As a trader in precious metals, we are regularly asked how to deal with precious metals in relation to the income tax return. In this blog article, we will explain the fiscal side of owning precious metals. We would like to point out that this document is purely informative and should not be seen as advice and that no rights may be derived from it. Consult your accountant or tax specialist for personal advice.
This article is divided into three topics:

• Private ownership of precious metals
• Commercial ownership of precious metals
• Precious metals, VAT and the margin scheme

Private ownership of precious metals

The possession of precious metals is considered an investment by the tax authorities. For this reason, you must declare your precious metals in your annual tax return in box 3 (savings and investments). You must declare the value of your precious metals on the reference date (1 January) of the year for which you are filing your tax return.
As a trader in precious metals, we do not provide any data to the tax authorities. The annual declaration of your precious metals is therefore your own responsibility.
Depending on the composition of your gold and/or silver stock and the use by the owner, it is possible that possession of precious metals can be considered as possession for personal purposes. This is then not an investment, but a collection.
However, it is rare that collections of precious metals are not considered as investments. A list of coins has been compiled by the European Commission which includes all coins that always fall under the heading of ‘investment gold’. All investment coins and bars that The Silver Mountain offers, such as the Maple Leaf and the Krugerrand, therefore fall into box 3 for income tax.
In the following link from the tax authorities you can read how your assets are calculated in Box 3. There are exemption schemes, these two exemptions are:

1. Exemption for objects of art and science
2. Exemption for a collection (special form of art and science)

 
Please note! To determine whether and to what extent you can use these exemptions, we advise you to seek expert advice. We do not advise on this.
 

Business ownership of precious metals

A legal entity (for example a BV) can also invest in precious metals. The legal entity is the owner of the precious metals (investment). Income from investments is in principle taxed for companies, this is after all profit on which corporate tax must be paid.
 
How do I value the precious metals?
Investments in precious metals can be valued for tax purposes at purchase price or market value. If valued at a lower market value, a (not yet actually realised) loss will be deductible from the profit in the year in question. In addition, any losses due to alienation are also deductible. A possible higher market value also means a (not yet actually realised) profit, which is taxed with corporate income tax. Please note that the chosen valuation basis must also be chosen in subsequent years.
 
Please note! Every situation is unique. We therefore advise you to consult with your bookkeeper or accountant on how best to deal with your company's precious metal investments.
 

Precious metals, VAT and the margin scheme

 
VAT on gold
Investment gold is exempt from VAT under certain conditions. These conditions are:

1. Gold bars or plates of a weight accepted by gold markets, of at least 99.50% purity
2. Gold coins that at least:

• 90% pure
• Minted after 1800
• Have been or are legal tender in the country of origin

 
All gold coins and bars that we sell meet the requirements to be sold as investment gold. For this reason, 0% VAT is charged on our gold coins and bars.
 

 
VAT on silver, platinum and palladium
Silver, platinum and palladium are primarily seen as industrial raw materials. As a result, these precious metals are in principle taxed with 21% VAT. Investment coins of these precious metals are traded under the margin scheme. All coins of these precious metals from our range are sold under the margin scheme.
 

 
Margin scheme
In terms of content, the margin scheme means that VAT only needs to be paid on the profit margin that is achieved on the sale of these coins. The condition for being able to do this is that no VAT amount is stated on the invoice.
Bars of silver, platinum and palladium do not fall under the margin scheme and are therefore taxed with 21% VAT. As a private individual it is therefore not attractive to buy bars of these precious metals. For businesses it can be very attractive, as you can reclaim the VAT from the Tax Authorities (and charge it again as soon as you sell the silver bars).
 

 

 

Conclusion

Bars of silver, platinum and palladium do not fall under the margin scheme and are therefore not interesting for private customers. Investment gold, on the other hand, is completely exempt from VAT. The possession of precious metals is seen as an investment and must therefore be declared in your annual tax return in box 3 (savings and investments). As a trader in precious metals, we do not provide this information to the tax authorities; this is your own responsibility.
 
Disclaimer: The Silver Mountain does not provide investment advice and this article should not be considered as such. Past performance is no guarantee of future results.