VAT on Silver

Anyone who buys silver – whether as a bar, investment coin or industrial goods – generally pays value added tax (VAT) in Malta. This fundamentally distinguishes silver from investment gold, which is fully VAT-exempt under the EU VAT Directive 2006/112/EC. For silver investors this difference has considerable practical significance: the tax raises the entry price and therefore the break-even point on a later sale.

Standard rate and margin scheme

In Malta the standard VAT rate of 18% applies to silver on the net purchase price. An example:

Net dealer price:      100.00 €
+ 18% VAT:            +  18.00 €
─────────────────────────────────
Gross price (customer): 118.00 €

Many dealers, however, use the margin scheme taxation. Here VAT is not levied on the entire sale price, but only on the trading margin (the difference between the dealer's purchase and sale price). The procedure is open to reputable commercial resellers who have acquired goods from private individuals or other margin-taxed dealers. The effective tax rate for the end customer is then typically lower than the full standard rate – depending on the dealer's specific margin. The margin scheme must be indicated on the invoice; a separate VAT statement is not permitted there.

Overview: silver VAT in international comparison

*In Singapore qualifying investment precious metals (including silver from fineness 999) have been GST-exempt since October 2012; the regular GST rate has stood at 9% since January 2024.

Within the EU, silver imports and purchases are subject to the standard VAT rate of the respective member state; the former tax advantage of buying via low-rate jurisdictions or bonded warehouses has largely disappeared for private individuals since import silver became subject to full import VAT.

Which silver products are affected?

The 18% VAT applies to virtually all silver products:

• Silver bars (cast or minted, any denomination)
• Investment and bullion coins made of silver (e.g. Maple Leaf, Vienna Philharmonic, Britannia, American Eagle)
• Numismatic collector coins made of silver (possibly margin-taxed by the dealer)
• Industrial silver (granules, semi-finished goods)
• Scrap silver and broken silver in commercial trade

Not subject to VAT, by contrast, is the private resale (private individuals are not taxable persons for VAT purposes) as well as certain VAT-exempt banking transactions, insofar as silver is classified as a financial instrument – which is rare and contentious in practice.

Effect on the silver price and the premium (agio)

The spot price for silver (e.g. the current silver price in euros) is a net market price without VAT. Dealers add their premium (minting costs, margin, logistics) on top of this price and then the statutory VAT. The silver surcharge due to tax can be considerable compared with gold and directly affects the return: anyone who buys silver and later sells it tax-free (private individuals sell without VAT) has the tax paid on purchase as a permanent cost factor.

With the silver calculator the current material value can be calculated; the tax estimator helps to estimate the overall tax burden on buying and selling.

The margin scheme in practice – what buyers need to know

1. Recognition feature on the invoice: a reference to the margin scheme – no separate VAT amount shown.
2. No input VAT deduction: businesses that use silver commercially cannot claim input VAT on margin-taxed invoices.
3. Price comparison: a gross price of 110 € (margin-taxed) can be cheaper than 110 € at the full standard rate, because in the first case the tax falls only on the margin.
4. Resale: private individuals can resell margin-taxed coins tax-free (not a business = no VAT obligation). Note that Malta levies no capital gains tax on private disposals of movable assets such as precious metals.

Tax advantage: why investment gold is better placed for tax

The EU has granted investment gold a special position since the special scheme for investment gold introduced with effect from 1 January 2000, because it is regarded as a money-like good. Silver does not enjoy this status – although historically, as a coinage metal, it likewise had monetary significance. For the investor this means: at the same spot price, gold can offer a better net entry level because no VAT raises the purchase price.

Note: this article does not constitute tax or investment advice. For individual tax questions please consult a tax adviser.

In brief

Silver is subject in Malta to the standard VAT rate of 18%; the margin scheme can significantly reduce the effective tax rate for the end customer. Unlike investment gold, silver enjoys no EU-wide VAT exemption – a factor that investors should always factor in when buying silver and comparing actual entry prices.