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Germany - new tax rules for purchasing foreign silver coins in 2023?


jultorsk

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A bit of an oddball question maybe, but I heard there would be new taxation on foreign (non-German) silver coins in Germany starting 2023? Any further information please - anyone?¬†ūü§Ē

@muenzdachs

The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary. - H.L. Mencken

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Rumours of some change have already been mentioned also in some other thread although it wasn't entirely clear to me what it meant in practice. Now that you raised it again specifically I tried to google some info on the internet and found a few quite detailed overviews of the situation (in German) e.g.:

https://www.gold.de/artikel/silber-anlagemuenzen-anwendung-der-differenzbesteuerung-vor-dem-aus/

https://www.goldreporter.de/silbermuenzen-finanzministerium-kippt-differenzbesteuerung-041022-14h/handel/109365/

I understand that nothing is official yet but there are rumours about planned changes which unsettled local dealers and caused increase in premiums already now?

edit: @dikefalos may know more

Edited by CollectForFun
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1 hour ago, jultorsk said:

A bit of an oddball question maybe, but I heard there would be new taxation on foreign (non-German) silver coins in Germany starting 2023? Any further information please - anyone?¬†ūü§Ē

@muenzdachs

I heard the same thing, but probably know less than you do!

ūüėé

Chards

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Oooh, there are a lot of ghosts haunting German silverland right now. I'm no expert, but I'll try to summarise the situation in simple terms. Since 2014, 19% VAT has also applied to silver coins in Germany, apart from collector coins, and not only to silver medals, silver bars, etc. The VAT on silver collector coins has been left at 7%. However, there was, or is, an exemption as a transitional solution, the differential taxation. This means that traders only have to pay 19% on their purchase/sale difference to the tax office and do not have to show any sum on the invoice. A week ago on Friday, traders received a letter by e-mail from the Federal Ministry of Finance stating that the differential taxation is no longer valid. In this video you can see the letter, I got the link from the German silver forum:
https://youtube.com/shorts/zVju95lYf6w?feature=share
I don't know the channel, one of the two is the operator of a relatively well-known online shop. Apparently there is no legal regulation for this yet and nobody knows what is valid and from when. On the same evening, almost all dealers raised their prices by around 20/30%, but still almost all show the margin scheme. The biggest problem for me as a customer, however, will be the dealer purchase prices in the future, if they cannot settle them with the margin scheme. Then we will also get such miserable dealer purchase prices, like you in the UK. If we stay at 60/70% premium for simple silver bullion, the subject of investment silver is finished for me. Luckily I already have 3 Britannias, so that will have to be enough for me. All coins that cost at least 250% above spot are considered collector coins and will continue to be taxed at 7%. They are expensive enough anyway.
I think all loopholes in Germany are simply being plugged now. I heard they need money. And since all dealers have used the exemption for almost every coin, it was only a matter of time before it was suspended. It's almost a miracle that it was, or is, valid for almost 9 years.

Edited by dikefalos
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Thank you @dikefalos for summarising. If this is true, it is terrible! Buying silver from Germany will no longer be an option.

Am I wrong that the margin scheme is also working in some other countires like the Netherlands and Belgium? Maybe one can still buy silver from there under the margin scheme?

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3 hours ago, CollectForFun said:

Rumours of some change have already been mentioned also in some other thread although it wasn't entirely clear to me what it meant in practice. Now that you raised it again specifically I tried to google some info on the internet and found a few quite detailed overviews of the situation (in German) e.g.:

https://www.gold.de/artikel/silber-anlagemuenzen-anwendung-der-differenzbesteuerung-vor-dem-aus/

https://www.goldreporter.de/silbermuenzen-finanzministerium-kippt-differenzbesteuerung-041022-14h/handel/109365/

I understand that nothing is official yet but there are rumours about planned changes which unsettled local dealers and caused increase in premiums already now?

edit: @dikefalos may know more

Thank you both @CollectForFunand @dikefalos for your excellent and well-informed comments - if that's really going to be the case, that's certainly a major upheaval! I used google translate for the gold.de link

https://www-gold-de.translate.goog/artikel/silber-anlagemuenzen-anwendung-der-differenzbesteuerung-vor-dem-aus/?_x_tr_sl=de&_x_tr_tl=en&_x_tr_hl=en-US&_x_tr_pto=wapp

"

According to the letter from the BMF, the special regulation for imported silver coins and coin bars from non-EU countries will no longer apply with immediate effect and the standard tax rate will be levied, i.e. 19 instead of 7 percent.

