Net margin
0.00 EUR
Purchase Price
€ 400.00
Selling Price
€ 1000.00
Tax
€ 0.00
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Business Tools /
Margin Scheme Calculator
for second hand goods in Cyprus
for second hand goods in Cyprus
Calculate the VAT you have to pay, when you're selling second hand goods
based on the margin scheme.
based on the margin scheme.
Understanding the VAT Margin Scheme
The VAT margin scheme is a specialized tax provision designed for businesses reselling secondhand goods, works of art, antiques, and collectors' items. Under this scheme, VAT is calculated only on the profit margin rather than the full sale price, making the resale of used goods more economically viable and promoting sustainability.
Calculation Formula
Here's the calculation based on a practile example.
A vintage designer jacket purchased from a private seller for 400 EUR and sold for 1000 EUR.
- Profit margin: 504,20 EUR (600 - 95,80)
- VAT payable: 95.80 EUR (included in the 600 EUR margin)
Key Requirements and Application
- Items must be genuinely secondhand - new items are not eligible
- Original purchase must be VAT-free (typically from private individuals)
Common VAT Margin Scheme Mistakes
- Calculating VAT on the total sale price instead of the margin
-
Incorrect VAT calculations:
- Correct method 1: Multiply margin by 16.67% (one-sixth)
- Correct method 2: Divide by 1.20 to find pre-tax amount, then subtract from margin
- Incorrect handling of discounted sales
- Inadequate purchase and sale price documentation
- Mixing treatment of new and secondhand items
TIP
We wrote a detailed article how the margin scheme works in Cyprus.
