How To Buy VAT Free Silver In The EU

In the European Union (EU) gold and silver, while both being precious metals, are treated as different types of asset. Gold can be bought VAT-free (Value Added Tax) whereas silver is subject to VAT. But there is a way for EU residents to buy VAT free silver.

First though, we need to look at why these two precious metals are treated differently…

Why Is VAT Not Charged On Gold?

Gold wasn’t always VAT free. Up until January 1st, 2000, VAT was charged on gold in the United Kingdom. Other countries in the EU also charged VAT on gold. But every country charged a different rate, some high some low.

That lack of a standard VAT rate was a thorn in the EU’s side and the various countries agreed that a standard rate of tax should apply. However, they couldn’t agree on a single rate of tax that everyone was happy with.

What was eventually decided was that gold should be reclassified as an investment, putting it on the same footing as stocks and shares, which have no VAT. This exemption was enshrined in law and certain gold coins were also included in the exemption. The reason for this is that most gold coins are bought as gold bullion rather that for their rarity or numismatic value.

Why Is VAT Charged On Silver?

Back in ye olde days, both gold and silver were used as legal tender. In fact, they’ve been used as legal tender for almost 6,000 years. In some eras, these precious metals were minted as standard value coins.

And, according to none other than Milton Friedman:

The major monetary metal throughout history is silver, not gold.

Aside from being a precious metal, silver, unlike gold, has industrial uses. It’s used in photography, telecommunications, medical and energy technologies. This additional value underpins silver as a commodity.

These technologies effectively use up silver which means there’s less above ground and, consequently, demand for what’s left is higher. This would normally push the price up but as we’ve seen, some major banks have been rigging the price of silver (and gold) to keep prices artificially low.

Silver Demand And Use Up Until 2015 – click the image for an enlarged view

It’s not as easy to reclaim silver as it is gold from the technologies mentioned. Gold is an inert metal. It doesn’t react with anything. Silver, on the other hand does so the expense of reclaiming silver from an alloy it’s part of may be higher than the value of the silver extracted.

Because of its industrial use – so the supply is slowly being used up – today there is actually less silver above ground than there is gold. That’s why many analysts think silver is very undervalued.

As a result, silver hasn’t been reclassified as an investment the way gold has. So, in the EU, the VAT on silver remains in place.

There was a question about whether silver coins with a face value could be declared legal tender and therefore not be subject to VAT. What the EU came up with is this:

Legal tender coins in use are not subject to VAT.

“In use” is the key phrase here. The currency used in the EU is the Euro. So any silver coins from outside the EU, even though they might be legal tender in the countries where they’re minted, are not Euro coins and so they are not seen as currency “in use”. That includes Canadian Silver Maple Leaf, American Silver Eagle and UK Silver Britannia coins.

The only silver coin minted within the EU in the Austrian Philharmonic. The coin is legal tender in Austria with a face value of 1.50 Euros. It does not appear to considered legal tender in the rest of the EU so VAT is also charged on these silver coins.

VAT Rates On Silver Coins And Bars In The EU

To complicate matters further, there isn’t a standard rate of VAT charged on silver. Each country has its own VAT rate and EU customers pay the rate of the country they buy silver from. These are the current VAT rates:

So How Do You Get VAT Free Silver In The EU?

There are three ways to get silver without having to pay an additional sales tax:

Buying Silver To Keep In A Vault

You can buy your silver through a dealer in a country that does not charge VAT on coins such as United States, Canada and Switzerland but you will need to store your silver in a vault outside the EU. Dealers should be able to provide you with several vault locations where you can store your silver. However, you will have to pay storage fees.

If you decide to have your silver coins or bars shipped to you (in the EU), then you will be liable to pay VAT at your country’s rate.

Buying Silver Abroad In Person And Bringing It Home

Another option is to travel to a country outside the EU that sells silver and buy coins or bars that are worth below €10,000 and personally bring them back to your country without declaring them. If they’re worth more than €10,000 you are obliged to declare.

Make sure that you check the Carry-on allowances with your airline when carrying silver with a high value.

Buying VAT Free Silver From Estonia

Canadian Silver Maple Leaf coins bough VAT free from Estonia by a friend of mine in the EU. There are 25 coins in the tube above the five loose coins

There is one country in the EU that does not charge VAT on silver – Estonia. They are being pressured to come into line by the bureaucrats in Brussels and charge VAT and there is some legislation to put that into effect but there won’t be any movement on this in Estonia until January 2017.

So people in the EU have at least until then to buy silver without paying VAT.

How can Estonia run counter to the EU on VAT? Because a number of international coins are considered to be legal tender in that country. So Maple Leafs, Silver Eagles and other coins are considered to be “in use” legal tender and therefore not subject to VAT.

CelticGold.eu is a German registered precious metals dealer that buys silver in Estonia on behalf of its clients. Silver is therefore VAT free. However, they cannot directly ship silver to a customer in the EU as the customer would then have to pay their local VAT on the shipment once they received it.

Article 34 of the EC-guideline 2006/112/EC limits international sales of VAT-liable goods like silver. The guideline says that the location where the contract is fulfilled (the buyer’s home country) is applicable to VAT. What’s key is that this guideline is only applicable when the bullion company ships directly to their clients.

So to get around this problem, CelticGold will not ship directly to clients. They have included an option in their order checkout that allows you to instruct a 3rd-party carrier to pick up an order from CelticGold and then deliver it to the buyer.

These are legally seen as two separate transactions rather than a single order fulfillment. Since the shipping company is merely moving paid-for goods from one location to another within the EU, no VAT is liable on the goods. As a result, the silver you order is not subject to VAT!

It’s all above-board and legal. Which is why the EU want to close the loophole. Whether Estonia will actually implement the legislation to make VAT payable on silver is still open to question.

In the meantime, certainly until January 2017, EU residents can buy VAT free silver from Estonia.