VAT on silver: everything about coins, bars and the tax rules

In the Netherlands silver is basically subject to 21% VAT, but the actual VAT burden varies greatly by form: silver coins often fall under the margin scheme, silver bars are fully taxed and buying silver without VAT is possible via a customs warehouse. Unlike gold, the VAT rules for 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 most fiscally interesting and how you as an investor can make well-informed choices.

What is silver as an investment metal?

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

This combination makes silver interesting for investors who want to diversify their portfolio.

Silver as a physical store of value

Like gold, silver is a tangible asset without counterparty risk. It is not dependent on banks, currencies or financial institutions. This makes silver attractive in times of economic uncertainty, high inflation or rising government debt burdens.

Characteristics of silver as a store of value:

• It retains value over long periods
• It is globally recognisable and tradable
• It acts as protection against loss of purchasing power

Although historically silver has experienced more price fluctuations than gold, many investors deliberately use it as a complement to gold holdings.

The dual role of silver: investment and industry

An important difference with gold is that silver has a strong industrial component. A large part of the annual silver production is used in sectors such as:

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

This structural industrial demand provides a fundamental underlying value. At the same time it makes silver more sensitive to economic cycles, which can lead to higher volatility, both upwards and downwards.

Silver coins and silver bars: what are the differences?

Anyone looking to buy silver will almost always end up with two main forms: silver coins and silver bars. Both represent physical silver of high purity, but they differ fundamentally in tradability, VAT treatment, price composition and intended use.

Silver coins

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

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

Characteristics of silver coins:

• Issued by recognised mints
• Nominal value (legal tender)
• High purity
• Easy to trade worldwide
• Popular with private investors

Silver bars

Silver bars are produced by recognised refiners and are available in a variety of weights, ranging from 100 grams to multiple kilograms.

Well-known producers are LBMA-recognised 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)?

Silver is subject to VAT because the tax authorities regard it as an industrial raw material, whereas gold is exempt as a financial product (investment gold). In this article you can read more about the VAT rules on gold.

Because silver is indispensable in solar panels, batteries, electronics and the medical industry, it is taxed as a regular good. In the Netherlands this means that, in principle, 21% VAT is charged on silver.

For private investors that VAT is a significant cost factor: the silver price must first rise by 21% before the purchase breaks even. However, there are legal ways to reduce or defer this VAT burden. Below we cover all the rules around silver and VAT.

Silver is considered a raw material and therefore 21% VAT is charged.

How exactly does VAT work when buying silver?

Anyone who wants to buy silver will almost always encounter VAT; the form in which you buy determines how much. Unlike gold, which is exempt from VAT under certain conditions, silver is regarded as a raw material under European law. Coins, bars or storage in a customs warehouse make a big difference to the final VAT rules.

VAT on silver coins (margin scheme)

Many silver coins sold to private investors, particularly pre-owned examples, fall under the margin scheme. This scheme is intended for used goods, including silver coins that have previously been in commercial circulation.

What does this mean in practice?

• VAT is not calculated on the full selling price
• Only the dealer's profit margin is subject to VAT
• The VAT is not visible on the invoice
• You effectively pay less VAT than on silver bars

For private investors this is generally the most VAT-efficient way to buy silver. Although VAT technically applies, it is embedded in the price and is significantly lower than the standard 21% rate.

When are silver coins attractive?

Silver coins are particularly suitable when you:

• invest privately
• value flexibility and tradability
• want to keep VAT costs as low as possible

For these reasons silver coins form the basis of many private investors' silver holdings.

VAT on silver bars (standard 21% VAT)

Silver bars are fiscally regarded as raw material and almost always fall under the standard 21% VAT rate. This applies to both cast and minted bars, regardless of weight or producer.

Key characteristics:

• VAT is calculated on the full purchase price
• The VAT is visible on the invoice
• For private individuals this VAT is a direct cost

For VAT-registered businesses this VAT can often be reclaimed. For private investors this makes silver bars in most cases less attractive, despite the lower premium per gram of silver.

When do silver bars still make sense? 

Silver bars can be interesting when:

• you invest for business purposes and can reclaim VAT
• you buy large volumes of silver
• you combine silver with professional storage

In combination with a customs warehouse (see below) the VAT situation changes fundamentally.

Buy VAT-free silver via a customs warehouse

A customs warehouse is a storage location recognised by customs where goods, including precious metals, may be stored VAT-free. When silver is placed directly in a customs warehouse, no VAT is due at the time of purchase.

Important principles:

• Silver is not physically delivered to you
• It remains stored under customs supervision
• VAT is only charged at the moment of delivery

Who is buying VAT-free silver suitable for?