--

For silver coin bars from third countries, the basis of existence for new products in Germany would be completely eliminated, since they would no longer have a price advantage over normal bars.

"

ūü§Į

 

The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary. - H.L. Mencken

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10 hours ago, jultorsk said:

According to the letter from the BMF, the special regulation for imported silver coins and coin bars from non-EU countries will no longer apply with immediate effect and the standard tax rate will be levied, i.e. 19 instead of 7 percent.

What about silver coins from within the EU then, like the Wiener Philharmoniker?

Edited by goldsilverdash
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2 hours ago, goldsilverdash said:

What about silver coins from within the EU then, like the Wiener Philharmoniker?

19% VAT. Until now they where reimported, so the dealers could use the margin scheme. 

Edited by dikefalos
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Just found an article on the subject. Dealers may face additional VAT payment  on silver coins for the last 4 years. This is likely to cause economic difficulties for some of the dealers.

https://amp2-handelsblatt-com.translate.goog/finanzen/recht-steuern/silber-haendlern-fuer-silbermuenzen-drohen-nachzahlungen/28744512.html?_x_tr_sl=auto&_x_tr_tl=de&_x_tr_hl=de&_x_tr_pto=wapp

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2 hours ago, dikefalos said:

Just found an article on the subject. Dealers may face additional VAT payment  on silver coins for the last 4 years. This is likely to cause economic difficulties for some of the dealers.

https://amp2-handelsblatt-com.translate.goog/finanzen/recht-steuern/silber-haendlern-fuer-silbermuenzen-drohen-nachzahlungen/28744512.html?_x_tr_sl=auto&_x_tr_tl=de&_x_tr_hl=de&_x_tr_pto=wapp

This would probably bankrupt dealers - i don't know how much silver a typical dealer would have sold over the last 4 years but some dealers could face tax bills of several ‚ā¨millions. They'd be finished.
They couldn't possibly recoup the money - they would have to add large premiums on coins but buyers would go elsewhere - to European Mint which wouldn't be saddled with these tax bills. This would kill the German dealer network.
It only needs a little joined up thinking to tell you that it would kill the goose that lays the egg, but these Eurocrats don't seem to use coherent thinking. Perhaps they want to stop people buying precious metals.

Edited by sixgun

Always cast your vote - Spoil your ballot slip. Put 'Spoilt Ballot - I do not consent.' These votes are counted. If you do not do this you are consenting to the tyranny. None of them are fit for purpose. 
A tyranny relies on propaganda and force. Once the propaganda fails all that's left is force.

COVID-19 is a cover story for the collapsing economy. Green Energy isn't Green and it isn't Renewable.

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1 hour ago, sixgun said:

This would probably bankrupt dealers - i don't know how much silver a typical dealer would have sold over the last 4 years but some dealers could face tax bills of several ‚ā¨millions. They'd be finished.
They couldn't possibly recoup the money - they would have to add large premiums on coins but buyers would go elsewhere - to European Mint which wouldn't be saddled with these tax bills. This would kill the German dealer network.
It only needs a little joined up thinking to tell you that it would kill the goose that lays the egg, but these Eurocrats don't seem to use coherent thinking. Perhaps they want to stop people buying precious metals.

I think it would cause big problems for smaller companies in particular. However, I think that retroactive taxation would not be legal. The loophole existed for almost 10 years and was tacitly accepted. 
Germany had a comparatively large silver market, but with the change in VAT that should be history. Collectors will continue to collect, but the numbers are likely to be manageable. Like goldsilver.be, the European Mint is likely to receive mail from the German tax authorities at some point, as they sold VAT free to Germany until this summer. Since the summer, silver coins have also been taxed in Estonia and the prices are no longer really interesting for German customers.

