With gold prices setting record highs day after day, investor fervor remains strong, with money pouring into gold exchange-traded funds (ETFs).
However, even though domestic gold ETFs are local products, unlike domestic equity ETFs, capital gains are subject to dividends income tax (15.4%). Because of this, advice is that using a tax-advantaged account or investing through a securities firm's gold spot account is favorable from a tax perspective.
According to Koscom ETF Check on Oct. 21, gold-related products surged into the top ranks of ETFs most net bought by retail investors last week (Oct. 14–20). The ACE KRX Gold Spot ETF (129.3 billion won) ranked third, while the TIGER KRX Gold Spot ETF (98.9 billion won) and the KODEX Gold Active ETF (97.1 billion won) placed fifth and sixth, respectively.
As gold prices continue to soar and one-month returns on gold-related ETFs surpassed 20%, buying appears to have intensified. Major investment banks (IBs) such as JPMorgan and Goldman Sachs expect gold to rise to $4,800 per ounce.
However, despite the growing popularity of gold ETFs by the day, guidance on taxation remains insufficient. Recently, Toss Securities caused confusion among investors by indicating within its mobile trading system (MTS) that no taxes are levied when trading gold ETFs. Toss Securities said it would bolster detailed page descriptions by distinguishing between domestic equity ETFs and other ETFs.
Gold ETFs listed in Korea are classified as commodities and, unlike domestic equity products, capital gains are subject to a 15.4% dividends income tax. In addition, overseas-listed gold ETFs such as SPDR Gold Shares (GLD) are tax-exempt up to 2.5 million won per year, but gains beyond that threshold are subject to a 22% capital gains tax (separate taxation), warranting caution.
For that reason, using a brokerage-type individual savings account (ISA) is advantageous from a tax-saving perspective when investing in gold ETFs. Profits earned through an ISA are tax-exempt up to 2 million won (4 million won for the low-income type), and amounts exceeding the threshold are subject to separate taxation at 9.9%. However, tax benefits are available only after three years from account opening, and overseas-listed ETFs cannot be included.
Experts assess that investing through a securities firm's gold spot account is the most advantageous in terms of tax benefits. A gold spot account allows investors to buy and sell gold in 1-gram units like stocks on the KRX gold market, and both capital gains tax and dividends income tax are exempt, which is considered the biggest advantage. The trading fee is about 0.3%.
An official at a securities firm said, "In the case of a gold spot account, as long as you do not withdraw in physical form (gold bar), value-added taxes (10%) are exempt and no additional taxes or expense arise," adding, "However, the so-called 'kimchi premium' risk—where domestic gold prices run higher than international prices—requires caution."