Gold stored in recognized custody centers can benefit from tax advantages that protect long-term wealth. In Dubai, bullion is exempt from VAT and capital gains, while in Hong Kong it is free of sales tax and recognized under LBMA standards. For investors seeking to preserve and grow assets across borders, these jurisdictions combine secure custody with efficient tax treatment. The result is gold that remains outside local taxation, documented through custody agreements, and fully available for international settlement.
1. Why Tax Treatment Matters in Gold Custody
Taxes create a permanent wedge between committed capital and the metal that actually sits in custody. Two frictions drive the gap: indirect tax at entry (VAT / sales tax) and capital gains at exit. Remove both, and the allocation converts into more bars on day one and stays intact through the holding period.
Entry effect — VAT / sales tax.
Assume a $10M allocation and an indicative gold price of $2,400/oz.
- Taxed entry (10% VAT): only $9M becomes metal → 3,750 oz.
- Zero-rated entry: full $10M becomes metal → 4,167 oz.
The policy decision at the point of purchase changes the long-term position by 417 oz (~10%). This difference compounds across decades because storage, insurance, and reporting then apply to a larger base of bullion.
Exit effect — capital gains.
A long horizon often brings price appreciation. If $10M in bullion grows to $15M over 15 years and a 20% gains tax applies to the $5M increment, the investor parts with $1M at exit. In a tax-neutral setup, the full $15M remains available for redeployment, settlement, or intergenerational transfer.
Operational reality — effective ounce yield.
Treat “effective ounce yield” (EOY) as a control metric:
- Jurisdictions with zero-rated bullion and no capital gains maximize EOY.
- Jurisdictions with VAT and gains taxes reduce EOY before custody even starts.
Why this belongs in the custody decision.
Capital preservation depends on what the barlist records over time. A tax-neutral jurisdiction converts more cash into numbered bars at entry and allows appreciation to accrue inside the custody structure. The result is higher metal weight on the barlist, cleaner reporting, and a stronger base for 10–20 year wealth plans.
2. Dubai: Custody Under DMCC Framework
Dubai functions as one of the most established centers for institutional gold custody because it combines tax neutrality with infrastructure designed for large allocations. Under the Dubai Multi Commodities Centre (DMCC) regime, investment-grade bullion can be stored on an allocated basis without VAT at acquisition and without capital gains taxation on disposal. This structure means that every unit of capital committed is converted into bars and remains intact across the holding period.
Entry efficiency.
In markets where VAT applies at 5–20%, a $20 million allocation would lose $1–4 million instantly to tax. In Dubai, the full $20 million converts into bullion. That difference — measured in hundreds of kilograms — is permanently recorded on the barlist and preserved in custody reports. For institutions managing reserves, the ability to show “gross = net” allocation on day one is a governance advantage.
Exit neutrality.
Over 15–20 years, bullion often appreciates 50–100%. In jurisdictions with 20% capital gains, a $20 million position growing to $40 million would incur an $4 million tax liability. In Dubai, appreciation remains untaxed, and the custody reports reflect the full uplift. For family offices planning succession, this ensures that future generations inherit the complete allocation without fiscal leakage.
Operational standards.
Allocated custody is mandatory. Each bar is identified by serial number, refiner, weight, and fineness, and listed in detailed barlists. International audit firms conduct periodic reconciliations, and their reports are integrated into institutional board packs or family office reporting cycles. Insurance is placed with global underwriters on an all-risk basis, directly linked to the recorded bars. These mechanisms transform the tax advantage into an auditable, enforceable custody system.
Cost framework.
Custody in Dubai is billed per kilogram per year, with insurance often bundled. Typical ranges make up a fraction of the tax savings generated by VAT and capital gains exemptions. For large allocations, the operational expense is marginal compared to the structural benefit of tax neutrality.
Strategic use.
