Margin scheme for VAT on second-hand goods

To which goods does the margin scheme apply?

Do you trade in second-hand goods? Such as used cars, clothes, or books. Then you may be allowed to apply the margin scheme. The margin scheme applies to most used goods that you have purchased without VAT. Goods that you buy from a private individual always count as used goods, even if they have never been used. The margin scheme sometimes also applies to art, antiques, or collectables that you have purchased without VAT. However, only under certain conditions.

How do you calculate VAT for the margin scheme?

With the margin scheme, you do not calculate VAT on your turnover, but on the difference between the selling price and the purchase price of the goods: the profit margin.

Positive profit margin and negative profit margin

Do you sell at a profit? If so, your profit margin is positive and you have to pay VAT on your profit. If you sell at a loss, you have a negative profit margin. In your VAT return, you then put €0. That means you do not have to pay VAT, but you also do not get a (negative) VAT refund.

VAT calculation example with the margin scheme

Suppose you bought a car from a private individual. You paid €20,000 for it. You want to make a profit of €10,000 on the sale. Then you calculate the VAT like this: 21/100 * €10,000 = €2,100. And the selling price of the car then becomes: €20,000 + €10,000 + €2,100 = €32,100.

Sell margin goods with VAT

For each sale, you may also choose not to apply the margin scheme. You then calculate VAT on the selling price. And include VAT on the invoice. You can choose to do this if your customer is a business and can deduct VAT. Otherwise, your business customer cannot deduct VAT on this purchase. This way you make it more advantageous for your customer.

The Tax Administration offers example calculations (in Dutch).

The margin scheme in your VAT return

When filing a VAT return, you enter the VAT on your turnover from margin goods at question 1. If you have margin turnover (with a positive profit margin) and also a 'normal' turnover, you add up the VAT.

The margin scheme in your records

You must record the purchase and sale of second-hand goods in your administration. There are 2 methods for this with margin goods:

1. The globalisation scheme
2. The individual method

The Tax Administration offers practical examples of these methods (in Dutch).

For both methods, the Tax Administration imposes additional requirements (in Dutch) on your records:

• You must keep margin goods separate from other goods in your administration.
• You must keep goods with different VAT rates separate in your administration.
• You do not charge VAT on the invoice to your customer. But you do put one of the following terms in Dutch on the invoice:

  • bijzondere regeling - gebruikte goederen (special scheme - used goods)
  • bijzondere regeling – kunstvoorwerpen (special scheme - works of art)
  • bijzondere regeling - voorwerpen voor verzamelingen of antiquiteiten (special scheme - collectors' items or antiques)
• You draft a purchase statement (in Dutch) for purchases of €500 or more on which you do not pay VAT.

With the individual method, you also have to keep your purchases and sales separate (in Dutch) in your records.

Switching methods

Do you want to switch methods (in Dutch)? Then you can send a request to your tax office. Do they permit you to switch methods? Then you can use the new method from 1 January of the following year. You must use the new method for at least 5 years. If you want to return to the previous method, you must send a request to your tax office again.

Export and import of margin goods within the EU

The margin scheme for used goods, art, collectables, and antiques applies throughout the European Union. So, you can buy and sell goods within the EU in the same way as you do in the Netherlands.