Buying silver: everything you need to know about coins, bars and VAT rules

Buying silver is an accessible way for many private investors and entrepreneurs to diversify their wealth and protect themselves against inflation, loss of purchasing power and financial uncertainty. Unlike gold, however, the VAT rules for buying silver are complex and often unclear. In particular, the difference between VAT on silver coins and VAT on silver bars raises many questions.

In this article, we clearly explain how VAT on silver works, which forms of silver are fiscally most attractive, and how you as an investor can make smart choices.

What is silver as an investment metal?

Silver is a precious metal with a unique position in the investment world. Whereas gold is primarily seen as a monetary store of value, silver combines two functions: it is both an investment metal and an indispensable industrial raw material.

This dual role makes silver particularly attractive for investors seeking portfolio diversification.

Silver as a physical store of value

Like gold, silver is a tangible asset with no counterparty risk. It does not depend on banks, currencies or financial institutions. This makes silver appealing in times of economic uncertainty, high inflation or rising government debt.

Key characteristics of silver as a store of value:

• It preserves value over long periods
• It is globally recognised and tradable
• It offers protection against loss of purchasing power

Although silver historically shows greater price volatility than gold, many investors deliberately use it as a complement to their gold holdings.

The dual role of silver: investment and industry

A major difference compared to gold is silver’s strong industrial component. A large share of annual silver production is used in sectors such as:

• Solar panels and renewable energy
• Electronics and semiconductors
• Medical applications
• Water purification and the chemical industry

This structural industrial demand provides a strong fundamental value base. At the same time, it makes silver more sensitive to economic cycles, which can result in higher volatility, both upward and downward.

Silver coins and silver bars: what are the differences?

Anyone looking to buy silver will almost always choose between two main forms: silver coins and silver bars. Both represent physical silver of high purity, but they differ significantly in tradability, VAT treatment, pricing structure and investment purpose.

Silver coins

Silver coins are minted by official mints and have a face value in the currency of the issuing country.

Well-known examples include the Maple Leaf, Philharmoniker, Britannia and Kangaroo. These coins typically have a silver purity of 99.9% or 99.99% and are recognised worldwide.

Characteristics of silver coins:

• Issued by recognised mints
• Face value (legal tender)
• High purity
• Easy to trade globally
• Popular among private investors

Silver bars

Silver bars are produced by recognised refineries and are available in a wide range of weights, from 100 grams to several kilograms.

Well-known producers are LBMA-accredited refineries, which guarantee quality and purity.

Characteristics of silver bars:

• No nominal value
• Very high silver purity
• Lower premium per gram for larger weights
• Efficient for larger investments

Why is there VAT on silver (and not on gold)?

Before diving into the rules, it is important to understand the fundamental difference between gold and silver. Tax authorities classify gold as a financial product (investment gold), which is therefore exempt from VAT (0% rate).

Silver, however, is classified as an industrial raw material. Because silver is indispensable in solar panels, batteries, electronics and the medical industry, it is taxed like a regular good. In the Netherlands, this means that 21% VAT is generally charged on silver.

For investors, this creates a significant hurdle: the silver price must rise by 21% just to break even. Fortunately, there are smart and fully legal ways to limit or avoid this VAT burden. These are explained below.

Silver is considered an industrial source and is therefore charged with VAT.

How does VAT work when buying silver?

Anyone buying silver will almost always encounter VAT. Unlike gold, which is VAT-exempt under certain conditions, silver is considered a raw material under European legislation and therefore falls under a different tax regime.

However, the form in which you buy silver (coins, bars or bonded storage) makes a significant difference to the actual VAT treatment.

VAT on silver coins (margin scheme)

Most silver coins sold to private investors fall under the VAT margin scheme. This scheme applies to second-hand goods, including silver coins that have previously been part of economic circulation.

What does this mean in practice?

• VAT is not calculated on the full sales price
• Only the dealer’s profit margin is subject to VAT
• VAT is not shown separately on the invoice
• The effective VAT burden is significantly lower than 21%

For private investors, this is generally the most VAT-efficient way to buy silver.

When are silver coins most suitable?

Silver coins are especially suitable if you:

• invest as a private individual
• value flexibility and liquidity
• want to keep VAT costs as low as possible

This is why silver coins form the foundation of many private investors’ silver holdings.

VAT on silver bars (standard 21% VAT)

Silver bars are considered a raw material for tax purposes and are almost always subject to the standard VAT rate of 21%, regardless of weight or producer.

Key points:

• VAT is calculated on the full purchase price
• VAT is shown separately on the invoice
• For private investors, this VAT is a direct cost

For VAT-registered businesses, this VAT can often be reclaimed. For private investors, silver bars are therefore usually less attractive despite the lower premium per gram.

When do silver bars still make sense?

Silver bars may be suitable if:

• you invest through a business and can reclaim VAT
• you purchase large volumes of silver
• you combine silver ownership with professional storage

In combination with a bonded warehouse, the VAT treatment changes significantly.

