You can use this process to define the method of taxation that is used during the purchase and sale of used vehicles, and also to determine the correct amount of value-added tax (VAT) depending on whether you are using standard or margin taxation.
It allows you to do the following:

• Enter and store the required basic data for vehicles.
• Change the taxation method by using specific actions before the resale of vehicles.
• Determine the correct basis for the calculation of VAT during the billing process.

Prerequisites

• A suitably-trained employee has determined the method of taxation to be used (standard or margin taxation) and entered it manually in the vehicle data. In the case of margin taxation, the original purchase price must also have been entered in the system.
• The decision to use margin taxation must take place before the goods receipt is posted.

If you wish to use margin taxation:

• Create new vehicle (transaction /DBE/VM). Select Create Vehicle, ensuring that Vehicle Business Transaction USC is selected.
• In the vehicle master, you have selected the Margin Taxation indicator.

• You have set the indicators for input tax and output tax.
• You have made the appropriate Customizing settings.

Process

The different taxation methods influence the amount that is taken as a basis for determining the value-added tax (VAT). Whilst in the standard taxation method the entire sales price forms the basis for calculating the tax, the margin taxation method uses the difference between the sales price and the original purchase price.
If the vehicle is sold using the margin taxation method, the original purchase price does not change even if the dealer services the vehicle or installs additional parts in the vehicle before selling it on. These activities simply increase the stock value of the vehicle and only influence the sales price (indirectly).
If a vehicle that already exists in the system (for example, it has been sold as a new vehicle before) is purchased back, you should use interlinked action QRPU (Repurchase Used Vehicle). By using this action, the margin taxation flag can also be set. For more information on elementary action QTIP (part of QRPU), see Action QTIP: Prepare Repurchase of Vehicle.
If during a vehicle acquisition the vehicle is transferred within the same company or group of affiliated companies (both parties being registered under the same number for tax purposes), for example between dealers, this has no effect on the original purchase price.

If the margin taxation method is used for the resale of a specific vehicle, the primary factors for determining the VAT are the original purchase price and the final sales price. Factors such as the costs incurred by the dealer for maintaining the vehicle are irrelevant. If the vehicle is sold at a loss, the VAT related to this vehicle is zero. If other accessories and parts are sold together with the vehicle in the same VSS order, such as new winter tires or a roof rack, the VAT is calculated for these items separately from the vehicle. The flat rate for delivery is an exception. This is added to the vehicle sales price and then compared with the original purchase price.
If the sales price (plus delivery flat rate) is less than the original purchase price, the tax payable on the vehicle is zero and not negative.

Example

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.

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.