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16 minutes ago, dikefalos said:

Like goldsilver.be, the European Mint is likely to receive mail from the German tax authorities at some point, as they sold VAT free to Germany until this summer. Since the summer, silver coins have also been taxed in Estonia and the prices are no longer really interesting for German customers.

Celtic Gold in Estonia used a loop hole to legally sell VAT free silver coins.
Silver coins were 0% VAT in Estonia.
Shipping was not included in the sale of coins. Shipping was offered by a different company to the coins. It was arranged as a separate transaction. You bought the coins VAT free in Estonia. Then in a separate transaction you arranged them to be shipped. If the sale included shipping they couldn't be sold VAT free. So such as Celtic Gold should not be chased for taxes.
My understanding from a dealer in the UK was that German dealers were importing coins and paid the lower 7% VAT rate. They did not reclaimed this VAT and as such were at the end of the supply chain. They then sold the coins as second hand using the margin relief scheme.

i expect the German authorities could chase dealers for unpaid VAT if they deemed them to have broken the law. If the German state is hungry for cash, which it is, then the courts will rule in favour of the tax authorities. That everyone was breaking the rules, if they were, doesn't really make any difference.  

Edited by sixgun

Always cast your vote - Spoil your ballot slip. Put 'Spoilt Ballot - I do not consent.' These votes are counted. If you do not do this you are consenting to the tyranny. None of them are fit for purpose. 
A tyranny relies on propaganda and force. Once the propaganda fails all that's left is force.

COVID-19 is a cover story for the collapsing economy. Green Energy isn't Green and it isn't Renewable.

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3 hours ago, sixgun said:

Celtic Gold in Estonia used a loop hole to legally sell VAT free silver coins.
Silver coins were 0% VAT in Estonia.
Shipping was not included in the sale of coins. Shipping was offered by a different company to the coins. It was arranged as a separate transaction. You bought the coins VAT free in Estonia. Then in a separate transaction you arranged them to be shipped. If the sale included shipping they couldn't be sold VAT free. So such as Celtic Gold should not be chased for taxes.
My understanding from a dealer in the UK was that German dealers were importing coins and paid the lower 7% VAT rate. They did not reclaimed this VAT and as such were at the end of the supply chain. They then sold the coins as second hand using the margin relief scheme.

i expect the German authorities could chase dealers for unpaid VAT if they deemed them to have broken the law. If the German state is hungry for cash, which it is, then the courts will rule in favour of the tax authorities. That everyone was breaking the rules, if they were, doesn't really make any difference.  

I think the European Mint will face the same problems with a German tax office as goldsilver.be. As I said, I am not an expert and cannot give exact figures. Dealers from other EU member states also need a tax number in Germany from a certain turnover. I don't know how high the turnover is for goods sold to Germany, but I seem to remember it starting at ‚ā¨100k. When it comes to VAT for goods bought in Germany, it is not the Estonian law that counts, but German law and the trader has to tax at 19% or apply the margin scheme.¬†Since the summer, however, there has also been VAT on silver coins in Estonia and since then the prices there have hardly been interesting for German customers. In addition, there are the rather high shipping costs.

As a company, you get VAT refunded and deduct VAT from your sales price to the tax office. Simple example. The exemption for silver coins was that they could be differential taxed. Means trader buys for ‚ā¨20 and sells for ‚ā¨30 and only has to pay 19% on the difference, 19% from ‚ā¨10. Actually, 19% would be due on the total amount, ‚ā¨30,¬†making a difference of about ‚ā¨3.80 on this amount.¬†

No German trader has really broken the law, just applied the exemption very broadly. E.g. importing Vienna Philharmonic orchestras back into the EU in order to apply the differential taxation. Since the regulation on differential taxation itself is very vaguely worded, I cannot imagine that retroactive taxation of dealers would be legally possible. Actually, this rule applies to art, antiques, or similar. And from 2014 until now also for silver coins imported into the EU.
The situation is different for non-German companies that exceed a certain turnover with goods delivered to Germany without registering for VAT. They violate German, and possibly European, tax law and can be asked to pay for it. I believe retroactively for 10 years, plus a tax penalty of usually 100% of the evaded taxes in addition. As I said, I'm no expert, but my tax advisor always scares me.

