The definition of investment gold is given in Article 1 of Law No 7 of 17 January 2000

Art. 1. (trade in gold)

1. For the purposes of this Law the term "gold" means

(a) investment gold, meaning gold in the form of bars or wafers of a weight accepted by the bullion market but in any event greater than 1 gram, of a purity equal to or greater than 995 thousandths, whether or not represented by securities

gold coins of a purity equal to or greater than 900 thousandths, minted after 1800, which are or have been legal tender in the country of origin, normally sold at a price not exceeding 80 per cent of the open market value of the gold contained therein, included in the list drawn up by the commission of the European communities and published annually in the "c" series of the official journal of the European communities, as well as coins having the same characteristics, even if not included in the aforesaid list; a decree of the Minister for the Treasury, Budget and Economic Planning shall lay down the procedures for the transmission to the commission of the European communities of information on the coins traded in the Italian state that satisfy the above criteria;

(b) gold material other than that referred to in (a), for mainly industrial use, whether in the form of semi-finished products of a purity equal to or greater than 325 thousandths or in any other form and purity.

2. Whoever disposes or effects a transfer of gold from or to abroad, or a trade in gold within the national territory, or any other transaction in gold, even free of charge, shall be obliged to declare the transaction to the Ufficio Italiano dei Cambi, if the value of the same is equal to or greater than 20 million lire. The obligation to declare is also incumbent upon the professional operators referred to in paragraph 3, whether they operate on their own account or on behalf of third parties. Transactions carried out by the Bank of Italy are excluded from this provision.

Thanks to Law No. 7/2000, the monopoly of the gold market by the Ufficio Italiano dei Cambi has been abolished and Italian residents may purchase and sell investment gold without VAT. Buying and selling, if not carried out professionally but as part of an investment/asset protection strategy, is free. Any sales, according to Art. 1 paragraph 2 of Law 17.01.2000, No. 7 must be declared to the financial information unit (UIF ex UIF) of the Bank of Italy. Not for nothing does the term 'anyone' indicate that no distinction is made between economic operators and private individuals, but that any transaction in excess of EUR 12,500.00 must be declared.

Taxation

The buying and selling of investment gold can generate capital gains of a financial nature, which Italian law subjects to taxation with the application of a substitute tax.

The taxable base subject to taxation is determined by the difference between the consideration received and its purchase value (Art. 68 of the TUIR). It is very important to keep the documentation of the deed of purchase of the metal, since in the absence of such documentation, capital gains are determined at 25 per cent of the sale consideration and 26 per cent is paid on this basis. This is not an option, but an obligation.

General criterion in the presence of documentation

Documented purchase price € 35,000

Consideration for disposal € 50,000

Taxable capital gain = B - A € 15,000

Tax due 26% of C € 3,900

Criterion in the absence of documentation of purchase cost

Documented purchase cost n.a.

Consideration from sale € 50,000

Taxable capital gain = 25% € 12,500

Tax due 26% of C € 3,250