The VAT margin scheme was introduced to reduce the possibility of double taxation on the sale of second-hand goods.
It operates by allowing dealers in certain second-hand goods to pay VAT on the difference between the sale price and the purchase price of the goods.
The scheme is at the option of the dealers concerned. If the dealer chooses not to operate the margin scheme then normal VAT rules apply.
Jewellery usually contains precious metals (e.g., gold, silver, platinum) or precious stones (e.g., diamonds, emeralds, rubies, sapphires).
The VAT margin scheme does not apply to jewellery generally as precious metals/stones are explicitly excluded from the margin scheme under Irish VAT legislation.
If jewellery is purchased as part of an intra-EU acquisition, VAT must be accounted for on the full sale price and not on the margin.
An antique jewellery dealer was denied the use of the margin scheme for jewellery sourced from UK as the purchases were deemed intra-EU acquisitions and so VAT was charged on the full sale price.