Importing silver into Switzerland – what must be considered (including taxation)
Rather like gold, silver investment products – both coins and silver bars – are becoming increasingly popular. However, unlike the yellow precious metal, the purchase of silver is subject to VAT. Furthermore, investors are required to pay import duties if they wish to import white metals into Switzerland. But there are legal alternative options which are considerably more advantageous.
Note: This article does not claim to be comprehensive and is intended to be read as guidance only. Authoritative, legally binding information is best obtained from the customs offices of the exporting country, the Swiss Federal Customs Administration, and the Swiss Federal Department of Finance.
While investors can buy physical gold VAT-free almost anywhere in Europe, when purchasing silver products, VAT is still charged at the rate applicable for each respective country. The reason for this anomaly is that, according to a European Commission decision, silver coinage and silver bars are classified as ‘works of art or collectibles’, while gold continues to be treated as a classic investment commodity.
Thus, buying silver in the European Union (EU) is relatively expensive because of the high VAT rates. And the VAT margin scheme which some precious metal traders use when selling silver or platinum does little to change that reality.
Statutory value added tax
When buying silver, value added tax (VAT) is generally levied at source, even if the goods are purchased purely for investment purposes. This charge applies to all goods subject to VAT legislation, though the amount varies from state to state: VAT is 19% in Germany, while in Austria and France the standard rate is 20%. Italy’s VAT rate is set at 22%, while Belgium and the Netherlands impose VAT at 21%. So, as a non-EU country, Switzerland’s own VAT rate of 7.7% is the cheapest by far.
According to VAT legislation, silver is basically subject to value added tax like any other goods. This also applies to silver coins, which are legal tender at their face value in the issuing country. For example, the American Silver Eagle (USA), the Maple Leaf (Canada) and the Vienna Philharmonic (Austria) are all listed as currencies. These coin products are also available in gold. However, unlike their counterparts issued as silver coinage, these gold coins are VAT-exempt when imported.
The difference between VAT and import tax
When investors wish to transfer their silver holdings to Switzerland, for example to put them into storage there, an additional import tax becomes due on that import. Silver import tax is charged according to the same principles which apply to VAT: It is added to the net price of the imported goods. Incidentally, this also applies to gold. Only investment gold is exempt from taxes under the VAT regulations.
However, there is no blanket obligation to disclose the import of silver investment coins or silver bars as long as their value does not exceed CHF 299. Nevertheless, all goods with a value of CHF 300 or more must be disclosed to customs, whether requested to do so or not, and the appropriate import tax must be paid. In essence, it is always advisable to check Swiss customs regulations beforehand in order to avoid nasty surprises when crossing the border.
Legal ways to avoid VAT
In various EU countries it is possible to reclaim VAT, provided the goods have been exported and that export has been confirmed by customs. However, when importing into Switzerland, all goods with a total value of CHF 300 or more must be registered, and Swiss VAT becomes due on them. It is possible to buy silver worth less than CHF 300 in the EU and reclaim the VAT in the country of origin, without having to pay VAT in Switzerland. However, this de minimis limit is of no interest to most investors, because the value of their investment products is usually significantly higher, which would make the whole process far too cumbersome.
A much more efficient solution is to place the goods in a bonded warehouse, which is controlled by the Swiss customs authorities. After making a purchase – at Echtgeld AG, for example – the physical silver is then delivered directly to the transit warehouse in Switzerland. As a result, the transaction incurs neither VAT nor import tax, because the precious metal remains in a duty-free area, and as such has not yet been classified as imported. Only when the silver actually leaves the warehouse, as the result of a sale for example, does it actually become liable for import duty. However, if it subsequently changes hands without any physical movement of goods – if it is sold back to the dealer, for example – then the silver continues to remain tax-exempt.
An alternative to importing: buy in Switzerland at a low rate of VAT
As mentioned earlier, silver products purchased in Switzerland attract VAT at a rate of 7.7%, which is low compared to most other countries. So investors who want to avoid the EU rates and import taxes, which are still high despite the margin scheme, can buy their white metal holdings in Switzerland and then store them there.
Bank-independent safe deposit boxes or vault facilities at Swiss Gold Safe Ltd, a privately run storage company, are ideal for this purpose. Here, investors will find fully insured, demand-oriented storage solutions offering state-of-the-art security for precious metals and other valuables. Beyond individual safe deposit boxes, the company can also arrange collective storage in a duty-free warehouse or segregated storage in a domestic warehouse.
Why should investors consider storing their silver assets in Switzerland?
Switzerland functions as an important wholesale trading centre for precious metals. It also belongs to the European Free Trade Association (EFTA) and is a member of the United Nations (UN). Nevertheless, the Swiss Confederation has retained its independence, is not part of the EU, and maintains its own national currency based on the stability of the Swiss franc.
Thanks to its secure economy and political stability, this democratic state at the very heart of Europe has a high reputation right across the world. Switzerland is also renowned for its long history of uncompromising protection of private property rights. Its excellent geographical location, close to the neighbouring countries of Germany, France, Italy and Austria, has also proven to be a great advantage. One direct result of this proximity has been excellent communications and easy access via good public and private transport links, supported by its own excellent infrastructure.