Value Added

‘Value Added’ is the difference between an item’s price and the cost of producing it. The sources of value added are diverse, and include, for example, adding a brand name label, processing raw material into products, and offering service alongside a product. In Europe, value added is used as one basis of taxation. This is charged on the sale of goods and services, but intermediate consumers (such as a manufacturer buying raw materials) can reclaim value added tax paid on their inputs.