to choose between the two, French gold investors must be able to offer proper documentation, showing the time of purchase, plus gold coin or bar identifications.

 

Few people owning gold in France say they bought it themselves. Instead, 45% inherited it and 35% received it as a gift, according to pollster agency Ipsos/Steria, which surveyed gold owners on behalf of French gold-market intermediary CPoR Devises.

 

This phenomenon – stemming from war-time hoarding over the 19th and early 20th centuries of what some analysts call "rabbit gold", because it was often buried for safe-keeping –  meant private French citizens were net sellers of gold throughout the 1980s, 1990s and most of the 2000s, as younger generations came into possession of family-held bullion.

 

Today, in contrast, the higher tax rate charged on disposals without full documentation is deemed to be a major deterrent to selling the yellow metal, said 76% of respondents to November's Ipsos survey.

 

With documentation needed to avoid the higher tax rate – charged on the total value of a sale – some 74% of French gold holders responding to the survey said they think it unfair.

 

The survey further claims that 12% of the French population owns gold coins or bars, typically Napoleon coins or kilo-bars, totaling an estimated value of £71 billion. Gold investment is usually considered a long-term position, meaning more than ten years.

 

The popular 20 Franc Napoléon gold coin has now lost almost 25% of its Euro value since the start of 2013. Despite the recent gold price drop however, 26% of French people are still ready to buy gold bars or coins as a secure investment or in the hope of making a profit, according to the poll.

 

Net consumer gold demand during the 12 months to the end of Q3 2014 rose very slightly in France, according to leading data source Gold Demand Trends. Published in mid-November by market-development organization the World Gold Council, and using data produced by consultancy Thomson Reuters GFMS, it says private French demand for gold coins and bars reached 2.0 tonnes from 1.9 tonnes during the previous 12 months.

 

By Thomas Podvin