Institutions often anchor their primary allocation in Dubai because board approval is easier when the structure shows zero entry and exit taxation, international audits, and enforceable ownership. Family offices use Dubai custody to create a tax-clean base that can be paired with other jurisdictions for diversification. In both cases, Dubai becomes the operational and accounting cornerstone of long-term gold preservation.
3. Hong Kong: Gateway to Asian Markets
Hong Kong provides a custody environment where tax neutrality is combined with international recognition of bullion standards. Investment-grade gold that meets defined purity levels is exempt from sales duties, and there is no capital gains tax applied to long-term holdings. For investors measuring results in decades, this ensures that allocations stored in Hong Kong retain their full value throughout the custody period.
Compliance with global standards.
Vaults in Hong Kong operate under LBMA Good Delivery rules. Every bar is documented with serial number, refiner, weight, and fineness, and these details are consolidated in barlists. Independent auditors reconcile these lists with physical inventory, producing reports that can be attached to institutional governance packs or family office financial statements. This level of compliance ensures that bullion stored in Hong Kong is recognized across markets and can be transferred or verified without dispute.
Integration into governance.
Institutions typically use Hong Kong custody to meet requirements for transparency and reporting. Quarterly or annual audit reports flow into compliance cycles, while barlists provide concrete evidence of ownership. For family offices, these documents simplify succession planning, as heirs receive verifiable proof of the allocation rather than abstract claims.
Liquidity and positioning.
Hong Kong’s location makes it a direct gateway to Asian demand. Allocations placed there can be mobilized quickly if settlement into regional markets is required, while still remaining within an allocated custody framework. This feature is less about trading and more about optionality: the asset is preserved long-term but can also be positioned where liquidity is strongest if needed.
Strategic role.
Institutions often pair Hong Kong with Dubai to balance their custody profile. Dubai offers efficiency in acquisition and legal enforceability, while Hong Kong adds Asian connectivity and redundancy. For family offices, splitting an allocation between the two hubs reduces dependency on a single custody center and creates flexibility in intergenerational planning.
In practice, Hong Kong custody operates as both a preservation tool and a reporting instrument. It strengthens diversification, aligns with international standards, and supports the governance processes that institutions and family offices depend on to maintain long-term capital strategies.
4. Comparing Jurisdictions for Institutional Use
For investors building custody strategies, Dubai and Hong Kong are not substitutes but complementary hubs. Both jurisdictions offer tax neutrality, international recognition of bullion standards, and mature infrastructure for storage. The difference lies in how each location contributes to a broader preservation plan.
Dubai as the acquisition anchor.
The absence of VAT at entry ensures that the full allocation is converted into gold from day one. For a $20 million commitment, the difference compared with taxed jurisdictions is measured in tonnes of capital preserved rather than absorbed. Capital gains neutrality then guarantees that appreciation stays within the custody structure. These features make Dubai the natural first point of allocation, particularly when institutional boards review the efficiency of asset deployment.
Hong Kong as the diversification hub.
Holdings in Hong Kong benefit from the same tax neutrality while adding geographic balance. Custody agreements there operate under LBMA standards, which means barlists and audits are accepted in global markets without question. The location also connects directly to Asian demand, positioning part of the allocation in a region where physical bullion trade remains active. For family offices, this creates resilience: wealth is preserved in more than one financial center and aligned with multiple reporting frameworks.
Operational consistency across both hubs.
In both Dubai and Hong Kong, allocated storage is the standard. Bars are listed by serial number, refiner, weight, and fineness; independent audits verify holdings; and insurance policies cover risks on a global basis. Institutions and family offices can integrate these reports into governance structures, ensuring that custody is not an opaque service but a transparent and auditable asset class.
Strategic outcome.
By combining Dubai and Hong Kong, investors achieve two objectives simultaneously: efficiency at entry and diversification of location. The allocation is protected from tax leakage, supported by international audits, and distributed across independent custody centers. Over a 10–20 year horizon, this dual setup strengthens continuity, reduces concentration risk, and ensures that preserved wealth remains documented, insurable, and transferable.
