When are silver coins exempt from VAT
and when are silver coins subject to VAT within the Republic of Ireland?

In 1789 Benjamin Franklin said "In this world nothing can be said to be certain, except death and taxes."

What Franklin mean was that there is a certainty about taxes being levied, in today's world it's true that we can be certain that we will have to pay taxes, but the certainty does not extend to interpreting the rules that governments lay down for taxation. In many cases a certain amount of interpretation is needed to understand the rules, and so it is with the application of VAT to silver coins in Ireland.

The definitive document would appear to be the VAT Guide which says that coins are exempt from VAT, and extract is shown below, reference (opens in a new window).

This sounds like the definitive answer, but life is not quite as certain as that. The Irish VAT Guide 2008 page 128, section (d) has something different to say under the section dealing the financial services . . . reference (opens in a new window) it defines VAT-exempt activities including . . .

(i) Financial services consisting of:

(d) the issue, transfer or receipt of, or any dealing in, currency, bank notes and metal coins, in use as legal tender in any country, excluding such bank notes and coins when supplied as investment goods or as collectors' pieces

This section appears to says that metal coins when supplied as investment goods or collectors' pieces are subject to VAT at the standard rate.

One would expect that the Irish Central Bank would be a reliable source of information and know the definitive answer, and indeed the Irish Central Bank does sell all manner of coins directly to collectors. However, despite what page 128 of the VAT Guide says the Irish Central Bank has a Collector Coin Unit that sells Irish collector coins directly to people who one must assume are collectors, but does not charge them VAT.

When asked 'I was looking at your price list for coins but could not find any mention of VAT, could you tell me whether or not the prices include VAT or not. I am particularly interested in the 10 euro silver coin and whether or not there is vat on this item.' the Collector Coin Unit replied . . .

One could ask is there a clear and definitive answer to whether or not silver coins are subject to VAT in Ireland, and what better place to go than the Finance Minister, accordingly we asked our local TD, Deidre McClure to ask the Minister of Finance the question which was duly put and the following answer given . . .

To ask the Minister for Finance the VAT implications for a new company that will sell silver coins; if silver coins are exempt from VAT or if the standard rate of VAT applies when sold to collectors or investors; if the Central Bank sell silver coins and if VAT apply to these sales; and if so, the rate of same; if VAT applies to Irish collector coins; if so the rate of same; if VAT applies to antique coins; if so the rate of same; and if he will make a statement on the matter.

- Deirdre Clure.

* For WRITTEN answer on Wednesday, 16th June, 2010.

Ref No: 25941/10

REPLY

Minister for Finance ( Mr Lenihan) : I am advised by the Revenue Commissioners that the only circumstances in which the supply of silver coins is exempt from VAT is where they are supplied for use as legal tender in any country. This is provided for in paragraph 6(1)(d) of Schedule 1 to the VAT Act 1972 (as amended).

The sale of silver coins, in general, is liable to VAT at the standard rate of 21%. The reduced rate of VAT of 13.5% may apply where the silver coins are supplied as collectors’ items or antiques as defined in paragraphs (ii)(b) and (iii) of Schedule 5 to the VAT Act 1972 (as amended). The new company should contact their local Revenue Office for advice on the appropriate VAT rates to apply.

Conclusion

After much questioning and enquiry we are still left without an infallible test that determines whether or not silver coins are liable to VAT or not. We have the Irish Central Bank selling coins to what appear to be collectors but not charging VAT and we have the conflicting statements in various official guides and a statement from the Minister of Finance that leaves companies to determine whether or not they are selling coins as legal tender or not. From the company's point of view this is very unsatisfactory because it means that when a VAT inspection takes place they could be surcharged for the amount of VAT that was deemed to have been due.

Anglo Irish Gold Limited has asked the local VAT office for guidance and awaits it with interest.

This is a mess and needs to be sorted out quickly so that Anglo Irish Gold Limited and other legitimate traders can engage in their business and make profits and employ people who will make a real contribution to the Irish economy.

Update October 2010

We have been informed by the Revenue Commissioners that they can not see any circumstances where silver coins could be supplied as zero-rated unless they were being sold for actual use as legal tender. We have consistently pointed out that the Irish Central Bank sells silver coins to collectors and investors without VAT. The Revenue Commissioners have said that they will look into this. In view of this we do not feel that it is prudent to sell silver as zero-rated goods but we will continue to press the matter.