Differing Taxing Laws in the European Union
The European Union allows the use of a special scheme — “VAT on margin” — when reselling second-hand goods, works of art, collectors’ items, and antiques. Under that scheme, the seller has to pay VAT only on the difference between the sales price and the purchase price (the margin). The scheme can be used if the items have been purchased from an original creator or any other non-VAT-taxable person; or, to explain it in other words, if the company has not deducted VAT on that purchase.
A store accepts a second-hand item for resale and pays the previous owner 60 €. The store will resell the item at 100 €. In this case, the seller’s margin is 100 – 60 = 40 €; assuming a VAT rate of 15%, the tax will be 6 € (and the net value is therefore going to be 100 – 6 = 94 €).
For a short overview, with links to the original legislation, please see HERE.
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