Government intervenes in taxes
Silver coin prices should pick up
10/08/2022, 8:12 p.m
The Federal Ministry of Finance makes it clear that a reduced sales tax rate of seven percent may only be applied to silver coins in exceptional cases. This is likely to drive up prices. There is uncertainty and excitement in the industry.
Anyone interested in silver coins as an investment or gift will soon have to dig deeper into their pockets. In a letter to the highest tax authorities of the federal states, the Federal Ministry of Finance pointed out that coins that are not collectors’ items of “monumentary value” and are imported into the EU from abroad should be charged a sales tax rate of 19 percent and not as before often a discount of 7 percent.
From the Ministry’s point of view, a simplification rule that only applies to collector’s items of high value has often been incorrectly applied in the past. With writing A ministry spokesman told the German Press Agency that the current legal situation was pointed out and some of the wording was changed so that it would be applied correctly in the future.
However, there is now uncertainty in the industry, as the managing director of the precious metals trade association, York Tetzlaff, said. It is unclear, for example, when the higher tax rates would have to be applied and what happened to dealers’ remaining stocks of silver coins. According to him, it could also be the case that dealers in silver coins would have to pay taxes retrospectively over the years. “For some companies, trading in silver coins accounts for up to 20 percent of sales,” explained the managing director of the industry association based in Pforzheim.
Industry wants legal clarity
Precious metal dealers have been using the so-called differential taxation for silver coins since 2014. “An exception should only apply to collector’s coins whose value is more than 250 percent higher than the material price,” explained Tetzlaff.
A few days ago, the precious metals trade association sent a list of questions to the ministry “in order to obtain legal clarity as quickly as possible for the industry, which was surprised by the letter.” At the moment, some dealers were selling silver coins at a 19 percent tax rate, while others were still selling them at 7 percent – the latter were now experiencing a run. Others would have suspended the sale completely.
With a view to rising inflation, Tetzlaff said: “This is extremely bad news for investors who have always invested in silver coins in particular or who want to give them as gifts. For dealers, this means legal uncertainty in ongoing transactions and bureaucratic burdens when changing their processes .” The rate of 19 percent used to apply to silver bars. According to Tetzlaff, these are easier to counterfeit than coins.