What is a gold passbook? Rates, costs and tax, explained

If you want to buy gold in Taiwan, the first word most people meet is not "bar" and not "ETF" — it is a gold passbook. It is a standard product at almost every bank, the account takes ten minutes to open, and two taps in online banking buys one gram.

But "convenient" is not the same as "good value". A gold passbook hides two costs: the bid-ask spread on the bank's board rate, and the income tax you have to declare when you sell. This article puts both on the table, and explains the difference between TWD-denominated and USD-denominated accounts, so you know what you are buying before you press "subscribe".

1. What a gold passbook actually buys

A gold passbook (some banks call it a "gold account") is essentially gold on the bank's books. After you buy, the bank records "X grams of gold" in your account. Ownership is yours, but the metal sits in the bank's vault and is never delivered to you.

So it has two personalities at once:

• Like a deposit: it has an account number, statements, and can be set to a fixed monthly amount; you buy and sell through online banking or the app, and the minimum is usually one gram.
• Not like a deposit: there is no interest, it is not covered by deposit insurance, and the price can fall. This is the most common misunderstanding — leave money in a passbook for three years and it earns nothing; the entire return comes from the gold price.

Can you take delivery of physical gold?

Most banks offer "conversion and withdrawal", but with three conditions: you must accumulate a specified size (commonly 100 g, one tael, one kilogram), you must pay minting or withdrawal fees, and you must do it at a branch. In other words, the passbook's liquidity advantage exists only on paper — the moment you want metal, the cost steps up a level. Understand that before you buy and you will not discover "I can't get it out" afterwards.

2. How to read the board rate: two prices, one round trip

Every day the bank posts two numbers: buy (the bank buys from you) and sell (the bank sells to you). You buy gold at the sell rate and sell gold at the buy rate, and the gap is your first cost.

Converted at today's gold price, here is how painful that 1% is:

Converted at 4,341.79 TWD per gram; board spread only, excluding branch handling fees and FX costs. Each bank posts its own rates; the published schedule governs.

The table makes one point: a gold passbook is not for short-term trading. A round trip on 100 g costs 8,684 TWD, which means gold has to rise 2% before you are back where you started. Gold moving 0.5%–1% in a day is common, but reliably capturing 2% inside a few days is much harder than it looks.

The board rate is not the live international price

A bank's posted price is "international gold price × exchange rate + the bank's markup". It follows the international market, but with a lag and a range. At state-owned banks such as Bank of Taiwan, passbook rates are posted mainly between 09:00 and 15:30 Taipei time on business days; if the international market moves sharply after hours, your passbook simply cannot move.

3. TWD-denominated vs USD-denominated: who carries the FX risk

The same bank usually offers both, and the difference is not just the currency — it is whether you are willing to carry the exchange rate:

A TWD-denominated passbook is "gold plus the exchange rate" sold as one product. If the Taiwan dollar strengthens 3%, your TWD value drops 3% even if the international gold price does not move at all:

• 100 g at an exchange rate of 32.6264 is worth 434,179 TWD
• If the Taiwan dollar strengthens to 31.65 (about 3%), the same 100 g is worth only about 421,154 TWD — 13,025 TWD less on paper

That is how "gold went up and I still made nothing" happens. In reverse, a weakening Taiwan dollar adds a layer of protection. The decision you are making is not whether gold will rise, but whether you want to bet on the exchange rate at the same time.

4. Tax: it only starts when you sell

This is the most overlooked part of the product. Nothing is taxed when you buy; tax appears when you sell.

1. Sale proceeds: property transaction income

When an individual sells a gold passbook, the gain is property transaction income and must be included in that year's consolidated income tax return. The calculation is "sale price − acquisition cost − necessary expenses".

2. Business tax: bars exempt, jewellery not

Under the Business Tax Act, pure gold bars, plates and coins are exempt from business tax; but gold jewellery, because it embodies fabrication and design, attracts 5% business tax on sale. That is one of the most concrete differences between "buying a bar" and "buying a necklace" in Taiwan, and the reason investment purchases should be bars rather than ornaments.

3. Gold at an overseas broker: foreign-source income

If you buy GLD or IAU through an overseas broker, the gain on sale is foreign-source income, counted into basic income under the alternative minimum tax; the filing threshold and exemption follow the Ministry of Finance's announcement for the year (in recent years the exemption has been in the NT$7.5 million band). The same gold, through a different channel, falls under completely different tax rules — a decision to make before you allocate, not after.

The above is general information, not tax advice. For your own case, consult an accountant or tax professional.

