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Example 1: Margin Taxation
A dealer accepts EUR 10000 as a trade-in for a used vehicle; and cannot assert a claim to any input tax for this business transaction.
Later the dealer sells the vehicle at a price of EUR 12000; the VAT is already included in this price.
The dealer is obliged to pay tax to the authorities of currently 7.6%, not on the entire EUR 12000, but on the difference between the final sales price and the original purchase price: EUR 12000 - EUR 10000 = EUR 2000.
In this case, the dealer pays tax on only EUR 2000: EUR 2000 x 7.6% / 107.6 % = EUR 141.26 is paid to the tax authorities.
Example 2: Standard Taxation
If the dealer had been able to deduct the input tax form the purchase price during the trade-in, the vehicle would have to be sold later using the standard taxation method, for which the basis for calculating tax is the total sales price of the vehicle.
If we use the same values as in the first example, the tax authority would receive the same amount of VAT at the time of sale of the vehicle.
The dealer demands the following amount of input tax from the original purchase price of 10000 (VAT included) of the vehicle: EUR 10000 x 7.6% / 107.6% = EUR 706.32.
After the sale of the vehicle for EUR 12000, the dealer pays VAT on EUR 12000 x 7.6% / 107.6% = EUR 847.58.
The difference between the input tax and the VAT is EUR 847.58 - EUR 706.32 = EUR 141.26. This is the same as the amount calculated for the margin method of taxation.
Example 3: Margin Taxation
The following table shows the calculation of VAT based on the margin method of taxation for four alternatives. The invoice amount as basis for the VAT with respect to the entire VSS order is the same, larger, or smaller than zero. The influence of accessories, for which the standard taxation method takes effect, is displayed.
Alternative 1: Vehicle (margin) Business (margin) | Alternative 2: Vehicle (margin) Business (margin) > 0 | Alternative 3: Vehicle (margin) < 0 Business (margin) < 0 | Alternative 4: Vehicle (margin) > 0 Business (margin) > 0 | |
Original purchase price | EUR 23250 | EUR 23250 | EUR 23250 | EUR 23250 |
Sales price | EUR 23000 | EUR 23000 | EUR 22000 | EUR 24500 |
Flat rate for delivery1 | EUR 250 | EUR 250 | EUR 250 | EUR 250 |
Accessories2 | 0 | EUR 500 | EUR 500 | EUR 500 |
Amount relevant for VAT purposes VAT incl. | 0 | EUR 500 | EUR 500 | EUR 2000 |
VAT (basis 100) | 0.00 | EUR 35.32 | EUR 35.32 | EUR 141.26 |
Sales incl. VAT | EUR 23250 | EUR 23750 | EUR 22750 | EUR 25,250 |
Net sales | EUR 23250.00 | EUR 23714.68 | EUR 22714.68 | EUR 25108.74 |
The flat rate for delivery is added to the sales price as basis for determining the margin with respect to the original purchase price.
In accordance with VAT laws and regulations, accessories, and also goods and services, are regarded independently of the vehicle and are therefore not always subject to VAT.