Not everything that shines is suitable for capital investment

Trading risks: As early as 1997, the Frankfurt Higher Regional Court had to decide whether a gemstone sales prospectus provided sufficient information about the risks of buying gemstones (diamonds). The investor, a gemstone buyer, successfully sued his seller for damages. The following is recorded under Ref .: 17 U 169/96:

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It is undisputed that there is no private market for diamonds. Diamonds bought by a private person can therefore – just as indisputably – only be sold at the wholesale price, which is considerably lower than the cost price of the end customer. The private investor can therefore only achieve the price that he paid when he bought the property again when the seller’s profit margin has been compensated again, taking into account any interim increases in value that have also impacted the retailer’s purchase price. In contrast, it says – highlighted in bold – in the aforementioned prospectus:

“You should regard the diamonds that we offer you as the hardest and internationally easily convertible currency. There is no country in the world where diamonds cannot be sold, ie converted into local currency ”.

The average investor who is not familiar with the common key language and who is to be taken into account when determining the content of prospectus information (see BGH, WM 1982, 863), can only understand this information to mean that if the diamond is resold, he may lose a price but not that – at least in the case of a short-term sale – the difference between the purchase and sales price of the intermediate trade remains in any case due to the lack of a private market.

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Anyone who tries to make a profit with gemstones should therefore be clear about their sales opportunities before buying.

Freedom of permission: Gemstone sellers in Germany only need a business registration. But also the conclusion of contracts for the storage of gemstones is basically free of permission. However, if the seller undertakes to repurchase the gemstones acquired by the buyer at a later point in time at a guaranteed price that is at least equal to the purchase price originally paid – possibly with the promise of a return – the investment offer can be made as a result of the repurchase promise, depending on the contractual arrangement Deposit business within the meaning of section 1 (1) sentence 2 no. 1 KWG.

Tax exemption: Anyone who sells gemstones at a profit does not have to pay a withholding tax if they can be classified as goods of daily use within the meaning of Section 23 (1) no.2, sentence 2 EStG or if the time between purchase and sale is no longer than one year.

REIME lawyer – the law firm

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