The details on this page relate to US and UK taxation laws concerning physical silver.
Taxation when Buying Silver in the USA:
Although VAT is common in the majority of countries — providing a problematic hurdle that European stackers struggle to overcome — there is no such tax in the United States. In fact, in some states, and as far as online bullion dealers are concerned, you don’t pay any tax at all. In truth though, it all depends on the state in which the purchase is made, because you may need to pay sales tax and this can differ from state to state.
Taxation when Selling Silver in the USA:
You need to keep track of how much gold and silver you purchase at all times, so that you can report to the government how much money you make or lose through its resale. In all states you will need to pay a federal tax if you receive more money than you paid. This simply means that your profits are being reported as income, and therefore need to be taxed accordingly.
Don’t stress though, because it is classed as a long-term gain, which means that the maximum tax you will need to pay is 28%.
To determine your total tax, you must work out how much you paid, including all of the added fees (credit card fees, postage and packaging, etc.,) and then how much profit you made. Once your profit is in the black, then you can work out how much tax you need to pay based on the capital-gains tax rate of 28%.
As an example, if I purchase 2 ounces of gold for $1,500 each, with free postage and no added fees, and then I wait for the value of gold to climb to $2000 an ounce before selling, I will have made $1,000 and will owe $280 in tax.
Taxation when Buying Silver in the UK:
There is a VAT of 20% to pay on all silver purchases in the United Kingdom. This is the highest VAT in the world when it comes to silver, so you can forgive UK stackers for being rather frustrated by this. What’s more, many bullion dealers in the UK add a premium to even the most basic of bullion coins, which means UK stackers often pay between 35% and 45% more for a silver coin.
What’s more, they have to pay extra VAT on all silver that has been repatriated, so there is no way of getting around this VAT by purchasing from Asia or America.
There are ways around this though and one of the most popular is to purchase and store in Switzerland. There is no VAT there when your silver is stored in a VAT-free zone. You only pay VAT if you take possession or ask delivery of your silver to your home in the UK.
Taxation when Selling Silver in the UK:
There is a tax to pay when you sell silver and make a profit from it, and this is known as a Capital Gains Tax. There are some exemptions for precious metals, such as those listed as official legal tender in the UK, but this is more common with gold (Gold Sovereigns are a prime example) and not with silver. However, the Silver Britannia is included in this and is therefore a great coin for UK stackers to purchase.
How much tax you pay depends on how much you earn and for how much you sell them. If you are a low earner paying the lower tax rate on your income, you will be charged 18% in Capital Gains Tax. If you are in the higher tax bracket, you will be charged 28%. This means that if you buy coins for £10,000 and sell for £13,000 (assuming there are no Silver Britannia coins in there) you will make a profit of £3,000 and will owe £540 at the lower rate and £840 at the higher rate.