Value Added Tax Consolidation Act 2010 section 87

Margin scheme - taxable dealers

Section 87 sets out the margin scheme under which dealers in certain second-hand goods, works of art, antiques and collectors' items account for VAT only on their profit margin rather than on the full selling price.

• The margin scheme allows qualifying taxable dealers to pay VAT on the difference between the selling price and the purchase price of margin scheme goods, with the margin treated as VAT-inclusive; if the purchase price exceeds the selling price, the margin is nil and no VAT is due.
• Margin scheme goods are second-hand goods (including, since 1 January 2010, means of transport and agricultural machinery), works of art, collectors' items and antiques acquired from persons who were not entitled to deduct VAT on their original purchase, from other margin scheme dealers, or from insurance companies settling claims; precious metals, precious stones and scrap metal are excluded.
• A taxable dealer may opt into an extended margin scheme covering imported works of art, collectors' items or antiques, works of art acquired from the artist or the artist's successors in title, and works of art acquired from a non-dealer accountable person, with a minimum commitment of two years; simplified globalisation arrangements apply to low-value goods where each item costs less than €635.
• Where the margin scheme is applied, VAT must not be shown separately on the invoice, the customer has no entitlement to an input credit, and margin scheme supplies dispatched to another Member State are not zero-rated but remain subject to Irish VAT with the place of supply deemed to be where dispatch begins.