Why VAT Makes Buying Secondhand Harder Than It Should Be

Introduction

Buying secondhand should be an easy, affordable way to reduce waste — yet in the Netherlands, thrift store shoppers often face an unexpected cost: VAT. Private peer-to-peer sales, like on Vinted or Marktplaats, are exempt from VAT. But professional resellers, including thrift stores, must charge VAT — even though the items have already been taxed when first sold new.

There is a mechanism to reduce this cost: the VAT margin scheme. It allows VAT to be charged only on the profit margin (the difference between the purchase price and selling price) rather than the full price. However, it only applies when goods are purchased from suppliers who did not deduct VAT, usually private sellers. Thrift stores that rely on donations cannot use it, so VAT is applied to the full price.

Challenges for Different Secondhand Models

Thrift stores’ donation-based model keeps costs low on the front end, but the inability to use the margin scheme raises prices for consumers. On the other hand, commission-based shops and mixed-model shops face significant administrative hurdles. Each item must be tracked individually — both for calculating VAT under the margin scheme and, for commission-based models, for matching sales to consignors and managing payouts. Mixed-model shops, which both buy and accept consignments, bear a combination of these burdens.

Bottom line: resale is neither simple nor cheap — for businesses or for consumers. These structural complexities make reuse less attractive, even in 2025 when reducing textile waste is more urgent than ever.

How the EU Margin Scheme Works Across Europe

The EU VAT Directive (Council Directive 2006/112/EC) provides a common framework for VAT on secondhand goods, but each country implements it slightly differently:

Germany, France, Belgium, Spain, and Sweden: The margin scheme is applied to goods purchased from private individuals. Donations, however, typically fall outside the scheme.

United Kingdom: Post-Brexit, the UK charges VAT only on the profit margin for goods purchased from non-VAT registered sellers. Donations are still fully taxed.

Across these countries, the principle is the same: VAT is applied only once, and donation-based resale is treated as a new taxable transaction.

Why Reform Matters

The current system makes resale more complicated and expensive than it needs to be. Ideally, all pre-owned goods — donated, sold on commission, or peer-to-peer — would be VAT-exempt, reflecting that they have already carried VAT when first sold. This would reduce administrative burdens, lower prices, and make reuse more appealing for consumers — the true drivers of a circular economy.

Conclusion

VAT on secondhand goods shows how tax systems designed for a linear economy struggle to accommodate circular models. While the EU margin scheme prevents double taxation in some cases, it leaves donation-driven and commission-based resale at a disadvantage. Adjusting VAT rules to better support reuse would make circular consumption easier, cheaper, and more scalable — benefiting both businesses and consumers, and helping tackle textile waste at the same time.

Call to Action

Creating a circular economy isn’t just about recycling or donating — it’s about making reuse accessible and affordable. Consumers, businesses, and policymakers all have a role to play. By reforming VAT treatment for pre-owned goods, we can make sustainable choices the easier, smarter, and fairer option for everyone.