Do I have to pay VAT on my silver purchase?
N.B. I am not a tax advisor. You must seek professional tax advice before embarking on any kind of investment. The following is merely my understanding of the tax system in relation to silver.
I think the comment I hear most when I’m talking about silver is ‘I’d love to buy silver but I don’t because of the VAT you have to pay.’
Luckily, this is a misunderstanding.
Whether you pay VAT or not comes down to what type of silver you are investing in and how you invest in silver.
For gold the issue of VAT is straightforward. On 31st December 1999 all EU member nations abolished VAT on investment gold (gold bars and coins).
From January 1st 2000, all investment gold purchased within the EU became exempt from VAT. This was a significant step for the UK, where investment gold had become VAT eligible in 1973.
Gold coins became tax free, as I understand it, due to the EU. In the early nineties there were significant disparities between member countries and their treatment of various investments. The UK was at a disadvantage as it charged VAT, in contrast to its fellow EU members who either did not charge or who only charged very low VAT. However the discomfort with this disparity does not seem to ring through for silver.
For many, the simple answer as to why gold is coins are not subject to VAT is because ‘they are money’. I can’t see anything on this on the HMRC website, but it does make sense. However it seems the main logic behind the VAT exemption is that gold was seen as a similar investment to stocks and shares, i.e. gold was bought for its value rather than as a collector’s item.
Silver coins are subject to VAT. This seems to be the case in several other European countries, not just in the UK. Here in the UK, silver coins are subject to 20% VAT. In Germany, they are also subject to VAT but it is significantly lower, so many coin buyers seem to buy from German websites – or so it seems looking at the forums.
However, when buying silver bars you may not be subject to VAT.
You do not pay VAT if the silver bullion you own is held in an accredited vault in an allocated account.
Should you take delivery of your silver bars whether from the bullion dealer or direct from the vault you will pay VAT.
Why is allocated silver stored in an accredited vault exempt from VAT? Because when you buy silver through a company such as The Real Asset Company you are buying silver bars stored in bonded storage facilities.
When silver is held like this, it gives the metal a status of “bonded bars” which is important. It means that from the point of view of the tax authorities, the silver bullion bars have not yet been imported into the UK/EU or Switzerland, or entered circulation, and are therefore not subject to VAT.
Should you take delivery of these bonded bars then you will have to pay VAT. This is because the silver bullion is then deemed to have then been imported.
Before the trolls appear and say ‘if you don’t hold it, you don’t own it!’ let me make one thing clear: The silver you buy with The Real Asset Company is yours, you own it. This is what ‘allocated’ means. It does not appear on our balance sheet and we store it for you in vault own by an accredited third party.
So yes, you can buy silver that is 100% yours and not pay VAT on it.
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