The Vienna Philharmonic and the Tax Evaders

[chrisild]

Got some money that you do not really want to declare? Here's the Vienna Philharmonic to the rescue.

Actually the orchestra and its musicians do not have anything to do with this trick. But you may know that the Austrian Mint has been issuing "Wiener Philharmoniker" bullion coins - in gold since 1989, in silver since 2008. The euro denominated pieces are the only euro bullion coins, by the way.

The silver "Phil" is a one ounce coin with a face value of €1.50 but costs whatever the market price of 1oz silver is, plus a moderate supplement - let's say a total of ten euro. (Yes, it's more, but I'm bad at maths so let us keep the calculation easy. ) Now we have somebody who usually pays taxes in Germany but somehow made some extra money in Austria. In the EU, when you cross an external or internal border, "undeclared" cash may not exceed €10,000. (You may have more with you, even for perfectly legitimate reasons, but you need to declare it then.)

Which means you can carry more than 6,000 of those silver Phils with you - after all, the total face value is less than €10,000. However, those six thousand coins are worth 60,000 euro, and such 1oz bullion pieces are fairly easy to sell again. Of course you may still get "caught" if you later sell the coins at that price without paying your taxes ...

More about this, in German, is here:
http://www.spiegel.de/wirtschaft/0,1518,633464,00.html

Christian

[Figleaf]

That sounds a bit like hype. The obvious equivalent is this case and we know that using the face value wasn't accepted there and then. If anyone had been caught or had gotten away with this defense, I am sure Der Spiegel would have reported it, so I am inclined to believe that this is only a shaky and untested theory. Maybe it will be tested soon, thanks to the article.

Another thing is that savings could be hidden from the tax man by putting the money in silver coin. Silver doesn't give a return, so all profit would have to come from price appreciation at a time when silver has already gone up steeply. Transaction cost would be at least four per cent both ways, not even counting the risk of being found out. It would be smarter to buy an ETF on the Dow Jones with a cost of 0.3% both ways and sit on them until the recovery has played out, even after tax. Your risk would be close to zero if you don't need the money for about two years.

Peter

[chrisild]

At least the story is now widely known.   Just a few examples from yesterday's and today's media:

http://diepresse.com/home/wirtschaft/economist/491605/index.do
http://diepresse.com/home/wirtschaft/economist/491765/index.do
Right, "Die Presse" covered it two times. Interestingly the second article mentions (bummer, I had not thought of that) that you pay 20 percent VAT in Austria if you buy such a Philharmonic coin, but only 7 percent in Germany. They say it must be "really really black" money to make it worth the efforts ...

http://www.kurier.at/geldundwirtschaft/1919684.php
(By the way, the "Kurier" claims that this silver piece is an "official means of payment in the euro area". Huh? When it comes to the legal tender function, that is limited to Austria.)

http://www.krone.at/krone/S32/object_id__151299/hxcms/
http://www.bild.de/BILD/news/2009/07/01/schwarzgeld-trick-mit-muenzen/steuerfluechtige-befoerdern-legal-grosse-mengen-geld-ueber-die-grenze.html
http://tt.com/tt/home/story.csp?cid=10225186&sid=57&fid=21

Three more stories (well, the same story) from an Austrian and a German tabloid, and a Tyrolean regional paper. Maybe I should it try the trick myself. "What, officer? Of course it's legal! Don't you read Bild and Spiegel?"

Christian