02.08.2024

VAT increase on September 1, 2024 – what to consider when buying and selling at an auction?

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The general value-added tax will increase from 24 % to 25.5 % from September 1, 2024. The amount of tax is determined by when the service is performed or when the goods are delivered to the customer. In this blog, we explain in more detail how the change in VAT will affect buying and selling at auction houses in August-September.

Value-added tax for buyer

 

The sale of used items is subject to marginal tax, i.e. the value-added tax is 0%. This means that the buyer does not pay VAT on the final sale price of the item, i.e. the hammer price, but only on the commission. The auction house fee consists of the buyer’s commission and office expenses, i.e. the hammer fee.

The delivery time of the purchased items determines which tax rate is used. Value-added tax is applied to the tax period during which the goods are handed over to the buyer. Delivery of the items is when the customer has picked up the items themself or the items have been transported to the customer. The tax rate of 24% is applied if the purchased items are delivered to the buyer no later than August 31, 2024, even if the buyer pays for the items later in September. If the purchased item is delivered to the buyer after September 1, 2024, a new tax rate of 25.5% will apply.

Examples of buying in auction:

  • The customer pays for the auctioned item in August and picks up the purchase in September. The delivery time of the purchase is in September. Hence, the VAT on the brokerage fee is 25.5% and a 1.5% increase in the VAT is paid upon collection.
  • The customer orders and pays for the shipping service for the purchase in August. The purchase will be delivered in September. The delivery time of the purchase is in September, so the VAT on the commission is 25.5%.

 

Value-added tax for seller

 

When selling items, the end date of the sales service determines which tax rate is applied. The value-added tax is allocated to the tax period during which the service has been completed. In selling, the time of selling the items and in pickup the collection of the items determine the applicable tax period. The auction house fee consists of the seller’s commission and office expenses, i.e. hammer fee.

Examples of selling in auction:

  • The customer orders the pick-up service for the items to be sold, and the pick-up will take place in August. The price of the pick-up service will be deducted from the sales payout in September. The service was performed in August, so the VAT on the pick-up service is 24%.
  • The items are sold in August and the payout is processed in September. The sales service was completed in August, so the VAT on the commission is 24%.
  • The sales assignment for the items is made in August and the items are sold in September. The sales service was completed in September, so the VAT on the commission is 25.5%.
  • The customer orders the pick-up service for the items to be sold in August. The collection will be carried out in September. The service was performed in September, so the value-added tax for the pick-up service is 25.5%.
  • The customer orders a pick-up service for household items. The 1st batch will be picked up on 30 August 2024 and the 2nd batch on 5 September 2024. The service ends in September, so the value-added tax for the pickup service is 25.5%.

 

Changes in our pricing

 

The increase in value-added tax is also reflected in Helander’s service pricing. Due to the increase in VAT by 1.5 %, we also have to raise our prices slightly. The new price list will come into effect with the Weekly auction published on September 9.

Whether you plan to buy or sell at an auction, it’s worth considering that a value-added tax rate of 24% will still be applied to purchases or items sold by the end of August 2024. So don’t forget to pick up your purchases before the end of the month to avoid higher VAT. The last auction of August is the Weekly auction, which will be online from 5 to 25 August. Items will be added the auction until Friday, 9 August 2024.

Read more about the topic on the Tax Administration’s website by clicking HERE.

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