What the law states

The sale and purchase of investment gold in Cyprus are governed by a very specific and favorable legal and tax framework, which is fully aligned with the European Directive on the Special Scheme for Investment Gold (incorporated into Article 42A of the Value Added Tax Law 95(I)/2000).

• Legal Definition of "Investment Gold"

For an item to fall under these special provisions, it must strictly satisfy the following criteria:

1. Gold Bars / Ingots / Wafer / Coins: Gold in the form of a bar, ingot, or wafer with a purity (fineness) of at least 995 thousandths (24 carats / 99.5%)

   
   

2. Gold Coins: Coins with a purity of at least 900 thousandths (21.6 carats / 90%), minted after 1800, which are or have been legal tender in their country of origin, and are sold at a price that does not exceed the open market value of the gold contained in them by more than 80%.

(Note: Common second-hand jewelry, e.g., 18K or 14K, is not considered investment gold).

• Full VAT Exemption

1. Zero VAT (Exemption): The supply, intra-Community acquisition, and importation of investment gold in Cyprus are fully exempt from VAT
2. This exemption applies to sales between private individuals and dealers, as well as transactions between businesses
3. The services of agents/intermediaries acting in the name and on behalf of another party for the sale of investment gold are also exempt.

• Obligations of Dealers & Anti-Money Laundering (AML)

Despite the VAT exemption, the buying and selling of investment gold are closely monitored for Anti-Money Laundering (AML) purposes:

1. Customer Due Diligence (KYC): For any investment gold transaction (especially when it exceeds statutory cash limits or €10,000), the dealer is required to record and verify the identity details of the buyer/seller
2. Record Keeping: Dealers in investment gold are required to retain all invoices, identification documents, and transaction logs for at least 5 years
3. Reverse Charge Mechanism: In cases where a business entity opts (under a specific legal right) to tax the transaction, or when raw gold/gold ores are sold to another taxable person, the VAT is accounted for by the buyer rather than the seller.

• 4. Income / Capital Gains Taxation for Individuals

For private individuals in Cyprus, purchasing investment gold and later reselling it at a profit is not subject to Capital Gains Tax, as this tax in Cyprus applies exclusively to immovable property (and shares of companies owning immovable property).

However, if this activity is conducted on a commercial/professional basis (systematic gold trading), the profit is taxed as business income.

References:

Laws