Redemption of a gold warrant as other capital claim

The Federal Finance Court (BFH) has ruled on when profits from so-called gold warrants can be realised tax-free, in connection with their redemption. Other capital claims within the meaning of Section 20 (1) no. 7 of the German Income Tax Act (EStG) cannot be ruled out simply because the holder of the claim has the right to demand fulfillment in a form other than cash. A distinction must be made in view of claims that are directly and exclusively related to the delivery of goods and can only be classified as income from private sales transactions within the meaning of Section 23 EStG. In its decision of June 3, 2025 (case no. VIII R 5/24), the BFH had to decide whether the taxpayer had generated taxable positive income from capital assets when redeeming certain certificates against the credit of gold warrants or when exercising the gold warrants.

In the case in dispute, the taxpayer acquired several “BEAR EUR Convertible Certificates on Gold” in 2015. These certificates granted the holder the option of receiving either a cash amount or a gold warrant, depending on the performance of the gold price. The gold warrants, for their part, were either for a cash payment or for credit of gold to the plaintiff's metal account. When the BEAR certificates matured, the taxpayer chose to purchase the warrants. When they matured, he chose to have the gold credited to his account, which he sold a year later. As part of the external audit, the tax office recorded a taxable profit from the sale of the BEAR certificates. The appeal lodged with the fiscal court was partially successful. Although the taxpayer did not make a profit from the sale of the BEAR certificates, the profit from the redemption of the gold warrants was taxable.

The BFH confirmed the opinion of the fiscal court that the redemption of BEAR certificates by entry of the warrants to the taxpayer's securities account was tax-neutral. BEAR certificates represent other capital claims within the meaning of Section 20 (1) no. 7 EStG, the fulfillment of which in a manner other than by payment of money constitutes redemption within the meaning of Section 20 (2) sentence 2 EStG. Exercising the option in favor of delivery in kind in the form of securities does not automatically mean that the claim must be treated as a claim for delivery in kind from the outset. As a result, the profit from the redemption of BEAR certificates in securities must be determined in accordance with Section 20 (4a) sentence 3 EStG in the version applicable in the year under dispute. According to this, the plaintiff's consideration for the acquisition of the BEAR certificates is to be recognized as the sale price of the claim and also as the acquisition cost of the gold warrants; there is no redemption gain.

However, due to the subsequent redemption of the warrants and the credit of gold to the metal account, the taxpayer has realized a taxable gain. This also constitutes the redemption of other capital claims and is neither a forward transaction, which from the outset was only intended to settle a difference, nor an option to deliver in kind. The warrants securitized a claim for cash settlement in the amount of the gold equivalent, which is to be valued at the gold market value at the time of crediting. According to the BFH, the term “redemption” also includes the granting of a claim for delivery in kind of physical gold, insofar as this fulfills the capital claim and causes it to cease to exist. Accordingly, a redemption gain in the amount of the difference between the market value of the troy ounces of gold credited to the metal account and the acquisition cost of the warrants must be considered.

Notice:

In its decision (identical to the decision of June 3, 2025, case no. VIII R 23/24, and the decision of July 1, 2025, case no. VIII R 33/23), the BFH clarifies that a securitized capital claim with the right of the claim holder to demand fulfillment of the claim in a manner other than in money falls under the term “redemption” within the meaning of Section 20 (2) sentence 2 EStG and not under the system of Section 23 EStG (private sales transactions subject to standard taxation). The exercise of the option in favor of delivery in kind merely specifies the way the other capital claim is to be fulfilled.

It should also be noted that Section 20 (4a) sentence 3 EStG, in its current scope of application, now only covers the delivery of shares within the meaning of Section 20 (1) No. 1 EStG (and no longer all securities). This means that, according to the legal situation applicable since the 2020 assessment period, the redemption of certificates against gold warrants is no longer treated as tax-neutral.