VAT Exemption for Investment Gold

Anyone who buys gold bars or gold coins in Malta and throughout the European Union pays no VAT - provided the gold meets the statutory minimum requirements for investment gold. This special rule has been harmonised across the EU since 1 January 2000 and makes gold considerably more attractive from a tax perspective than most other precious metals, in particular silver, on which the Maltese standard VAT rate of 18% applies.

Legal Basis

The VAT exemption for investment gold rests on two levels of law:

• EU law: Articles 344 to 356 of the VAT Directive 2006/112/EC oblige all Member States to exempt supplies of investment gold from VAT.
• Maltese law: The VAT Act (Chapter 406 of the Laws of Malta) transposes the EU directive into national law. The exemption applies to supplies, intra-Community acquisitions and imports of investment gold.

The rule concerns gold only - silver, platinum and palladium are not covered and are subject to the standard Maltese VAT rate of 18%.

What Counts as Investment Gold?

Not every gold product is automatically VAT-exempt. The law defines investment gold on the basis of clear criteria:

Gold Bars

Bars from LBMA-certified manufacturers such as Heraeus, Umicore, PAMP Suisse or Valcambi generally meet these requirements automatically.

Gold Coins

Classic investment coins such as the Krugerrand, Vienna Philharmonic, Maple Leaf or American Eagle meet these conditions. The European Commission publishes a non-exhaustive list of VAT-exempt coins annually in the Official Journal of the EU. Coins traded mainly as collectibles, whose price reflects their numismatic value, may be excluded from VAT-exempt status.

Input VAT Deduction for Dealers (Option to Tax)

A special mechanism concerns commercial gold sellers: traders who supply investment gold may waive the exemption and opt to tax the supply. This is worthwhile where significant input VAT is incurred on the purchasing side (e.g. in the manufacture of bars). For private buyers this aspect is irrelevant - they always benefit from the exemption.

Distinction: Processed Gold and Semi-Finished Products

As soon as gold is processed, the exemption ceases to apply:

• Jewellery made of gold is always subject to VAT, regardless of fineness.
• Dental alloys (dental gold) are likewise subject to VAT.
• Semi-finished products (wires, sheets, granules) for industrial purposes are subject to the standard rate.

The line between VAT-exempt investment gold and a VAT-liable processing product is relevant to the melt value calculator: a gold ring of 585 alloy is not investment gold - neither because of its fineness (below 99.5%) nor because of its processed form.

Tax Advantage over Silver

Example: 1 kg silver at a spot price of EUR 30.00/ounce

Raw metal value:  1,000 g / 31.1035 g x EUR 30.00 = EUR 964.52
+ 18% VAT:        + EUR 173.61
= Purchase price approx.  EUR 1,138.13

For gold (1 troy ounce, EUR 2,400):
Gold value:        EUR 2,400.00
+ 0% VAT:          EUR 0.00
= Purchase price approx.  EUR 2,400.00 (plus dealer premium, no tax)

The missing 18% buffer on silver makes it considerably harder to trade at cost when reselling. The tax estimator can calculate this effect for specific purchase scenarios.

Import from Third Countries

The import of investment gold from non-EU countries (e.g. from Switzerland or the USA) is also VAT-free, provided the quality criteria are met. Customs duty may nonetheless arise where no free trade agreement exists - however, this is generally not the case for gold, since gold falls under Chapter 71 of the Harmonised System and is subject to a 0% customs rate in the EU.

Relationship to Other Tax Rules

The VAT exemption says nothing about income tax or capital gains. In Malta, no capital gains tax is levied on the private disposal of movable assets such as precious metals - Maltese capital gains tax applies only to specific assets (immovable property, securities, business interests). There is no German-style speculation period. Gains from the private sale of physical gold by individuals in Malta are therefore generally not taxed.

Note: This article serves general information purposes only and does not constitute tax or investment advice. For individual tax questions, a qualified tax adviser should be consulted.

In Brief

Investment gold with a fineness of at least 99.5% (bars) or 90.0% (coins minted after 1800) has been fully exempt from VAT in the EU - and thus in Malta - since the year 2000; a statutory advantage that structurally favours gold over silver, platinum and other precious metals on physical purchase.