Why precious metal traders are finding new hope - and what that means for customers

For the unsettled precious metal traders in Germany there is new hope in tax issues. In a response from the Federal Ministry of Finance (BMF) to a request from the FDP member of the Bundestag Frank Schäffler about the changed handling of the taxation of silver coins, the BMF announced that it would coordinate with the federal states "a non-objection rule that ensures that dealers are not retrospectively burdened with higher sales taxes “. The corresponding letter from Parliamentary State Secretary Katja Hessel to Schäffler is exclusively available to WELT.

There has been a lot of excitement in the industry since the ministry ordered the tax authorities of the countries at the end of September to end the practice used by dealers in physical silver trading of selling certain products at a reduced tax rate to their end customers.

This so-called "differential taxation" only applies if the coin is a collector's item of numismatic value, the ministry made clear at the time. This applies to coins and medals for which the assessment basis for sales is more than 250 percent of the pure metal value.

On the other hand, since the VAT increase on investment silver to the full VAT rate in January 2014, dealers have switched to selling silver coins imported from other EU countries with seven percent import tax to end customers at a lower price.

On the one hand, the clarification from the Federal Ministry of Finance generally means that the end price for the corresponding products will increase by a good ten percent for customers with immediate effect. Since the letter is to be applied "to all open cases", precious metal dealers also fear that they may have to pay taxes for eight years. However, according to estimates from the industry, this would completely overwhelm some companies.

"Should this tax change also have retrospective consequences, numerous dealers who have imported themselves would be insolvent overnight," said Dominik Kettner, managing director of the sender Kettner Edelmetalle, the specialist portal "Goldreporter.de".

There, the volume in question from the silver trade is estimated at around 100 tons. At the current market price, this would result in a tax liability of around seven million euros. In addition, there would have been massive costs and bureaucratic effort to determine any tax liability at all.

Investing in precious metals has often been the focus of politics in recent years. As of January 10, 2020, the cash limit for the anonymous purchase of precious metals was reduced by 80 percent from EUR 10,000 to EUR 2,000. It was not until 2017 that the corresponding threshold was reduced from 15,000 to 10,000 euros.

In the summer of 2020, there was a threat of new tax regulations for so-called gold ETFs such as Xetra Gold and Euwax Gold. These securitizations, which are popular with investors due to their simple and inexpensive construction, should therefore have been subject to the withholding tax if they securitise a right to delivery of the physical metal. This plan was discarded a little later.

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