Buying silver VAT-free via a bonded warehouse

A bonded warehouse is a customs-approved storage facility where goods, including precious metals, may be stored without VAT being charged. When silver is placed directly into a bonded warehouse, no VAT is due at the time of purchase.

Key principles:

• The silver is not physically delivered to you
• It remains under customs supervision
• VAT is only charged upon physical delivery

Who is VAT-free silver buying suitable for?

This approach is particularly attractive for:

• investors with a long-term horizon
• larger investment amounts
• investors who primarily view silver as a store of value

As long as the silver remains in the bonded warehouse, no VAT is due.

Comparison of VAT rules for silver coins, bars and bonded storage

European VAT rules and recent changes

VAT rules for buying silver are largely determined at the European level. Although individual member states have limited flexibility, the VAT framework for precious metals is set out in EU directives.

This harmonisation has led to important changes for silver investors in recent years.

Why European regulation is so influential

Within the EU, a single VAT system applies, including a legal distinction between:

• monetary investment assets
• industrial raw materials

Gold benefits from a specific VAT exemption. Silver does not and is therefore subject to VAT in all EU member states.

Countries are allowed to apply limited exceptions, but structural deviations have been increasingly restricted.

Harmonisation of VAT on silver coins

In the past, there were significant differences between EU countries in the VAT treatment of silver coins. Some countries, such as Germany, temporarily applied more favourable regimes, encouraging cross-border purchases.

The EU has actively reduced these differences to:

• prevent VAT arbitrage
• create a level playing field
• simplify enforcement

As a result, country-specific VAT advantages have largely disappeared.

You can buy VAT-free silver when choosing for storage in a bonded warehouse.

What changed in the legislation? (the “German route”)

Until recently, dealers could import silver coins via Germany at a reduced import VAT rate. These coins could then be sold under the margin scheme in other EU countries.

Germany increased this reduced rate to its standard VAT rate under EU pressure, eliminating the advantage. Newly minted coins from outside the EU are now taxed at full VAT upon import.

As a result, the market shifted toward pre-owned coins, which can still be sold under the margin scheme.

Investing in VAT-free silver: how does the bonded warehouse work?

For investors who want to buy silver without paying VAT immediately, a bonded warehouse offers a tax-efficient solution. This structure makes it possible to buy and store silver VAT-free, as long as the silver is not physically delivered. Especially for larger investments, this can make a significant difference in total costs.

What is a bonded warehouse?

A bonded warehouse is a customs-approved storage facility where goods are stored under customs supervision. In such a warehouse, the levying of VAT and import duties is deferred.

For precious metals like silver, this means that no VAT is due at the time of purchase, as long as the silver remains stored in the warehouse.

Important to understand:

• The silver legally becomes your property
• The silver is not physically delivered to you
• It remains stored within the customs regime

This creates a VAT-neutral situation as long as you choose storage.

How does buying VAT-free silver work in practice?

The process typically works as follows:

• You buy silver (usually silver bars) via a recognised dealer
• The silver is immediately stored in a bonded warehouse
• No VAT is charged upon purchase
• You can sell the silver or have it delivered at any time

Only when you have the silver physically delivered, for example to your home, does the VAT become due at the then-applicable rate.

VAT-free silver storage via The Silver Mountain

The Silver Mountain offers customers the opportunity to buy and store silver VAT-free via a recognised bonded warehouse. This storage structure is intended for investors who primarily view silver as a long-term store of value and wish to operate tax-efficiently.

For this purpose, The Silver Mountain collaborates with specialised storage partners, including Edelmetaal Beheer Nederland (EBN). The storage is professionally managed, fully insured and meets strict security requirements. Customers retain insight into their holdings at all times and can have the silver delivered or sold upon request.

Rolf van Zanten explains:

Selling silver: How does VAT work and what are the returns?

An investment is only successful if you achieve a good return upon sale. With silver, there is often a misunderstanding that you will face complex tax rules again when selling, or that it is difficult to sell your silver. At The Silver Mountain, the opposite is true.

To offer you certainty, we work with a firm buyback guarantee.

How does VAT work when I sell my silver?

As a private individual, you do not have to worry about paying VAT when selling your silver.

• Private individual: You sell your coins or bars to a dealer (like us). Because you are a private individual, you cannot and do not need to charge VAT. You simply receive the agreed amount in your account. This is untaxed (subject to wealth tax in Box 3).
• Business: Are you selling silver that is on your company's balance sheet? Then you must issue a sales invoice with VAT. The purchasing party pays this VAT to you, and you remit it to the Tax Authorities.

Conclusion on VAT on silver

Buying silver offers interesting opportunities, but requires insight into VAT rules. Silver coins are often the most tax-efficient option for private investors thanks to the margin scheme, whereas silver bars are generally taxed at 21% VAT. Those investing larger amounts who do not need immediate physical possession of the silver can buy and store silver VAT-free via a bonded warehouse.