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VAT Free Silver: Everything You Need to Know

Monday, August 20, 2018

It comes as a profound source of frustration to precious metals traders everywhere that silver remains subject to VAT in most European countries. Where gold, its glitzier and more valuable precious metal cousin, has been exempt from the tax since the turn of the millennium, physical silver bars and silver coins unfortunately remain subject to a 20 per cent tax rate.

The flat rate has a far more profound effect on the wider financial market than simply silver investors having to pay a little more tax than gold investors. In fact, it vastly reduces silver’s potential as a credible trading commodity all together. Luckily, silver investors looking to invest in silver without a 20 per cent barrier have some options.

Here’s everything you need to know about VAT and silver.

VAT: gold vs. silver

In the 20th century, gold was subject to exactly the same VAT charges that other precious metals and most commodities are today.

Naturally, with VAT rates being vastly different from country to country, it means that potential investors often travelled to find the most competitive VAT rates for their products. VAT in the UK sat between 10 per cent and 17.5 per cent, with other nearby European countries charging much lower or even no VAT charges at all.

In the 1990s, the European Union wanted to develop a single unified VAT rate for investment gold, in order to curb this effect. The chances of them reaching agreement across countries for a unified VAT rate were next to impossible – so they decided instead to unilaterally abolish VAT charges on investment gold across the European Union.

This brought the commodity in line with other investment options, like stocks and bonds, which are also not subject to VAT.

Silver wasn’t and isn’t as widely traded as gold, and was much less valuable – meaning the urgency for a unified VAT rate was far less. While it’s certainly a good thing that all investment gold is VAT free – it’s particularly unfortunate that silver has never been accorded the same status.

What would a VAT free silver market look like?

In order for a silver investment to be worthwhile, it must rise in value by at least 20 per cent before investors can begin to make profits.

As it’s fairly rare for such a profound change in value to happen over a short time period, silver becomes a far more long-term investment than it would otherwise be.

If you look at a silver price chart, you’ll quickly see that it has historically been a lot more volatile than gold. Without a 20 per cent flat rate, investors would be able to treat silver as a short term, low value investment, riding the peaks and troughs of its value on a daily or perhaps hourly basis.

VAT free silver in the real world

Reading this, you’d be tempted to conclude that all is lost and that silver probably isn’t going to be the precious metal for you any time soon.

Luckily, we’ve got options.

The best way to get the maximum potential out of silver is to avoid claiming the physical product altogether. No physical product means no VAT, allowing you to claim profits from the full value by which silver rises over the period you own it.

When you buy silver with us, you can request that the final product is held in storage for the length of time you choose to own it. In a LBMA approved, ‘black box,’ your silver will be safe, protected, and most importantly – tax free.

The product remains fundamentally yours, and you can sell it at whatever time you like for the full value of the contemporary silver price. You can even ask for the product to be delivered if you decide to keep it yourself after all – but of course, VAT will then be payable on the delivered product.

There are a number of similar schemes being run by precious metal companies in the UK and the EU. You’ll notice that they tend to go a little quiet about how the VAT exemption actually works. We’re not pointing any fingers here, but some of them are definitely less legitimate than others - and a lot of them are less legitimate than ours.

VAT free silver opens up a lot of opportunities – for both the investor and the market. But it’s important to make sure we’re all legally watertight in the process. Luckily, we are – so contact us to find out more, or check out our range of VAT Free silver coins and silver bars right here.

If you’re in the mood for buying silver, why not take a look over the brand new 2018 silver Krugerrand – the very first of its kind.