Excellent

Newsletter Signup Click Here

VAT Free Silver and Platinum

Author: Ian Davis - Bullion Manager

Published: 31 Aug 2018

Last Updated: 10 Mar 2021

Synopsis

Welcome to our blog on VAT-free silver and platinum.

We offer silver bullion and platinum bullion for secure storage in Switzerland at very competitive premiums. Being stored in a bonded warehouse means these bullion products are not liable for value added tax (VAT), making them very attractive to investors looking for cheap silver and platinum.  

VAT-Free Silver

What is Value Added Tax (VAT)?

According to the European Union, VAT is a general, broadly based consumption tax assessed on the value added to goods and services.

This consumption tax was regulated by Brussels, until the UK formally withdrew from the EU in January 2021. The UK standard VAT rate is currently 20%, which has been the case since the rise from 17.5% in January 2011. You can work out how much tax you are paying by dividing the sales amount by a value of 6. This means for every £100 you spend you are paying £16.66 in tax, which is quite a significant amount.

Some products such as milk, books, children’s clothes and take away food carry no tax and are classified as zero rated. Newspapers are zero rated (note their digital counterparts are taxable), maps are zero rated and energy supplies are usually 5%. As you can imagine, there are many rules for other products; if you're inclined to do so you can read more on HMRC's website.

More relevant here is that gold has been exempt from VAT since January 1st 2000 but silver, platinum and palladium have remained subject to the standard rate. This makes gold a much better investment if your funds allow but that's not to say silver (at the right time) doesn't make a great investment. If you believe the price of silver to be low you can offset the VAT amount when selling at the higher price.

Benefits of VAT

The first benefit of VAT is said to be increased revenue for the state (certainly a benefit to the state, but possibly a detriment to taxpayers) and that these amounts are to be distributed via ‘benevolent’ means. The second benefit is that higher VAT rates should, in theory, stimulate a savings response amongst the population.

A few issues with this are that given the current economic environment, shouldn't we be spending and not saving? Why has the government not reduced VAT when the Bank of England reduces the base interest rate?

We are left to conclude that VAT is a means to rob more pennies off the spending public rather than its use as an influencer of spending behaviours. Secondly, it is difficult to say whether money is spent correctly to benefit society at large, with people having differing views on spending on topics ranging from education, military or even propping up banks, amongst a thousand other topics.

A final point is that VAT itself could be a means to simply tax (and penalise further) those who have made a hard-earned profit (even after already paying income tax) and that for these people who are likely to spend more they are subject to more VAT at the end of the day.

This last point can often be overlooked when talking about high earners not paying enough tax, assuming they have made it from non-tax evading means and spend their money within the UK.

Why Store Silver (or Gold) Outside of the UK?

The benefits of precious metal storage outside of the UK is that it completely circumvents the local economic and political conditions. In times of uncertainty it is thought of as a "safe" option to store your metal holdings outside of UK borders. 

Storage Locations

We store our VAT free silver and platinum in Switzerland. Your silver will be stored in a bonded warehouse and all your goods will be fully insured. 

CGT Exempt And No VAT

We have an excellent range of products that are capital gains tax exempt, including all coins classified as British legal currency. We have a complete take on capital gains tax on our blog here.

If you are interested in VAT-free CGT exempt coins, we have the following available:

VAT Free Silver 1 oz CGT Exempt Coins - Loco Zurich

These VAT-free British 1 oz silver coins will be chosen on an 'our choice' basis, which may include Britannias or Royal Mint lunar coins. All will contain one ounce of fine silver, struck in .999 fineness.

Quantity Premium Total
1
£6.50
£24.93

Price Per Item:
£24.93

Est UK Delivery
£3.50
5
£6.30
£123.65

Price Per Item:
£24.73

Est UK Delivery
£6.00
10
£6.10
£245.30

Price Per Item:
£24.53

Est UK Delivery
£6.00
25
£6.00
£610.75

Price Per Item:
£24.43

Est UK Delivery
£6.00
50
£5.90
£1,216.50

Price Per Item:
£24.33

Est UK Delivery
£11.00
100
£5.70
£2,413.00

Price Per Item:
£24.13

Est UK Delivery
£27.60
250
£5.60
£6,007.50

Price Per Item:
£24.03

Est UK Delivery
£30.60
500+
£5.50
£11,965.00

Price Per Item:
£23.93

Est UK Delivery
£48.20

 

VAT Free Platinum 1 oz CGT Exempt Coins - Loco Zurich

We can also offer CGT-exempt platinum coins for VAT-free storage. These coins will be chosen on an 'our choice' basis, which may include Britannias or Queen's Beasts coins. All will contain one ounce of fine platinum, struck in .9995 fineness.

