Margin taxation
Under margin taxation, VAT is levied only on the difference between purchase and sale price; it applies to trade in used, individually identifiable items such as vehicles where no input tax deduction was possible on purchase.
Definition
Without this rule a vehicle bought from a private person would be taxed in full on resale, even though the tax was already contained in the purchase price. The margin is therefore the appropriate tax base — but it requires purchase and sale to be traceable per item.
No VAT may be shown on the invoice. Whoever shows it anyway owes it on the full amount — an error that gets expensive in the used vehicle trade.
Where to read it
What the software must be able to do
What is needed is item management that holds the purchase and sale price per vehicle and calculates the margin, together with an invoice showing no tax. Garage software can do this, generic invoicing usually cannot.
Checked Aug 2026
More terms under VAT and customs: Acquisition tax Customs declaration Effective method Exempt supplies Flat-rate VAT method Input tax Non-consideration Own use Place-of-recipient rule Reduction of consideration Takeaway 2.6 vs. eat-in 8.1 Value added tax VAT 3.8 % accommodation VAT 8.1 / 2.6 / 3.8 % VAT liability