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51 minutes ago, dikefalos said:

 

An EU company selling into Germany could sell up to ‚ā¨100k before they had to apply Germany VAT. This changed in July 2021 when a company's VAT threshold for all goods exported within the EU became ‚ā¨10k total sales.¬†

i don't know how European Mint ran their business but i ordered from Celtic Gold several times and they were strict about you buying the coins first and then arranging shipping yourself with another company. They had sold you the coins and they were still in Estonia - deal done, transaction complete. VAT 0%. Then you took them home so to speak. As it was the shipping i used was arranged by a company run by the guy's wife but it was certainly a two stage transaction. 

With GS.be they are in Belgium and so should always have been charging VAT when they sent to the rest of the EU and the UK pre-Brexit. As i say i was told this by a UK dealer who had investigated the VAT rules very thoroughly - he has taken questions to the UK parliament about this. He said GS.be was buying them in from outside the EU, being charged a low rate of VAT and not reclaiming that VAT. That meant GS.be was at the end of the transaction chain. The silver was fully VAT paid. Then the silver was sold again but as second hand coins with VAT only being paid on the profit made. Up to that point there is nothing wrong being done except companies have been advertising they were VAT free - Silver-to-go is an example of a company who claimed this and still have it on their website - "Silver-to-go specialises in buying and selling VAT free silver bullion coins ". But the coins are not VAT free or should not have been b/c there would be VAT on the profits on the coins. There was also VAT in the price paid by Silver-to-go as they imported them. They should not have been claiming the coins were VAT free when they weren't. i looked at GS.be sales invoices and it says 0% tax. Even if they sell coins second hand with margin relief they are not 0% tax. There is tax on the profits. Some of that VAT should have been paid to other countries inside the EU and so all the dealers should be VAT registered. Really it does suggest that the whole EU VAT system has been very sloppy and now it is tightening up.

So some German dealers have been breaking the law b/c they have been claiming coins are VAT when clearly they can't be unless there is VAT fraud going on.

They have been exploiting a grey area of the law. i actually think if someone in the German government did a proper analysis they would realise Germany will be losing out. This VAT change will mean a lot less silver will be bought from Germany. i have bought thousands and thousands of euros of silver from German dealers. This will now stop - completely. Dealer profits will be less, total VAT receipts will be less. 

i will just buy bits off TSF and otherwise buy it on the Exchange at Kinesis Money. 

Edited by sixgun

Always cast your vote - Spoil your ballot slip. Put 'Spoilt Ballot - I do not consent.' These votes are counted. If you do not do this you are consenting to the tyranny. None of them are fit for purpose. 
A tyranny relies on propaganda and force. Once the propaganda fails all that's left is force.

COVID-19 is a cover story for the collapsing economy. Green Energy isn't Green and it isn't Renewable.

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11 minutes ago, sixgun said:

An EU company selling into Germany could sell up to ‚ā¨100k before they had to apply Germany VAT. This changed in July 2021 when a company's VAT threshold for all goods exported within the EU became ‚ā¨10k total sales.¬†

i don't know how European Mint ran their business but i ordered from Celtic Gold several times and they were strict about you buying the coins first and then arranging shipping yourself with another company. They had sold you the coins and they were still in Estonia - deal done, transaction complete. VAT 0%. Then you took them home so to speak. As it was the shipping i used was arranged by a company run by the guy's wife but it was certainly a two stage transaction. 