Quantity Premium % Total
1
10
£928.40

Price Per Item:
£928.40

Est UK Delivery
£6.00
2
9.75
£1,852.58

Price Per Item:
£926.29

Est UK Delivery
£7.00
5
9.25
£4,610.35

Price Per Item:
£922.07

Est UK Delivery
£9.00
10+
9
£9,199.60

Price Per Item:
£919.96

Est UK Delivery
£12.00

Do You Wish to Collect Your Stored Silver?

Taking delivery of your silver and/or platinum bullion from bonded storage in Switzerland is possible, but not recommended.

These products are intended to be sold as 'storage only' items and are not a cost-effective option should you ever wish to take delivery. Costs to take delivery or collect will include handling fees, custom clearance charges and even tax liabilities.

We do offer very cheap second-hand bullion coins and bullion bars for immediate delivery in the UK, which are sold on the special scheme. VAT is only paid on the dealer’s margin, which means investors can make massive savings!

Buying VAT Free Silver Coins For Delivery

Before we left the European Union, it was possible to buy VAT free silver and have it shipped to the UK. As a part of the EU, VAT could be paid in the country of purchase which could sometimes be at a lower rate than the UK’s 20% (please correct us if we are not 100% accurate as we like to keep our pages up to date):

Country VAT Rate Country VAT Rate
Austria  20% Luxembourg  17%
Belgium  21% Netherlands  21%
Denmark  25% Spain  21%
France  20% United Kingdom 20%
Germany  19% Estonia  0%
Italy  21% United States 0%
Ireland  23% Canada 0%
Sweden 25% Russia 18%
Australia 0% New Zealand 0%
Norway 0% Switzerland 8%

We were aware of investors who took advantage of VAT free silver from dealers in Estonia, where the rate for VAT is 0%. Unfortunately, since our departure from the EU all silver, platinum and palladium bullion products are taxed at the standard rate when they enter the UK. This, obviously, is not the best news for UK investors and collectors who have had this loophole closed.

Alternative Ways to Save on VAT

It’s unlikely that the UK will follow Estonia’s lead in scrapping VAT on precious metals, but that doesn’t mean you can’t make savings. There are still some ways to avoid paying excessive taxes.

VAT-Free Silver Storage 

If you’re not concerned in having the physical product in your hands, you can avoid paying over the odds for your silver by purchasing our VAT-free bullion products. These particular coins and bars are held in secured bonded storage in Zurich, which allows investors to avoid the 20% VAT charge. We do charge minimal storage fees on these Loco Zurich products, but this is still considerably cheaper than having them delivered.

Buy "VAT free" or "marginal VAT" silver online

The differential tax margin scheme was, and still is, somewhat of a loophole after a deliberate short or half-arsed intervention by Brussels in 2014.

Up until 2014, Germany charged 7% VAT on silver, but to “harmonise” the common market, Brussels intervened and instructed them to raise VAT to 19% - where it has been ever since.

However, the policy updates failed to include goods bought outside the EU and only applied to products of domestic origin. Therefore, new silver coins bought from a non-EU country (e.g., Australia, Canada or America) were still subject to the 7% VAT and then to a margin tax on the profit made. This margin tax is charged at 19% but as the profits made on silver coins are relatively low, the amount to pay is usually very small.

The UK has a similar special margin scheme for secondary market silver where you only pay VAT on the profit you make when you come to sell.

This means if we sell a silver coin for £20 that we have previously bought for £15, we would only pay VAT (at 16.67%) on the £5 profit or 83p. Likewise if you were to sell the coin onward for £30, you would then pay VAT on you £10 profit which at 16.67% is £1.67.

See our page on the margin scheme for more details.

Our Conclusion 

The seemingly arbitrary rules and rates for VAT in the EU show how ridiculous it actually is. The lack of uniformity in rates which span from 0% - 25% within the same ‘Union’, even after asking Germany to ‘harmonise’ rates by increasing theirs to 19%, does not give a good indication that the EU bureaucrats are thinking logically and rationally.

Obviously, the EU is not to blame for the situation in the UK now. The main reason behind withdrawing from the EU was to give the UK more sovereignty over decisions such as these. A reduction, if not complete abandonment of VAT would be welcomed by many and would give the UK a more competitive advantage in the industry. Anglosphere nations such as Canada, Australia, New Zealand and the United States have VAT exemptions for certain silver and platinum bullion products, so why don’t we?

People will avoid paying tax where they can, which is why some canny investors were buying their precious metals from Estonia and shipping them in legally into the UK prior to January 2021. Whilst this door is now closed, cheap silver bullion options still remain to UK investors in the form of special scheme products and VAT-free bullion storage

Further Reading

You may wish to view all of our articles on our silver guide.

Related Blog Articles

This guide and its content is copyright of Chard (1964) Ltd - © Chard (1964) Ltd 2021. All rights reserved. Any redistribution or reproduction of part or all of the contents in any form is prohibited.

We are not financial advisers and we would always recommend that you consult with one prior to making any investment decision.

You can read more about copyright or our advice disclaimer on these links.