5. Five ways to buy gold, costs side by side

Rates are common market ranges; the published schedule of each bank, broker or platform governs.

Read that table as one sentence: a passbook sells convenience, an ETF sells low cost, spot sells flexibility. None is absolutely better; the question is which one you need right now.

6. Three real worked examples

Case A: small saver, 5,000 TWD a month

That buys about 1.15 g a month, roughly 13.8 g a year. A 1% spread means 50 TWD each time, 600 TWD a year. On small amounts the spread barely matters — the point is consistency; but note that some banks charge a minimum handling fee on small purchases, which pushes the cost ratio up. Ask before you open the account.

Case B: middle income, one purchase of 100 g

434,179 TWD in, 8,684 TWD round-trip cost. If the goal is "inflation protection over three years", that 2% spread over three years is 0.67% a year — acceptable. If you plan to sell in three months, you start 2% behind and your win rate takes the hit immediately.

Case C: large, 1 kg

Market value 4,341,788 TWD, round trip 86,836 TWD. At this size it is worth properly comparing passbook vs physical vs ETF: if a 1 kg bar carries only a 1.5% premium and no annual management fee, it may well be cheaper than a passbook over the long run. Do not choose convenience alone at size.

7. Who it suits, and who it does not

Suits: people who want to accumulate small amounts in TWD, do not want to handle storage or authenticity, already use the bank's app, and will hold for more than a year.

Does not suit: anyone trying to capture short-term moves (the spread eats the profit), anyone wanting to short or use leverage (a passbook is long-only), anyone who needs cash at any hour (business hours only), and anyone expecting income (gold pays nothing).

8. Opening the account and buying the first time: five steps

The process is simpler than you expect, but each step has a detail that affects your cost:

1. Choose the bank — compare rates first. At the same moment each bank posts a different markup, and over years that adds up. Look at the bank's "gold passbook rates" page and compare the buy/sell gap, not just the headline gold price.
2. Open the account (branch or online). You need an ID and a second document; some banks can attach it to an existing account so you do not open a new one. Foreign nationals in Taiwan also need a residence permit and a unified ID number.
3. Choose the currency. TWD or USD — most banks will not let you switch freely afterwards, so you are fixing who carries the FX risk at the start.
4. Buy. Either a single purchase or a "gold piggy bank" monthly plan. Online banking usually allows one gram; at a branch there may be a minimum amount.
5. Keep the records. Download the statement after every trade — it is the only cost evidence when you later declare property transaction income.

9. The four most common mistakes

Mistake 1: treating the passbook as a principal-protected deposit

It pays no interest, has no deposit insurance, and the price falls. Putting your emergency fund into a gold passbook means paying for living expenses with money exposed to gold price swings.

Mistake 2: trading in and out

A 1% spread means you are 2% behind on every round trip. Chase a 3% swing and after costs you have 1% left — and you still have to be right about direction. The product was never designed for short-term trading.

Mistake 3: ignoring the exchange rate

A TWD-denominated passbook's return is gold plus the exchange rate. Many people watch only the international gold price and then find a stronger Taiwan dollar has eaten the entire gain — which really happened in 2020 and again in 2022.

Mistake 4: selling without declaring

The bank will not calculate your tax for you and will not send a withholding statement. Property transaction income is yours to include in your income tax return; if it is found on audit you pay the tax plus a penalty.

10. FAQ

Q1. How is a gold passbook different from buying physical gold?
A passbook is gold on the bank's books: what you buy is a claim to a number of grams, and you cannot withdraw it at will. The advantage is that you never handle storage, insurance or authenticity, and one gram is enough to start. If you want the reassurance of metal in hand, a passbook will not give it.

Q2. How big is the board spread?
The bank posts a buy and a sell price; you buy at the sell rate and sell at the buy rate, and the gap is about 1%. On 100 g at 4,341.79 TWD per gram, a round trip is about 8,684 TWD.

Q3. Do I pay tax when I sell?
Yes — it is property transaction income and goes into your income tax return. If you cannot prove your cost, the practice is to assess 6% of the transaction price as income, so keep every statement.

Q4. TWD or USD denomination?
It depends on who should carry the FX risk. TWD denomination bundles gold and the exchange rate together, so a stronger Taiwan dollar erodes your return; USD denomination separates them, but converting back still costs a spread. If you earn and spend in TWD, take TWD; if you already hold USD, take USD.

Q5. Passbook or gold ETF — which is cheaper?
Over three years or more the ETF's total cost is usually lower (about 1% a year all-in but a tight spread); for a few months, the passbook's flat 1% spread is simpler. Holding period matters more than the headline fee.