How to avoid VAT on silver purchases
This post is for UK and European silver stackers. Unlike our US cousins, we must pay the government for the privilege of converting fiat into silver. It's called the Value Added Tax (VAT). Well, like most things governmental, this has been poorly planned. With a bit of effort this shakedown tax can easily (and I hasten to add, legally) be avoided.
Here's the VAT rates in a few EU and European Free Trade Association (EFTA) countries, and Switzerland which has a separate trade agreement with the EU.
So the upshot here is say if you're a Greek, battered to within an inch of your life by the banksters, and want to get out of the fiat system by buying some silver, guess what, you'll need to pony up 23% extra for the taxman. Nice eh? Not really.
Fortunately there are two big flaws with this VAT tax grab. Which I outline below...
Flaw 1: Originating country delivery rules
EU guidelines say that if goods are sold and delivered locally then local VAT applies, even if the goods are later transported out of the country. Since Estonia and Norway have a VAT rate of zero on silver, Voilà! no VAT payable. That is, as long as the dealer either has someone completely unconnected deliver your silver, or you collect it in person.
Here are some Tallin (Estonia) dealers worth contacting.
CelticGold
Liberty Silver
I've been to Tallin, it's well worth a visit! (Boozer in blue shirt isnt me, my friend Jim, one of five stackers on a little visit to Tallin in 2013)
Plus here's a couple dealers in Norway.
Realverdier
Tavex
Oslo is lovely, though the beer is expensive. If you visit Oslo DO NOT MISS the Viking museum.
Flaw 2: 'Margin scheme' or 'Differential tax' tax laws
If you're willing to travel in person to collect you should definitely consider this option. In Germany and the Netherlands their 19% and 21% VAT rates respectively on silver coins is applied to the dealers profit margin. The Germans call it ‘differential taxation’ and it’s for non-EU coins only. This makes retail level VAT essentially zero. In the UK and Republic of Ireland 'used' silver coins/items can be resold under a similar rule thus also making VAT negligible.
Just get in touch with any dealer in these countries and ask how they apply these local tax rules. I ended up visiting Bessers in Dresden (Germany).
That's me in Dresden, bottom left, being a tourist.
Final random comments:
As you can probably tell, my favourite option is to combine a purchase with a holiday. Ordering online from CelticGold has worked well too
For UK buyers silver Britannia coins are exempt from UK Capital Gains tax. Don’t underestimate this benefit
Market prices (e.g. eBay) typically reflect the VAT cost, so to an extent you do get your VAT back
Dealers are not dumb. They are wise to any tax advantages and adjust their premiums accordingly
In Germany, the differential tax scheme applies to non-EU silver coins only. So the 1oz Canadian Maple Leafs and US Eagles looked attractively priced, but not the Philharmoniker or Britannia coins
For getting your coins back home, see my post on customs rules and border checks
Remember: keep your receipts for when it comes time pay your Capital Gains taxes
Cheers and happy tax-free stacking :)
Check out my apps here:
Android - Silver Coin Valuer PRO and Gold Coin Valuer PRO
iOS - Silver Coin Valuer PRO and Gold Coin Valuer PRO
Thanks for this very interesting and informative post. Question, if for example, one bought a silver coin in Germany for €20 and in a few years it is worth (hopefully :-) €100, then with silver you would be looking at a whopping VAT tax on the €80 profit. Right?
In Germany, with gold coins there is no VAT or capital gains after one year. Is that your understanding?
Hi. No, the VAT is a tax only on the purchase. It's like a sales tax. When you sell, hopefully with a profit ;) thats when you face a possible Capital Gains tax. The exact CGT will depend on your tax residency, your taxable income that year etc. As you say, CGT is zero in Germany, but in some places CGT is very high
Just searched and found this:
Differential taxation
As often happens, even in this case, there is a particularity in the German tax law. Silver coins which are imported from outside of the EU (e.g. the Canadian Maple Leaf, the American Eagle, the Australian Koala, etc.) or purchased from private persons are excluded from the new regulation. The importing trader pays the import sales tax of 7% and can then apply the so-called differential taxation. Equally, the trader who has purchased silver, platinum, or palladium from private persons before can apply the differential taxation.
When applying the differential taxation, not the total net sales price is taxed as usual, but only the difference between purchase and sales price, thus the trader's margin, is subject to the full tax rate of 19%. The name of this type of taxation derives from that.
Impact on private customers
The import sales tax of 7% added to the purchase price corresponds exactly to the old VAT rate of 7%. The additional differential taxation of the trader's margin is small, because the margins in the precious metal trading, as is generally known, are very small.
Therefore, most of the silver coins have only increased slightly in price since January 2014, on average approx. by 1% until now compared to the regulation valid until 31.12.2013.
https://edelmetalle-direkt.com/en/differential_taxation_0067.html
In my experience, this was couple years ago now, I paid basically zero VAT at that Dresden dealer mentioned. Bought 100 Maple leafs 1oz. I know of one other person who had similar experience. But hey, the tax people are always moving the goal posts to suit themselves so your mileage will probably vary. Good luck!