Primark, H&M and Zalando join industry push for resale and repair tax reform

Major fashion retailers including Primark, H&M Group and Zalando are calling on governments to introduce tax reforms aimed at making resale and repair more commercially available.

The move comes as nearly 70 fashion and textile organisations signed a joint statement coordinated by the Ellen MacArthur Foundation, warning that current tax systems continue to favour the production of new clothing over circular business models.

Other signatories include Bestseller, Selfridges, Global Fashion Agenda, Arc’teryx, Decathlon, Vinted, Lacoste, Vestiaire Collective, ThredUp and Etsy.

The group is urging policymakers in the EU, US and Canada to reduce VAT on resale and repair services, lower labour taxes linked to circular business models and expand Extended Producer Responsibility schemes to fund textile collection and sorting infrastructure.

The proposals have particularly drawn backing from retailers expanding resale, repair and re-commerce operations as pressure grows around sustainability targets, textile waste and shifting consumer spending habits.

According to the foundation’s new report, ‘The New Bottom Line: Policy levers to scale resale and repair for fashion’, targeted policy reforms could increase gross profit margins to as much as 55 percent for resale businesses and around 41 percent for repair services. The circular fashion market is projected to reach 393 billion dollars by 2030, growing at twice the rate of the wider fashion industry.

‘Today, [the resale model] is economically penalised…’

In a statement, H&M Group’s chief sustainability officer, Leyla Ertur, said: “Resale keeps products in use while meeting customer demand for more affordable and sustainable choices. But today, this business model is still economically penalised.

“If governments are serious about circularity, they need to act by removing double taxation, reducing labour costs, and removing other barriers that hold resale back.”

The Ellen MacArthur Foundation’s fashion and textiles lead Mark Buckley added: “Fashion’s potential to become more circular is significant, but the economics are stacked against resale and repair. Businesses are incentivised to use new resources rather than invest in keeping clothes in use for longer.”

The initiative forms part of the foundation’s Fashion ReModel project, which supports brands and retailers developing revenue streams through resale, repair, rental and remaking services. Participating businesses reported circular revenues growing four times faster than broader company sales, yet the segment still represents a relatively small share of total turnover.

Resale and repair businesses are still often burdened by high labour costs and typically face taxes on items at every transaction, rather than solely the original point of sale.

Vinted’s senior director of sustainability, Marianne Gybels, said to make circular businesses the first choice, they must deliver on what matters most to consumers, such as reliability and affordability.

“To unlock its full potential, policy should support business models that make circular choices more accessible. This helps second-hand to scale further and provides consumers high-quality, affordable alternatives that are significantly better for climate impact than buying new,” Gybels concluded.