With GS.be they are in Belgium and so should always have been charging VAT when they sent to the rest of the EU and the UK pre-Brexit. As i say i was told this by a UK dealer who had investigated the VAT rules very thoroughly - he has taken questions to the UK parliament about this. He said GS.be was buying them in from outside the EU, being charged a low rate of VAT and not reclaiming that VAT. That meant GS.be was at the end of the transaction chain. The silver was fully VAT paid. Then the silver was sold again but as second hand coins with VAT only being paid on the profit made. Up to that point there is nothing wrong being done except companies have been advertising they were VAT free - Silver-to-go is an example of a company who claimed this and still have it on their website - "Silver-to-go specialises in buying and selling VAT free silver bullion coins ". But the coins are not VAT free or should not have been b/c there would be VAT on the profits on the coins. There was also VAT in the price paid by Silver-to-go as they imported them. They should not have been claiming the coins were VAT free when they weren't. i looked at GS.be sales invoices and it says 0% tax. Even if they sell coins second hand with margin relief they are not 0% tax. There is tax on the profits. Some of that VAT should have been paid to other countries inside the EU and so all the dealers should be VAT registered. Really it does suggest that the whole EU VAT system has been very sloppy and now it is tightening up.

So some German dealers have been breaking the law b/c they have been claiming coins are VAT when clearly they can't be unless there is VAT fraud going on.

They have been exploiting a grey area of the law. i actually think if someone in the German government did a proper analysis they would realise Germany will be losing out. This VAT change will mean a lot less silver will be bought from Germany. i have bought thousands and thousands of euros of silver from German dealers. This will now stop - completely. Dealer profits will be less, total VAT receipts will be less. 

i will just buy bits off TSF and otherwise buy it on the Exchange at Kinesis Money. 

Best thing with this situation is, I will buy more Sovereigns from now on.

Edited by dikefalos
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What a mess! Out of interest I searched for more information and I can tell you this can become interesting if the authorities decide to apply a hard line in terms of the past periods and start assessing additional VAT to the dealers for previous years. But I hope they will be more lenient towards the past, but in any case, the loophole seems to be definitely closed for the future.

For those interested in the detailed background, I summarise below the respective legislation including the links to the underlying documents (sorry for long post!|:

  • According to the German VAT Act, reduced 7% VAT can be applied to several categories of goods, which are listed in Annex 2 to the VAT Act. Collectors' items ("Sammlungsst√ľcke") are covered by Point 54 of this Annex. According to letter c) paragraph cc) of that point,¬†coins and medals made of precious metals qualify as collectors' items if their price (excl. VAT) exceeds 250% of the metal value.
  • According to Article 12 paragraph 2 point 12 of the¬†German VAT Act, reduced rate on the above items specified in Point 54 of Annex 2 shall be applied only on importation of goods, i.e. not on domestic or intra-community transactions. This is in accordance with the EU VAT Directive which does not allow applying reduced VAT rate on collectors' items in general, but only on imports. So far so good.
  • The German Ministry of Finance issued a letter on 5 August 2004¬†detailing application of reduced VAT rates. This letter starts with the following introduction: "With reference to the result of the discussions with the highest tax authorities of the federal states, the following applies to the application of the reduced tax rate to sales of items specified in Appendix 2 of the UStG carried out after July 30, 2004:". So this letter pretends to be quite an official interpretation of the law, as I see it.
  • Silver coins are covered by¬†line 174 point 2 of that letter and this is where it becomes really interesting, as this letter literally says that "The reduced tax rate can be applied to sales of silver coins that are not included in the list attached to this letter¬†without the need for a valuation.". So it's pretty simple - silver coin not in the list? Then reduced VAT rate applies irrespective of the premium.
  • And if the coin is in the list? "The sales of the silver coins listed in the attachment are regularly subject to the standard tax rate. However, the entrepreneur can claim the reduced tax rate for those coins¬†if he can prove that the requirements are met in the individual case.¬†The list of silver coins subject to the general tax rate is regularly reviewed and adjusted as necessary. Any changes to the list will be announced separately.". So the coins listed in the attachment must be tested for price against the metal content value.
  • And so which are those coins which do not qualify for automatic VAT reduction according to the letter of 2004? They¬†are listed in the attachment to that¬†letter and curiously, include only various "junk" silver coins from the 20th century and Maria Theresia Taler, but no bullion coins. Was this list ever updated? I don't know but I did not find any update. I found that in 2014 the Ministry confirmed that the 2004 list still applies. Maybe in 2004 the Ministry¬†did not feel the need to include bullion silver coins as the market was not as widespread and afterwards they just omitted to update the list? Or was there any other reasoning behind which coins are included and which not?
  • And finally, we are now in 2022 when the same Ministry of Finance issued a¬†new letter dated 27 September 2022¬†in which they just say that "The regulations of the letter of August 5, 2004¬†led to practical application¬†that the reduced tax rate was applied on some silver coins, although the statutory conditions were not met. The regulations mentioned there are therefore no longer applicable.¬†The regulations of this¬†new letter are to be applied in all open cases.".

