Tax treatment of Gold ETFs (eg. GLD)

Derek Maloney

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Hi,

I understand that currently U.S. domiciled ETFs such as SPY can be treated as regular shares with respect to CGT and dividend income. Is the same true for Gold ETFs such as GLD? Is there any issue with the underlying physical gold in such ETFs causing this type of investment vehicle being treated as a "collectible"?
 
Typically, such investments (i.e. Commodity ETFs, ETCs) are treated like shares regardless of where they're domiciled.
 
Thanks for the quick reply Gordon.

I was thinking that. Then I heard a throwaway comment on a Bloomberg interview recently saying to watch out for the tax treatment of gold as "collectibles". This comment was intended for a U.S. audience but a bit of googling revealed this (3 year old) article that mentions

"Profits from investments in ETFs that back their shares with physical holdings of precious metals face taxes as high as 28 percent for investments held at least a year. That’s the rate the U.S. Internal Revenue Service applies to items it considers “collectibles,” such as coins, art, silver and gold."

(Article source: I don't meet the min reqs to post a link here but if you google "gold-etf-sellers-facing-tax-surprises-at-28-gains-rate" then it should be the first link. It's a bloomberg article).

So I don't know what the implications are for an Irish resident trading GLD. What would the tax treaties with the U.S. mean in this situation?
 
Income and gains made by an Irish resident wouldn't be taxable in the US...that article wouldn't be relevant.
 
Okay. I guess I don't have a full understanding of the implications of the Double Taxation Treaty between Ireland and USA.

I wasn't sure if in situations like this you had to pay some/all of the U.S. taxes due first and then that was allowable against your Irish taxes. But based on your answer that wouldn't be the case in this situation.

Thanks.
 
The taxation of EFTs is overtly complicated and are only treated as shares in certain circumstances (by the Revenue in any event). There is a link below to the Revenue's view and a pdf attached.

[broken link removed]
 

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  • exchange-traded-funds-guidance-note (1).pdf
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@dublin66 Thank you very very much for that link. From reading the two pdfs the revenue has provided at that link, my understanding of the tax treatment of U.S. domiciled ETFs such as SPY would appear to be correct - they can be treated as regular shares with respect to CGT and dividend income because they are not Irish domiciled ETFs and they are non UCITs based ETFs (thankfully!). Section 5 of the guidance note extends this type of tax treatment to ETCs (eg. GLD). So the good news would appear to be that regular U.S. shares, U.S. domiciled ETFs and U.S. domiciled ETCs all are treated the same for tax purposes - income tax on dividends and CGT on gains. The physical gold ETC of GLD would appear to be fair game to trade as a simple instrument.

That link was really useful.
 
UCITS funds cannot directly hold physical metals such as gold. European domiciled products, such as iShares Physical Metals plc, are actually structured as (zero coupon) debt instruments and are taxed accordingly (ie under the normal CGT regime - gold does not produce an income).
 
Thanks @Sarenco. That's a good point you make - that as UCITS physical metals don't generate any income the income tax treatment of them is irrelevant. The only point I'd stress again for anyone reading this is that I am talking only about non-UCITS fund, in particular GLD. Your point still holds for GLD as (as far as I am aware) it does not generate a dividend income either.
 
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