a precious metals tax declaration form for capital gains tax on gold and silver investments

What You Need to Know About Taxes on Precious Metals

10 minuti di lettura
12 ott 2021

Do you want to buy gold but don’t know how to pay taxes on precious metals? Here’s a short guide on taxes for physical gold and silver investments.

One of the most common questions we receive from our clients is how do you pay taxes on gold and other precious metals.

And we get why: it’s an important, yet complex, subject that one should get a hang of before starting to invest in gold, silver, platinum, or palladium.

That’s why we’ve made this short guide to break down everything you need to know about taxes on precious metals.

When do you pay taxes on precious metals?

Let’s say you bought several American Eagle gold coins and a few 1 oz silver bars and… now what? At what point do you have to pay taxes?

It’s actually quite simple. Let’s break down precious metal ownership into 3 phases:

  • When buying: when making a precious metal purchase, the only tax you should think of is the VAT (Value-Added-Tax).

Gold: When buying investment gold (aka coins and cast or minted bars), you pay no taxes because, in most countries, investment gold is VAT-free. Buying silver, however, is a different story.

Silver, Platinum, and Palladium: As an industrial product, silver is subject to VAT, with rates varying from country to country. The same goes for platinum and palladium — the PGM group metals. You will find more details on this below.

  • When storing: In short, owning precious metals is pretty much tax-free. Unlike real estate, precious metals are not subject to annual taxes and they are not taxed as part of your income. Instead, you can just keep them, follow their spot price, and sell them at the right moment. However, bear in mind that in some countries such as Switzerland, the precious metals you store have to be included in your wealth tax declaration.
  • When selling: finally, when it comes to selling, there’s one main tax to have in mind: the capital gains tax. It exists almost everywhere, with rates varying in different countries. Unlike VAT, this tax applies to all precious metals, including gold.

Now that we know the key stages of taxes on precious metals, let’s unpack how each of these taxes works, exactly.

What are the taxes on gold and other precious metals?

As mentioned above, there are two taxes you need to keep in mind when it comes to investing in precious metals:

  • VAT
  • Capital gains tax

Let’s take a look at VAT first.

What is the VAT on precious metals?

When it comes to gold, throughout Europe, investment-grade gold is not subject to VAT.

It is important to remember, however, that, to be considered “investment-grade”, bars or coins should be at least 999.5 pure gold. Therefore, make sure you buy your gold coins and bars from a trusted gold dealer.

Silver and PGM group metals

For all other metals, however, VAT will apply as, in the eye of the law (or in the eye of the tax institutions at least) they are seen as an industrial product. So buying silver, or PGMs (Platinum, Palladium, etc.) is just like buying a new iPhone: you will have to pay VAT on your products.

In Europe, VAT rates on silver, platinum, and palladium vary between 8% and 25%. To give you a better idea of what they are, here’s a shortlist:

Switzerland - 7.7% VAT

Germany - 19% VAT

United Kingdom - 20% VAT

France - 20% VAT

Italy - 22% VAT

There are also a few countries in Europe, among which Estonia and Norway, where you can buy legal VAT-free tender silver coins (for example, Silver Eagles, Silver Maples, and Silver Philharmonics).

In the U.S., however, there’s no federal tax applied on precious metals purchases. The only tax you might have to pay is a state sales tax, depending on which state you live in. For example, in July 2021, Ohio became the 41st state to remove sales tax from gold and silver bullion purchases.

Finally, when it comes to platinum and palladium, these metals, too, are subject to VAT with rates usually the same as for silver.

So, to sum up, for VAT on precious metals:

  • No VAT on investment gold in most countries.
  • VAT on other metals in most countries ranging from 7.7% in Switzerland (lowest rate in Europe) to 20% in France and the UK.

Now, let’s looks at the principal tax to be paid when selling your precious metals — the capital gains tax.

What is the capital gains tax on gold and other precious metals?

So, now that you realized the gold price is rising and the market is bullish, it looks like a good time to sell your gold American Eagle coins.

But when selling your gold coins, in most countries, you will have to deal with the capital gains tax. It’s a fee on the profit you get from selling your precious metals.

Like with the VAT rates for silver, rates of the capital gains tax vary from country to country. For example, Italy has a rate of 12.5% for private investors, while the U.K. applies a capital gain tax on precious metals varying from 10%-28%, depending on your income level. However, in the U.K., capital gains tax does not apply to legal tender coins produced by the Royal Mint.

Notably, some countries like Switzerland, Belgium, or Germany, do not apply the capital gains tax on precious metals. But, here again, certain taxes, such as customs duties or your country’s own capital gains tax, may apply if, after selling your precious metals products, you repatriate the funds to a different country.

Finally, in the U.S., physical holdings in gold or silver are subject to a capital gains tax equal to a marginal tax rate, up to a maximum of 28%. Meanwhile, short-term gains on precious metals are taxed at ordinary income rates.

Selling gold: a short case study of French taxes on gold

France has a slightly different tax system when selling your precious metals. They actually have not one but two taxes in place:

  • the capital gains tax: 36.2% on the profit made from selling your precious metals
  • the tax on precious metals: 11.5% of the total sale price of your metals (not only the profit but the entire amount you will get after selling)

When selling, French gold owners will then have to choose between the two taxes. So make sure you do your math to select the most advantageous of the two.

Finally, French gold buyers should know that, in the long term, owning gold in France might be rewarding:

in the second year after buying your gold products, the capital gains tax rate is reduced by 5% each year. This means that, after 22 years, your gold will become tax-free in France. Simply remember to save your proof of purchase document.

Can I buy tax-free precious metals?

As we’ve seen, in most countries, precious metals are subject to capital gains tax (except for a few countries like Switzerland, where only the wealth tax applies to precious metals).

And while gold is VAT-free in Europe, silver and PGMs (Platinum, Palladium…) are subject to VAT in almost every European country. Some of them have rates reaching 20% and higher, which will end up making your silver investment much more expensive.

Here’s an example: let’s say you buy €10,000 worth of silver in France, where VAT is 20%. Out of these €10,000, €2,000 will go on VAT.

But there are a few ways to reduce the burden of VAT 🙂 :

  • Buying and storing your precious metals in Switzerland, which has the lowest VAT rates in Europe. But investors should keep in mind that, if they later choose to have their products delivered to their home country instead of keeping them stored in Swiss vaults, they might end up paying VAT twice. For example, when shipping to France, you’d have to pay the Swiss VAT of 7.7% at the moment of purchase as well as 20% VAT in France upon delivery.
  • Buying entirely VAT-FREE silver and platinum: this is possible with storage in a secure Swiss Freeport – an economic area where the 7.7% Swiss VAT on precious metals does not apply.