Good news for investors

January 2000, Volume 37 No. 1
THE good news in the coin world this month is the announcement from Brussels that VAT is to be removed from "investment gold"- a welcome move that will hopefully inject valuable capital into the coin trade. This new ruling will make the buying and selling of gold coins simple, the way it was in "the good old days" of the 1970s and who knows, it may herald a new beginning for coin collecting. We feel so elated at this news that we have invited John Whitmore, the former Treasurer of the British Numismatic Trade Association, and an expert on VAT matters, to contribute this month's Editorial and set out the new criteria for buying and selling gold coins.
After negotiations that have taken years to conclude, sales of "investment gold" will become exempt from Value Added Tax throughout the European Community on the dawn of the new millennium. The object is to put the investor in gold on the same footing as an investor in stocks and shares, who has never been subject to VAT. Whether anyone will be in a fit state to think about gold or any other investment on January 1, 2000 is perhaps doubtful, and even as this is written not all the details of the new arrangements have been published, but as this is the last COIN NEWS before the great day, readers may like to know the current state of the scheme. It will affect many collectors and dealers who do not normally think of themselves as involved in gold investment.

There are four tests used to define an investment gold coin. All of them have to be true for a coin to qualify. 1. Minted after 1800.
2. At least .900 fine, that is containing no more than 10% of metals that are not gold.
3. Is, or has been, legal tender in its country of origin. This excluded unadopted patterns, copies and unauthorised restrikes.
4. Is of a description of coin that is normally sold at a price that does not exceed 180% of the open market value of the gold contained in the coin.

This fourth test is the tricky one. Fortunately it will rarely be necessary to check the latest price guides and make elaborate calculations because an official list will be published describing the coins that are deemed to be within the definition. This list is not yet available, but it seems likely that it will give just the country and denomination of each qualifying type. For instance, the list is expected to include as one entry "UK Sovereign". This will cover all the sovereigns issued from 1817 to the present by the Royal Mint and by its colonial branches, regardless of changes of design. Because the majority of sovereign sales are at less than 180% of their bullion value, all the coins within the description become investment gold, even though individual rarities may sell for far more.

On the same date, all imports of investment gold coins will also become free of VAT.
All this might seem nothing but good news, but there is a sting in the tail of the new arrangements. There is a risk that money for investment gold might have come from criminal activities, and schemes nominally using gold coins have in the past been devised to try to defraud the revenue. Customs & Excise need to be able to monitor the new arrangements closely even though the transactions themselves will be free of VAT. Originally elaborate record keeping rules were proposed for all cases where an investor spent more than £500 in a year. After consultation with trade representatives, the limit has been raised to £10,000 to a single customer in a year or to £5,000 for any one transaction.

If he makes one of these larger transaction, a trader, whether currently registered for normal VAT purposes or not, must notify Customs & Excise that they deal in investment gold, and a form for the purpose will be included in the official notice when it is published shortly. Whenever a sale is made which exceeds the stated limits, the dealer must be absolutely certain that the name and address given by the purchaser is correct, and he must have documentary evidence in support. Provision will be made to enable transactions to be conducted by post or even the internet, but there will be safeguards. Investment gold coins will cease to be eligible for the margin scheme or global accounting.

The VAT regulations for gold coins that are not within the definition of investment gold are unaltered, as they are for all coins made of silver, platinum or any other "precious" metal, which all remain taxable under the rules in force at the present time.

John Whitmore .

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In This Issue

Ancients25
A coin of change
The antoninianus reflected the decline of the Roman Empire
On the Fringe28
Barter in ancient America
Financing an ancient society without the use of money
Collector's notebook31
Official counterfeits?
Were the coins of Civil War Jersey merely counterfeits?
Insight33
The coinage of Russia - vii
A look at the life and times of Thomas Simon
Background37
The Mamluks
Coinage of a warrior race "resented as thugs and aliens"
Feature Article41
"These useless tokens"
18th century Ireland saw many upheavals
Tokens44
Canteen coinage
Examples from a a neglected area of numismatics
Banknote feature51
Estonia
Banknotes from a brief period of independence

Regulars

Coin News & Views13
Market Scene - Demand for quality19
New issues Update23
Banknote News & Views47
Banknote New Issues48
Dealers' lists55
Price Guide to CROWNS56
Fair preview59
Calendar61
Coin clinic62
Readers' letters63
Semi-display adverts64
Classified adverts66