Silver, the Spot Price, and the Impact of 21% VAT – Why Silver Remains a Smart Investment

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Silver has played a unique role in the world of money, jewelry, and industry for centuries. For investors, it's one of the most accessible precious metals—less expensive than gold but with a similar function as a store of value. Yet in the Netherlands, there’s something unusual: the application (or continued enforcement) of 21% VAT on silver has had a significant impact on the retail market. So what does this mean—and why should you continue to buy silver despite this tax?

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What Is the Spot Price of Silver?

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The spot price of silver is the current market price for one troy ounce (about 31.1 grams), as traded globally on commodities exchanges. This price fluctuates constantly based on supply and demand, economic developments, geopolitical tensions, and central bank policies.

For example: if the spot price of silver is $30, that’s the price large institutions pay for immediate delivery on the global market.

However—and this is important—the spot price does not include VAT, storage, transport, manufacturing costs, or profit margins. For private buyers, the final purchase price can be significantly higher.

What Impact Does VAT Have on Silver?

Unlike gold—which is exempt from VAT in many countries including the Netherlands—silver is subject to the standard 21% VAT rate. This means that if you buy a silver coin or bar as a private individual, you must pay an additional 21% tax on top of the base price.

Example calculation:

• Spot price of silver: €800 per kilogram

• Sales price with VAT: €800 + €168 (21%) = €968

That additional tax puts immediate pressure on your return. When you later sell the silver at the prevailing spot price, you typically won’t recover the VAT as a private seller. You start your investment at a disadvantage.

What Effect Has This Had on the Market?

Due to the VAT, many Dutch investors have turned to alternatives:

• Purchasing margin products like silver trackers or ETFs (which don’t involve physical ownership)

• Buying and storing silver abroad, e.g. through German or Austrian providers offering VAT-free storage in bonded warehouses

• Purchasing silver coins at reduced VAT rates through specific legal structures

As a result, the physical silver market in the Netherlands has been somewhat restricted—but far from disappeared.

 

Why Buy Silver Despite the 21% VAT?

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Even though VAT creates a hurdle, there are still strong reasons to hold physical silver:

1. Silver is undervalued compared to gold
The gold-silver ratio (how many ounces of silver you need to buy one ounce of gold) remains historically high. This suggests silver is relatively cheap and may have more room to rise.

2. Silver is crucial to the energy transition
Silver is essential in solar panels, electric vehicles, batteries, and other sustainable technologies. Industrial demand is increasing while supply remains tight.

3. Protection against inflation and systemic risk
Like gold, physical silver exists outside the financial system: no counterparty risk, no dependency on banks. In times of inflation, high debt, or monetary instability, it offers tangible security.

4. Trade potential during crisis
In a crisis scenario, having silver on hand gives you real bartering power. Gold is expensive (often over €100 per gram), while silver can be easily divided into small tradable units. One troy ounce coin can cost as little as €30–50, making it ideal for everyday necessities if needed.

5. Collector’s value
Silver also has numismatic appeal in the form of limited editions, exclusive coins, and bars. Collector demand can drive prices up, offering an additional path to financial gain.

Conclusion: Silver Remains Relevant

The 21% VAT on physical silver is a real consideration—but not a reason to ignore it entirely. With smart strategies, you can still benefit from silver as a precious metal:

• Buy during dips in the spot price

• Use silver as a hedge against economic uncertainty

• Gain physical protection from inflation and crises

• Acquire more weight for less money compared to gold

Silver is more than just an investment—it's tangible value in an increasingly digital world.