Taxation laws differ from country to country. To be able to calculate the tax incurred and also the subsequent billing correctly, you have to be able to represent the former by different taxation methods in the system. Below you can find some information on margin taxation (taxation of the margin). This method of taxation can be used during the purchase and sales of used vehicles in Switzerland, for example.

Margin Taxation in Switzerland

The method of margin taxation is a regulation set by the Swiss Value-Added Tax (VAT) Fiscal Code that can be used on the purchase and sales of moveable goods, in this case motor vehicles. The law in its present form has been valid since the introduction of the revised VAT law of January 1, 2001.
Currently, there are two methods of taxation for the purchase and resale of used vehicles:

• Standard taxation (input tax deduction on purchase, VAT levied on the entire sales price)
• Margin taxation (without input tax deduction, for example when a private customer purchases the vehicle; VAT is only levied on the difference, or margin, between the original purchase price and the sales price)

As soon as a dealer acquires a used vehicle, whether by purchasing it or taking it as a trade-in, the taxation method required for this vehicle takes effect. In some cases, the taxation method can be different and has to be adapted to the vehicle. If the vehicle is sold later, this note regarding determination of the correct tax amount with respect to the vehicle item has to be taken into consideration both on the invoice and in any dealings with the tax authority.
For further information on margin taxation, see Standard and Margin Taxation.