The tax situation on silver

Silver in the Czech Republic is subject, similarly to other metals, to a 21% tax. The exception to this law is with investment gold which specifies special conditions. What are the practical results of this law for the investors of silver?

In order to explain the problem simply, it is necessary right at the start, to distinguish two different types of investors – customers. It concerns on the one hand people paying tax and on the other those who do not. The system of tax differs in both these groups.

1. Tax payers

This group contains people with a ´Živnostenský list´, other entrepreneurs and legal entities (p.l.c. and others) registered for tax purposes. If such a tax payer purchases investment silver (private entrepreneurs will add it to their assets), he will pay tax, but in the nearest tax period, he will be able to deduct this tax. His investment will therefore be stored in real value without tax.

As we are dealing with an investment instrument and not a raw material, a legal entity does not have to have a ‚Živnostenský list‘ for manipulating with silver. According to the majority opinion of tax consultants, there is no legal arrangement which prevents the depositing of available finance into precious metals or other activities. If then the tax payer has a licence, the purchase-sale of investment silver can be included among other goods.

If the tax payer wants to sell the silver he will offer it at a price which includes tax. If the purchaser is also a tax payer, he will deduct the tax without any tax loss. If however he sells to a non-tax payer, he cannot deduct the tax, but that does not mean a price increase against the actual market price. Investment or venture into investment silver by tax payers, does not therefore, actually involve a tax burden, and it matches the conditions for investment gold.

If the tax payer is from another EU country (e.g. Slovakia), the situation does not change. He will receive the goods already without tax and he does not have to wait till the end of the tax period, the tax on entry and exit is balanced as part of the end of year.

2. Non tax payers

This group is made up of non tax registered businessmen, and non-entrepreneurs. These people must purchase silver for prices which include tax, and they may not deduct that tax. As opposed to tax payers therefore, they have a 20% less favourable purchase price. The majority of investment silver in our region is in the hands of small investors. The possession of silver at prices with tax is therefore common.

If a non-tax paying investor wants to sell the silver after valuation, he will not have to add any tax, whether he sells to a tax payer or a non-tax payer.