The margin over a period | EasyConsign course

You don't need to work out the margin per item. For clothes and most things in a secondhand shop you take the total over a tax period, for example a quarter.

The sum

Sales of margin goods minus purchases of margin goods is your margin.

In a consignment shop your "purchases" are mostly what consignors get for their sold items. EasyConsign counts that by itself. Did you buy secondhand things yourself? Add those under Add expense as margin goods.

How exactly you handle consignment can depend on your agreements with consignors. Ask your accountant whether this way fits your shop.

In The Netherlands this is called the globalisatieregeling. You pay 21% BTW on the margin, but it's already included in the margin. That's why 21/121 of the margin is BTW.

Do you sell as an intermediary on commission for another business? Then you may not be able to use the globalisatieregeling. Check the government links above and ask your accountant.

In the UK this is called global accounting, under the VAT margin scheme. You pay 20% VAT on the margin, but it's already included in the margin. That's why 1/6 of the margin is VAT.

Global accounting doesn't apply to an item you bought for more than £500, or to cars, motorcycles, boats and caravans.

An example

This quarter you sell €5,000 of margin goods. Your consignors get €2,000 of that. Your margin is €3,000. 21/121 of that is BTW: €520.66.

This quarter you sell £5,000 of margin goods. Your consignors get £2,000 of that. Your margin is £3,000. 1/6 of that is VAT: £500.

A negative margin

Did you buy more than you sold in a period? Then your margin is negative. You then pay no BTWVAT on margin goods. You carry the amount below zero over to the purchases of the next period. EasyConsign shows how much that is.