How to avoid VAT on silver coins

Precious metal investors within the European Union (EU) may pay a value-added tax (VAT) on silver bar and coin purchases. However there is little uniformity in VAT rates or how this tax is applied. Confusing things further is the existence of trade agreements with non-EU countries (e.g. Norway, Switzerland) and non-fiscal territories inside the EU itself (e.g. Channel Islands).

All this noise creates straightforward and perfectly legal ways to avoid VAT.

The table below shows VAT rates in selected EU and European Free Trade Association (EFTA) countries. Switzerland has a separate trade agreement with the EU. You can see why some EU residents are understandably keen to avoid VAT rates of 20% or more on their silver coin purchases.

Value-added tax (VAT) rates on silver coins

Value-added tax (VAT) rates on silver coins


 

We deliberately omitted two high-VAT countries the Netherlands (21%) and Germany (19%) from the table. That’s because these countries apply a very favourable method of calculating VAT on certain silver coins. This is called a margin or differential VAT scheme, and we discuss it below.

In our section Minimizing buy taxes we present several ways to avoid sales and value-added taxes. In this blogpost we focus on two approaches specifically for EU residents; originating country delivery and the margin or differential schemes.

For the charts below we checked the market-close price at eight different online dealers for orders of one hundred 1oz silver coins; UK Britannia, Austrian Philharmoniker, Canadian Maple Leaf, and US Eagle. Silver was €15.15/oz and we used mid-day exchange rates to convert to euros. Payment assumed by cash or bank transfer

 

Delivery within originating country

Some dealers, notably Estonian, use an EU guideline that says if goods are sold and delivered locally then local VAT applies even if the goods are forwarded on later. This gets around EU rules which say destination country VAT is applicable for distance selling.

We compared what it would cost to have one hundred 1oz silver coins delivered to a UK address by dealers in the UK, Germany, and Estonia. The UK and German dealers applied VAT as required. The Estonia dealers charge Estonian VAT (0%) as they deliver to a local courier who then forwards the metals to a UK address.

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You can see that for UK buyers for most types of coins the Estonia option was cheapest. The 1oz Canadian Maple Leaf was €19.16 each (comprised €15.15 spot plus €3.31 premium and €0.70 shipping). Interestingly, 1oz Britannia’s worked out cheapest from Germany at €20.55 each even though the dealer applied VAT. The UK is known for it’s high VAT rate and high premiums on silver, sadly this was confirmed here.

Check out this Estonia dealer for more details about the delivered-in-Estonia approach.
 


 

Margin or differential VAT schemes

Next we looked at travelling and picking up the coins in person. This not only bypasses distance selling tax rules it also allows you to avail of the favourable German and Dutch approach to VAT.

In Germany and the Netherlands the 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 chart below we also include Norway. We found one dealer in Bergen, Norway who takes foreign orders and allows for local pick up. Norway has zero VAT on silver coins.

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You can see that for UK buyers wanting to avoid VAT – and willing to do some legwork – Estonia with its 0% VAT on silver still remains overall the cheapest option. Although for the Maple Leaf and Eagle coins German dealers were competitive. In Estonia Maple Leafs could be had for €18.46 each. The Norway dealer wasn’t bad either; €19.01 per coin.

The dealers surveyed in these comparison tests are listed here.
 

The bottom line

EU residents can easily avoid VAT on silver coins, and save money overall, by ordering from dealers in Germany, Estonia and Norway.

Other conclusions:

  • For UK buyers silver Britannia coins are exempt from UK Capital Gains tax (CGT). Don’t underestimate this benefit. Over-paying slightly for these coins upfront seems like a sound strategy to us;
  • We noticed dealers are wise to any tax advantages and adjust their premiums accordingly;
  • In Germany, the VAT margin 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.

 
Finally, there shouldn’t be any issue bringing back to another EU/EFTA country 100 or so silver coins bought on a visit to Tallinn, Oslo, or Amsterdam etc. Check out our Transporting metals internationally for details.

In the interests of brevity we’ve omitted some other details, otherwise this would be a far longer blogpost! So feel free to ask questions or make a comment below.
 

Posted in Estonia, EU, silver coins, UK, VAT Tagged with: , , , , ,
3 comments on “How to avoid VAT on silver coins
  1. Saleh says:

    Hello and thanks for the informative post
    Would like to confirm my vat situation here
    I am a coin dealer from Kuwait coming to Berlin coin show
    Will bring around 3 to 4 kg of sliver coins and 100 g of gold coins (kuwaiti and qatari coins)
    What would be the duty/tax i have to pay?
    Is it the 19% ? Or differential tax applies to my case?
    Regards

    • PMT says:

      Hi Saleh,

      The import duty rate for bringing personal gold or silver coins into Germany is 0%. Basically, you are free to bring small amounts of private gold and silver into and out of Germany. However import VAT is 19% if the items are classified as commercial goods or items of an industrial nature. Differential tax only applies to German dealers selling certain coins within Germany. Also, the market value of metal quantities you describe are well under the EUR10,000 threshold for declaration of personal valuables entering/exiting Germany, so you don’t have to declare them if they are a personal possessions.

      • Carlos says:

        Saleh,

        I am not sure you are right. Coming from outside the eu, the good or silver will be taxed as a normal good, with 7% or 19%. That is what German customs says in their website

        Where did you find the information that small quantities of private gold or silver are tax free?

Comments or questions are most welcome