So what this all means? Basically, in 2004, the Ministry of Finance interpreted the law in such a way that they extended the legal definition of silver coins which qualified for reduced VAT rate on import from >250% items to any silver coins not in the list, whereas the list contained for investors only not very relevant silver coins. This interpretation was arguably followed by the German customs authorities and therefore silver bullion coins could have been imported to Germany with 7% reduced VAT. In 2022 the Ministry suddenly woke up and realised that their interpretation went beyond the law so reversed it and confirmed that 7% may apply only to >250% collectors' items.

This is however not the end of the story, because in order to benefit from the loophole, the dealers had to first import the coins with 7% VAT and then apply the differential taxation in order to avoid taxing the whole value of the coins by 19%. According to article 25a of the German VAT Act, the differential taxation can be applied by resellers of the collectors' items. As was shown above, collectors' items are defined as coins >250% premium. The 2004 letter scratched this requirement but in my understanding, only in respect of the application of reduced VAT rate, so the letter did not re-define the collectors' items for other purposes, such as the application of the differential taxation. Or is there any other method whereby German dealers could have applied differential taxation on new bullion silver coins?

So as I see it, the dealers had every right to rely on the 2004 letter from the Ministry and import silver bullion coins with 7% VAT on them. But I am not so sure they were able to sell these coins under the differential taxation scheme, even while that 2004 letter was in force... In any case, gone are the times of cheap silver bullion from Germany and the it will be interesting to follow further development and how much the dealers will be investigated for the past sales...

Edited by CollectForFun
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  • 3 weeks later...

https://www.welt.de/finanzen/article241870903/Anlagesilber-Darum-koennen-Edelmetallhaendler-jetzt-neue-Hoffnung-schoepfen.html

After the tax authorities had recently ended the practice of tax-privileged acquisition of certain silver coins for precious metal trading in Germany, the Federal Ministry of Finance is now getting involved. Millions are at stake for the industry. 

There is new hope in tax issues for unsettled precious metal traders in Germany. 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 “

--

"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.

https://www-welt-de.translate.goog/finanzen/article241870903/Anlagesilber-Darum-koennen-Edelmetallhaendler-jetzt-neue-Hoffnung-schoepfen.html?_x_tr_sl=de&_x_tr_tl=en&_x_tr_hl=en&_x_tr_pto=wapp

 

TBH 7 million euros does not sound like much, especially as it was the government who bungled up the tax interpretation. Germany must be well and truly broke?¬†ūü§Ēūü§∑‚Äć‚ôāÔłŹ

 

The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary. - H.L. Mencken

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9 hours ago, jultorsk said:

TBH 7 million euros does not sound like much, especially as it was the government who bungled up the tax interpretation. Germany must be well and truly broke?¬†ūü§Ē

Thanks for the follow up. I interpret that part that ‚ā¨7M extra tax calculation relates only to Kettner, the (smallish) dealer quoted by the article, not the whole industry.

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  • 2 weeks later...

Just an observation that the situation regarding the premiums might have meanwhile somewhat stabilised (perhaps helped by higher spot price at the moment).

When the market was freshly shocked by this tax change early October the 1oz premiums quickly got above 40%. But currently 1oz at German dealers start at around 30% and 1 kg bars are available at less than that, some offers even at 20% premium, which seems quite acceptable considering that VAT is included in that. As far as I can remember, silver premiums in Germany did not use to be less than 15%, even when there was "no VAT" in the differential taxation era.

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