Fashion companies demand VAT cut on used clothes

Nearly 50 Swedish and Nordic fashion companies — including H&M, Lindex, Acne Studios, and Björn Borg — are demanding a VAT cut on used clothes.

The campaign is being driven in collaboration with STICA (The Scandinavian Textile Initiative for Climate Action), a non-profit focused on reducing the fashion industry’s climate impact.

According to STICA, “low profitability in secondhand sales” is the biggest obstacle preventing circular business models in the fashion industry from competing with traditional linear models.

It is pointed out that because each secondhand garment is unique and handling costs are high, turning a profit is especially difficult. Increased profitability would encourage more players to enter the secondhand market, and for existing ones to invest more heavily.

The group is urging the Swedish government to include the VAT cut in its 2026 budget. So far, however, no such measure has appeared in the government’s proposal.

These demands are coming during a period when the second-hand industry in Europe are struggling to survive, despite the fact that reuse is considered the most important part of a circular economy.

One reason for this struggle is new EU-regulations that lead to higher costs for second-hand enterprises.