VAT and Margin Scheme Question

B

blipsblips

Registered User
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1. Can a VAT registered business use the margin scheme to second hand clothes, bought directly from the public?

2. If you bought a shirt for €10 and sold it for €30, how would the tax be calculated?

Would the vat be: 30 ÷ 1.23 = 24.39. 24.39 x .23 = €5.61

or would it be: 30 - 10 = 20. 20 x .23 = €4.60

If someone could help, it would be great. Cheers.
 
VAT is calculated on the profit on each item, as follows

30 - 10 = profit of 20

VAT = (20 / 1.23 x 0.23) = €3.74
 
Thanks DB74, I appreciate the help! So, let's say that this shop bought and sold 1000 of those shirts in the month.

Would that equate to the total vat amount owed to Revenue at the end of that month at €3740.00?
Thanks in advance.
 
Yeah that's right

You can also claim back VAT on other VATable expenses like telephone, diesel, etc so your VAT bill will probably be less than €3,740 per month
 
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