5. Practical Steps for Setting Up Tax-Free Gold Custody
Establishing tax-free gold custody in Dubai or Hong Kong follows a sequence that ensures clarity of ownership, transparency of records, and long-term usability of the asset. The process is not complex, but each stage must be completed carefully to preserve both the value and the structure of the holdings.
Step 1. Define allocation and storage objective
Determine what portion of capital will be stored in gold and for what horizon. Institutions often anchor 10–20% of their reserves, while family offices may fix a percentage as part of intergenerational planning. The objective should guide the choice of vault capacity, reporting frequency, and insurance coverage.
Step 2. Establish the custody agreement
The agreement is the core document. It must specify:
- Allocated storage: bars held in the client’s name.
- Barlist requirements: serial number, weight, fineness, refiner.
- Fee schedule: annual custody cost per kilogram, insurance premium, withdrawal fees.
- Settlement channels: bank transfers (SWIFT/SEPA) or crypto settlement if required.
- Withdrawal and transfer clauses: notice periods, transport liability, insurance during movement.
Step 3. Verify reporting and audits
Custody providers in both jurisdictions operate with barlists and scheduled audits. Independent auditors such as SGS or Alex Stewart issue reports reconciling the barlist with physical inventory. Institutions should request quarterly or annual reports and ensure that they are included in governance packs or financial statements.
Step 4. Secure insurance coverage
An all-risk policy must be in place, underwritten by a global insurer. The policy should state coverage for theft, fire, and damage, with limits linked to the market value of bullion. Importantly, the investor must be named as a beneficiary on the policy, ensuring that coverage applies to their allocated bars.
Step 5. Integrate custody into governance
Institutions and family offices should formalize custody into their governance framework. This includes defining who can authorize transfers, how often audit reports are reviewed, and how insurance renewals are tracked. Integration ensures continuity even if management changes.
Step 6. Test operational procedures
Before scaling, conduct a test transfer or withdrawal. Confirm that barlists are updated, insurance coverage is valid during movement, and reporting is accurate. This operational check ensures that the system functions as expected under real conditions.
By following these steps, investors establish tax-free gold custody that is transparent, auditable, and enforceable. The process ensures that the capital allocated to bullion remains intact over decades and can be integrated into broader wealth strategies.
6. Integrating Tax-Free Custody into Long-Term Wealth Strategy
Tax-free custody in Dubai and Hong Kong is most effective when it is treated not as a storage service but as a structural component of capital management. Integration means that bullion is positioned alongside other assets in a way that supports reporting, governance, and intergenerational continuity.
Capital allocation.
Institutions often define a fixed reserve ratio for physical bullion — for example, 10–15% of total assets. Family offices may assign a portion of net worth to gold specifically for preservation across generations. The decision is documented in policy papers and reviewed annually, ensuring that the allocation remains consistent with broader investment goals.
Jurisdictional balance.
A dual-location model, with Dubai as the acquisition base and Hong Kong as the diversification hub, provides redundancy. If one market faces operational disruption, the other remains active. This balance is recorded in custody agreements, which specify how holdings are split, how transfers are authorized, and what reporting flows are required.
Governance integration.
Custody must appear in board packs or family office reports with the same weight as traditional financial instruments. This includes barlists, audit reports, and insurance renewals. By embedding these documents into governance cycles, institutions create a system where gold is not a passive holding but a monitored, auditable asset class.
Succession and continuity.
Family offices use custody to formalize intergenerational transfer. Independent audits and barlists provide heirs with evidence of ownership, while insurance ensures that the physical asset is protected regardless of location. Institutions achieve continuity by assigning signatories and approval thresholds that do not depend on individual managers.
Strategic benefit.
When custody is tax-neutral, allocated, audited, and insured, it becomes a pillar of capital preservation. Investors gain the efficiency of full conversion at entry, the security of untaxed appreciation at exit, and the transparency of internationally recognized reporting. Integrated into long-term planning, tax-free custody is not simply storage but a durable framework for preserving and transferring wealth.