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A recent report issued by Vinted and Retail Economics shows that “secondhand shopping” – the concept of purchasing second hand goods –  now accounts for just over 10% of all UK gift spending—amounting to £2 billion—with more than 80% of consumers open to buying such pre-owned presents. Adam Jay, CEO of Vinted Marketplace, told Sky News that while the cost-of-living crisis has likely spurred demand, the shift was already underway due to rising awareness around overconsumption and sustainable buying. He believes that secondhand could ultimately become the first choice for shoppers.

A separate survey from resale platform OfferUp found that 74% of shoppers now view gifting “pre-loved” items as socially acceptable—a 7% increase from last year—and 83% say they’d be happy to receive a secondhand gift. It’s little wonder, then, that the re-commerce market is projected to grow by 55% by 2029, reaching $291.6 billion and outpacing the overall retail sector.

Digital platforms have propelled this growth, offering user-friendly interfaces, transparent pricing, and convenient delivery options, while also building trust through ratings, reviews, and detailed product descriptions. Nor is this phenomenon  limited to specialized marketplaces: retailers like Ikea, have launched secondhand marketplaces in 2024, indicating a broader shift across the industry. Once seen as a situational necessity, secondhand shopping has evolved into a vocal lifestyle choice, popularized by celebrities, influencers, and sustainability advocates. As the stigma around pre-owned items has faded, secondhand gifts have become an acceptable—and increasingly desirable-  option. 

In 2025, marketplaces offering secondhand or circular sections are likely to experience exponential growth—fueled by the pursuit of circular revenue, as outlined by Peter C. Evans in his paper Harnessing Platforms to Generate Circular Revenue—yet they must also address additional tax considerations to ensure this growth is successful.

Tax liability will depend on factors such as who is responsible for the tax, the seller’s or buyer’s status, and whether any special tax schemes apply. This article is focused on the EU but the questions arising in  consumer to consumer sales are applicable anywhere.

Location of the goods and Location of the seller impacts who is liable

When goods originate from outside the EU  and the consignment value is under €150, the marketplace (as the deemed supplier) becomes liable for VAT. The same applies when goods are located within the EU but the seller is outside the EU. In both situations, no special scheme applies, and the marketplace must charge VAT in line with standard EU rules.

By contrast, when goods are located in the EU and sold by an EU seller, the seller is liable for the VAT and special scheme and exemption may apply. Similar rules also apply in the UK with a threshold of GBP 135.

VAT Margin Scheme

The VAT margin scheme may apply when the goods are located in the EU and are sold by an EU seller. This optional scheme helps prevent double taxation on second hand goods by allowing VAT to be paid only on the difference between the sale price and the purchase price. However, it only applies to certain qualifying goods—specifically those purchased without any VAT recovery right. As a result, a merchant may use the margin scheme for some transactions, while others remain subject to normal VAT rules.

The marketplace has no possibility to verify if sellers are correctly applying the VAT margin scheme, primarily because it cannot trace the origin of the underlying goods. Fraudulent activity can therefore only be detected through audits of individual sellers, a gaping hole in the process. Moreover, sellers often require a system that allows them to apply different rates to similar products depending on each transaction’s VAT treatment. One strategy employed by some marketplaces is to enforce a universal price—charging the same amount regardless of the VAT rate—which in turn prevents the marketplace from offering the option of  invoicing solutions for these particular transactions, as they may not have access to the VAT treatment on a transaction basis.

This situation also impacts business buyers who would normally reclaim VAT on purchases. Under the margin scheme, they cannot do so, resulting in an added cost, and consequently an adverse impact on their profit margin, for those business buyers and a poor experience overall. To address this issue (though perhaps one might argue awkwardly) , some marketplaces stipulate in their terms and conditions that buyers are “deemed” to be non-business customers—thereby eliminating any right to reclaim VAT. Alternatively, they may create separate sections dedicated to business customers where special schemes do not apply. This allows the marketplace to be able to facilitate invoicing for those Business to Business transactions, a capability that will become increasingly important with the advent of e-invoicing.

Consumer to Consumer sales

Another challenge involves consumer-to-consumer (C2C) sales, where individuals sell items occasionally and not for business purposes, placing them outside the scope of VAT as a “non-professional seller”. However, to qualify as a non-professional seller, these transactions must be truly occasional. Consequently, marketplaces must verify and monitor a seller’s status—often confirmed anecdotally by the absence of a VAT number and low sales volume—to ensure they remain compliant. Although the marketplace generally isn’t liable for tax in C2C transactions, it could face joint liability if it fails to prevent fraud, meaning reviewing sellers and educating them is key. Moreover, new regulations require platforms to share information with tax authorities; those new reporting obligations have created a new burden for Marketplaces, but seem to have encouraged merchants to adhere more strictly to their obligations. These C2C sales considerations apply globally when the marketplace isn’t liable, making it crucial to confirm that all conditions are met. This not only affects the price paid and the tax collected or remitted, but also influences the competitive playing field among other sellers.

Conclusion

The rapid rise of secondhand shopping—driven by increasing consumer demand for sustainable options and facilitated by digital platforms—presents enormous opportunities for marketplaces. However, navigating the VAT implications requires a robust understanding of location-based tax rules, special schemes like the margin scheme, and the nuances of consumer-to-consumer transactions. Ensuring compliance means not only meeting legal obligations but also maintaining customer confidence and minimizing fraud. By proactively and robustly managing tax liabilities, verifying seller status, and adapting to upcoming obligations, marketplaces can position themselves for sustainable growth in this thriving sector.

Disclaimer: The views, statements or opinions expressed in this article are solely those of the author and do not represent tax advice and are not to be designated to be the views, statements or opinions of any other person, group, association or company.

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