Margin Scheme

    A VAT scheme where tax is calculated on the profit margin, not the full price.

    Definition

    The margin scheme applies to second-hand goods, works of art, collectors' items, and antiques. Under this scheme, VAT is calculated only on the seller's profit margin (selling price minus purchase price), rather than on the full selling price. This avoids double taxation on goods already subject to VAT.

    Related Terms

    VAT (Value Added Tax)
    A consumption tax levied at each stage of the supply chain.

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