Flea market sales
A private individual can sell usual goods that have been in use by his/her family exempt from tax if the capital gains obtained from selling do not exceed a total of €5,000 per year. If your capital gains exceed €5,000 in a year, you must pay capital gains tax for the part exceeding this threshold value. Gains means the difference between the selling price and acquisition price.
If you sell usual goods that have not been in use by your family, you must pay tax on the capital gains. However, this tax is payable only if your sales of such goods and other movable property exceeds a total of €1,000 in a year.
This threshold value of €1,000 is calculated using the selling prices, not the capital gains. If the selling prices exceed €1,000 in total, all gains are taxable capital income. If selling is systematic and continuous, it can, under certain conditions, be taxed as business activity.
From a taxation viewpoint, the marketplace on which you sell the goods is of no significance. The same rules apply for the applicable goods whether they are sold at traditional flea markets or yard sales, or on online flea markets or internet auction sites.
Capital gains from selling usual household goods are deemed tax-exempt up to €5,000
The gains from selling usual household goods that have been in use by you and your family are tax-exempt in the taxation in the year of sale if such capital gains do not exceed a total of €5,000 during the tax year (= calendar year). Usual household goods include, for example, clothes, cookware, jewellery, furniture, home electronics and leisure equipment. The goods sold must be owned by you or by your family.
The amount of capital gains is calculated by subtracting the acquisition price from the selling price. You must be able to reliably report both the selling price and acquisition price. If your selling prices do not exceed a total of €5,000 in a tax year, it is clear that the sales are deemed tax-exempt even if you could not reliably report the purchase prices. Any losses resulting from selling goods that fall within the scope of tax exemption are not tax-deductible.
Example: Lisa has been using a dinnerware set whose acquisition price was €750. The resale value of this set has increased notably. Lisa sells the set on an internet auction site for €3,000. As a result, the total capital gains accrued in the tax year amount to €2,250. Since this concerns selling usual household goods, Lisa does not need to pay income tax on the sales.
Selling items other than usual household goods
Cars, motorcycles, boats and similar vehicles used and owned by a household are not considered to be usual household goods. Therefore, the tax exemption threshold of €5,000 is not applied to the gains from selling such items.
Moreover, tax must always be paid on the capital gains from selling exceptionally valuable paintings and works of art, other investment property, and shares acquired for leisure, such as golf shares.
Tax must be paid on the capital gains from selling items other than usual household goods if the selling prices exceed €1,000 in total. The amount of capital gains is calculated by subtracting the acquisition price from the selling price.
The losses incurred from selling property are usually tax-deductible. However, the losses incurred from selling household goods, a boat or other items intended for personal use are not tax-deductible.
Example: James has bought a classic car for €14,000. He has been restoring the car and even driven it for a couple of summers. Restoration has cost him €1,500 in total. James sells the car on an internet auction site for €21,000. The resulting capital gain to be taxed as capital income is €5,500 (€21,000 – €14,000 – €1,500). James must report this income on his tax return.
If a person makes products and sells them on online marketplaces or at flea markets, the income from such products is that person's income subject to tax. Expenses incurred for the production of income can be deducted from the income. Selling products that someone else has made, or selling new or second-hand goods that have been purchased from someone else, is subject to tax even if it takes place only occasionally.
Continuous, professional selling of goods is business activity
Continuous and professional selling of goods is considered business activity. Normally, such activity is about selling new products, own manufacturing, or buying and selling second-hand goods.
One of the key characteristics of business activity is that the activity is pursued with a firm view to earning an income. If new or used goods are purchased and sold regularly and with a view to earning an income, any capital gains accrued are taxable business income. Such income must be reported on the business tax return.
The seller must register for VAT if the turnover from selling the goods exceeds the threshold value of small-scale operations in VAT taxation (€15,000).
Example: Bridget buys dinnerware from a retail store in Finland. She re-sells it on an online flea market. Bridget has submitted an application for VAT registration because her net sales (without VAT) are above €17,000 per year. (The sales figure exceeds the threshold value of small-scale operation in VAT taxation.)
The received selling prices for the dinnerware amount to €21,080 ( = €17,000 + €4,080 (24%VAT)) per year. She paid €14,880 for the dinnerware including expenses ( = €12,000 + €2,880 (24%VAT)), and she also paid €500 in other expenses caused by her business activity (no VAT included). Bridget files and pays VAT in MyTax: €1,200 ( = €4,080 – €2,880).
The resulting business income for the entire year is €4,500 (€17,000 – €12,000 – €500). Bridget must report this on her business tax return.