[Last updated March 2016]
Here’s some tips for legally side-stepping sales taxes and value-added taxes (VAT). We cover custom rules and import duty issues separately here.
In this section
TIP #1: No VAT on gold in the EU
In 2006 the European Commission helpfully passed a Directive creating a special tax exemption for investment gold (Directive 2006/112/EC).
Investment gold was defined as bars or wafers of weights “accepted by the bullion markets” and of a purity equal to or greater than 99.5%. Also gold coins of a purity equal to or greater than 90%, those minted after 1800, and those that are or have been legal tender in the country of origin. Since this law was passed no VAT or any other sales tax is chargeable on investment gold by any European Union dealer.
Each year Member States must indicate which coins meeting these criteria are traded on their territory. These lists are published in the EU Official Journal. The latest can be found here by doing a search for “VAT on gold coins”.
TIP #2: Intra-EU silver purchases
EU residents in high VAT countries can save by buying silver from low or zero VAT countries within the EU or EFTA (European Free Trade Association). In particular, EU residents can buy silver in Estonia or Norway and avail of the 0% VAT rate on silver. Switzerland (8% VAT on silver) is part of the EFTA so this tax saving technique applies there too.
The key to this technique is that the silver is delivered within the same country as purchase and is then shipped out by the buyer as non-commercial goods. As long as the contract is settled with the foreign dealer (or their local agent) and shipped separately by the buyer no import duties or taxes are payable at the buyers home country EU border. Picking up your metals in person can be a nice excuse for a holiday trip.
Here are some dealers you may wish to contact for further information about this approach. These dealers may connect you with an independent shipping courier or, at very least, can hold onto the metals for you until you pick them up.
A variation of this approach is to enquire about the dealers threshold for sales in your country. The general rule for VAT within the EU area is the so-called origin principle. That is, VAT is applied where the sale originates. However, for intra-EU selling this principle only applies up to a certain threshold (usually €100,000 per dealer). Beyond the threshold the dealer must charge the VAT rate in your country. The best time to ask if your dealer is below their threshold, and will charge origin VAT, is at the very start of the tax year when the threshold is reset to zero.
TIP #3: Use a bailment service
Precious metal bailment services operate from bonded warehouses where goods are non-dutiable. This means all forms of buy-side taxes are not payable (this includes the dreaded VAT). But beware, depending on your country of tax residency taxes may become payable if you take physical possession.
The Delaware Depository Service in the US is one example of a bailment service with an impeccable reputation. In Australia the Perth Mint offers a depository service with a similar reputation. Please note though, only their fully allocated accounts not the unallocated or pooled account options meet our specific definition of a precious metal bailment service.
In Europe, Amsterdam Safe is a well known bailment service located at Schipol airport, as is Gold Switzerland at Zurich airport.
Convenient online bailment services include Goldmoney and Bullionvault. These work much like an online banking account and with all the flexibility that that entails. Goldmoney offer their services to residents of most countries including the US, although the Netherlands is a notable exception at present (this might change).
TIP #4: Visitor sales tax / VAT refunds
Claim your tax back when you depart. Countries and special territories usually have either a value-added (VAT) or some form of state and/or federal goods and services tax. Non-resident visitors can have these refunded within certain limits. Often you’ll see a “visitor tax refund” kiosk at the airport or tourist offices. You’ll need receipts.
For example, in Australia the federal Goods and Services tax (GST) is applied to gold coins less than 0.995 fine (ie. less than 99.5% gold content). This means gold Sovereigns, Krugerrands and Eagles will attract GST. You can get this refunded at the airport when you leave.
Similarly, residents of non-VAT countries can have many classes of VAT refunded on their purchases. Look out for a “VAT refund” kiosk at the airport or enquire at hotels or visitor information centres. You’ll need all your receipts, so make sure you have them. We note that for some reason these refund services are better advertised in Europe than in the US or Canada.
TIP #5: VAT margin schemes
In the UK (and Republic of Ireland) many used goods can be resold under a special scheme whereby the only VAT payable is on the sellers margin, and therefore almost negligible. This applies as well to precious metal coins. Similarly, in the Netherlands VAT on silver coins is only calculated on the dealers profit margin and is thus very low. Since January 1st 2014 Germany introduced a similar scheme called differential tax, whereby a VAT rate of 19% is applied to the dealers profit on silver coins. However, this is only for non-EU silver coins and only for customers who can pick up personally or (technically) ship to a German address.
We have seen UK dealers offering sealed 2-10kg bags of worn silver coins with varying silver content and no collector value (although who knows?) under this scheme. These are old florins, half crowns and shillings from the pre-decimal era. Auctioneers will sometimes also avail of this scheme when selling silver items. It is well worth asking about it before making a major purchase. We know investors who regularly buy UK silverware at auction sans le dreaded VAT.
TIP #6: Avoid the VAT on eBay or at auctions
You can buy silver coins and bars on eBay and similar online auctions. If you are a resident of a country with VAT and the seller is VAT registered, then a VAT is payable and you will find some version of this tax added to the purchase price.
VAT on eBay etc purchases is not payable if:
• You reside in a non-VAT country such as the US or Australia;
• The seller is not registered for VAT, i.e. is not a “business”.
Also worth mentioning is that some auction houses in UK (and Republic of Ireland) will avail of the VAT Margin Scheme (see TIP #5 above) whereby the only VAT payable is on the sellers margin, and therefore almost negligible. Make sure you ask the auctioneer what VAT treatment is being applied before you bid for that antique silver dining set.
Finally, residents of non-VAT countries can have all classes of VAT refunded on their auction purchases (see TIP #4). Once again ask the auctioneer beforehand. Look out for a “VAT refund” kiosk at the airport or enquire at visitor information centres, make sure to keep your receipts.