Margin or VAT: how to tell the difference
Margin or VAT is not a label someone sticks on at random. It follows from who the car was bought from. It decides what you keep on the sale.
How to tell from the listing
A dealer usually states it: margin or VAT. If nothing is stated the question is simple: could the previous owner deduct the VAT?
- Private seller: almost always margin
- Ex-lease car or company van: often VAT
- Dealer with no mention: ask, in writing
Why it matters when you sell
Buy a VAT car and you deduct the VAT on purchase and charge it on sale. Buy a margin car and there is nothing to deduct, so you only pay over your margin.
Selling to a business buyer who wants to deduct VAT makes a VAT car more attractive to them. Selling to a private buyer, it makes no difference to them and you keep more on a margin car.
The mistake that costs money
Selling a margin car with VAT on the invoice is a mistake you get to pay for yourself. The reverse too: you cannot deduct VAT on a car you bought under the margin scheme, because no VAT was paid.
If you doubt a specific car, put the question to the seller in writing and keep the answer.
Frequently asked questions
Is my car margin or VAT?
Look at who it was bought from. From a private seller: margin. From a business that could deduct VAT: VAT. If the invoice does not say, ask the seller and keep the answer.
What is the difference between margin and VAT on a car?
On a VAT car you charge VAT on the full sale price and a business buyer can deduct it. On a margin car you only pay over your profit margin and there is no deductible VAT on the invoice.
Can a margin car become a VAT car again?
No. The character follows from the purchase and does not change because you resell it.
This page explains the main rules and is not tax advice. For your own situation, certainly for import, export or cross-border trade, ask your accountant or the tax authority.
What a margin car is · The purchase declaration · Buying cars from private sellers · What a car dealer earns per car