What is differential taxation?

What is differential taxation? © Own image

Ein Begriff auf den der interessierte Edelmetallkäufer immer wieder stößt, ist der der „Differenzbesteuerung“. Doch was steckt hinter diesem Konzept? Und bringt die Differenzbesteuerung dem Käufer Vorteile oder sogar Nachteile? Während Gold in Österreich und der EU von der Mehrwertsteuer befreit ist, kann bei Silber immerhin eine besondere Form der Umsatzsteuer greifen.

Differential taxation: special feature of value added tax

Differential taxation is a special form of the generally known value added tax. To understand it, one must understand the VAT, as a consumption tax for the consumer - a consumption tax, which all active companies collect for the state on your services and products and pay once a month to the tax office. The amount of the applicable tax rates, as well as which tax rate must be added to which product, is regulated in the Value Added Tax Act (UStG). In Austria, the standard rates for VAT are 20% or a reduced rate of 10%. However, the UStG also regulates numerous special forms that result from or simplify everyday business. These include, for example, the reverse charge regulation among companies, in which the sales tax is calculated but not paid, or the differential taxation.

The basic idea of differential taxation is to provide a tax-fair solution for goods in secondary markets. Here, VAT is not applied to the total price, but only to the difference between the purchase and sales price of the goods.

In practical terms, this means that certain (used) goods (e.g. cars, works of art, jewelry, numismatic coins, etc.), for which VAT has already been paid once by a consumer, no longer have to be paid with VAT on the total amount, but only on the dealer's margin, when they are sold again by a dealer. The legally important thing here is that the VAT has already been paid once.

Example of differential taxation of a silver coin.

A precious metal dealer buys an old silver coin from a consumer and pays him 100.- Euro for it. He then sells the same coin to another customer for 124 Euros and adds this text or a similar text to the invoice: "No VAT shown! Differential taxed according to §24 UStG".

Thus, the purchase price of 124 euros includes only 4 euros VAT, instead of the normal VAT of 24 euros. Thus, this arrangement makes the coin 20 euros cheaper. If the coin were taxed normally, the dealer would have to charge 144 euros for the silver coin to make the same profit margin (20 euros). The sales tax would then be 24 euros.

>> Differentially taxed silver is therefore the most favorable way for investors to obtain silver (or palladium or platinum).

Tax differences between silver coins & bars

At Gold & Co you can buy silver in various forms, besides bullion coins made of silver and silver bars, also in the form of collector coins. While the standard tax rate of 20% always applies when selling silver bars, silver coins and also coin bars, which are legal tender, can often be sold under differential taxation.

Especially silver coins that are imported from a country outside the European Union and then resold domestically can be offered by these dealers with a differential taxation.
The sales tax of 20% is not applied to the full net sales price when a dealer resells the coins, but only the difference between the purchase price and the gross sales price has to be paid to the tax office.

Some dealers also offer same-year new goods from European production with differential taxation, but this is not entirely unobjectionable from a legal point of view due to the obvious tax evasion.

Gold & Co Savings Tip

Usually, dealers offer silver coins from non-EU countries, such as the Chinese Panda or the silver Maple Leaf. However, these coins are bought back at a larger discount when resold at a later date and are usually not very well known in the domestic market. On the other hand, the well-known silver shillings in the denominations ATS 5, 10, 25, 50 and 100 are very well accepted and can be bought from us with differential taxation up to 30% cheaper than the same amount in bullion coins. Watch out for our promotions!

Advantages for silver investors

For the investor, differential taxation thus brings the advantage of a significantly lower price when acquiring corresponding silver. Due to the relatively small margins in precious metals trading, the tax burden resulting from differential taxation is comparatively low. The price advantage when buying silver subject to differential taxation compared to investment coins or silver bars is therefore on average around 10-15%.

ATTENTION: Silver bars, however, do not fall under the differential taxation and must be fully taxed! An exception is the special investment form "coin bars", which also exploits a tax loophole, since it was common in Germany until a few years ago to charge 11% VAT on coins and 19% VAT on bars, but this has since been "harmonized" to 19% for both products. However, they can still be bought differential taxed.

Because coin bars are made of silver and are recognized as legal tender in the countries of origin by means of a corresponding stamp, and not as conventional silver bars, they enjoy a special appeal. Compared to silver coins, which are minted at great expense, the production costs for bars are significantly lower per gram, so that there is a further significant price advantage.

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