Buying VAT-free silver via a customs warehouse is particularly interesting for:

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

As long as the silver remains in the customs warehouse, there is no VAT burden. VAT becomes due only upon physical delivery to your address or movement outside the warehouse.

Some providers point to storage outside the EU, for example in Switzerland, as a route to avoid VAT. A Dutch customs warehouse achieves the same fiscal effect: no VAT as long as no delivery takes place, without your silver having to cross national borders.

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

Buying silver as a private individual or business: a buyer's guide

Not sure which form suits your situation? Our specialists are happy to think along with you, without providing individual tax advice. Please consult your tax advisor for that.

European VAT rules and recent changes

VAT rules for buying silver are largely determined at the European level. Although individual member states have some policy leeway, the VAT framework for precious metals is essentially set out in European directives.

It is precisely this European harmonization that has led to significant changes for silver investors in recent years.

Why European regulation is so decisive

Within the European Union there is a single common VAT system. That means countries are required to charge VAT according to established categories, including the distinction between:

• monetary investment instruments
• industrial raw materials

Gold falls under a special exemption for investment gold in Europe. Silver does not fall under this and is legally regarded as a raw material. As a result, VAT charging on silver is in principle mandatory within all EU member states.

Countries may apply limited exceptions, but structural deviations have been increasingly restricted.

Harmonization 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 a more favourable VAT regime. This led investors to buy silver across borders to save on VAT.

The European Union has actively reduced these differences in recent years. The aim was to:

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

The result is that VAT advantages through country-specific constructions have largely disappeared. For investors this means more clarity, but also fewer opportunities to avoid VAT through foreign purchases.

You can buy VAT-free silver by choosing storage in a customs warehouse.

What has changed in the legislation? (The "German Route")

Since the European tightening, the margin scheme no longer applies to newly minted coins from outside the EU; only pre-owned coins still benefit from it. Many investors remember that silver coins always fell under the margin scheme. Why has this changed?

Until recently, dealers could import silver coins via Germany. Germany applied a uniquely low VAT rate (import rate) on silver coins from outside the EU. Dealers imported via Germany and then resold the coins in the Netherlands under the margin scheme.

• The change: Under pressure from the EU, Germany has increased this low rate to the standard rate (19%). This removed the advantage.
• Consequence: Newly minted coins coming from outside the EU (such as the Canadian Maple Leaf) are now taxed at the full VAT rate on arrival. As a result, dealers often have to pass on 21% VAT to the customer on new coins.
• The solution: Trade has shifted to 'Pre-owned' coins. Because tax has already been paid on these at some point, or because they were purchased from private individuals, the dealer is allowed to apply the favorable margin scheme to them.

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

For investors who want to buy silver without paying VAT immediately, a customs warehouse offers a fiscally attractive solution. This construction 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 customs warehouse?

A customs warehouse is a storage location recognized by customs where goods are stored under customs supervision. In such a warehouse the charging of VAT and import duties is deferred.

For precious metals like silver this means that no VAT is due at the moment 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 under 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 generally proceeds as follows:

• You buy silver (usually silver bars) through a recognized provider
• The silver is stored directly in a customs warehouse
• No VAT is charged at the time of 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, is VAT then due at the rate applicable at that time.

VAT-free silver storage via The Silver Mountain

The Silver Mountain offers customers the possibility to buy and store silver VAT-free via a recognized customs warehouse. This storage arrangement is intended for investors who primarily view silver as a long-term store of value and want to operate in a fiscally efficient manner.

The Silver Mountain works with specialized storage partners for this, including Edelmetaal Beheer Nederland (EBN). The storage is professionally arranged, fully insured and meets strict security requirements. Customers always retain insight into their holdings and can have the silver delivered or sold on request.

Sell silver: How does VAT work and what does it yield?

When selling silver as a private individual you do not have to remit VAT; you simply receive the agreed amount. An investment is only successful if you achieve a good result when selling. There is often a misconception about silver that you will have to deal with complex tax rules again when selling, or that it is difficult to get rid of your silver. At The Silver Mountain the opposite is true; to give you certainty, we work with a buyback guarantee.

What about VAT when I sell my silver?

As a private individual you do not need to worry about remitting VAT when you sell your silver.

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

Note: "VAT-free" does not mean that silver is completely tax-free. Physical silver counts for private individuals as assets in Box 3, meaning the value on the reference date can be relevant for your tax return. See the current reference value for the tax return for this.

Conclusion about VAT on silver

Buying silver offers interesting opportunities, but requires understanding the VAT rules. Silver coins are often the most tax-efficient option for private investors thanks to the margin scheme, while silver bars are generally subject to 21% VAT. Investors who invest larger amounts and do not need the silver immediately can buy and store VAT-free silver via a customs bonded warehouse.