The purchase declaration: your proof it is a margin car
A purchase declaration is the document recording that you bought a car from a private seller. It is not a formality. Without it you cannot later show the margin scheme was applied correctly. The problem then lands on you.
Why the document exists
The margin scheme rests on one fact: the seller could not deduct VAT. You have to be able to prove that fact. A private seller does not issue an invoice. The purchase declaration fills that gap.
The burden of proof sits with you as the buyer, not the seller. If you cannot show it, the tax authority can tax the full sale price instead of your margin.
What belongs in it
- the date of purchase
- name and address of the seller
- name and address of your business plus your VAT number
- make, model, chassis number and registration of the car
- the mileage at the time of purchase
- the purchase price
- the statement that the seller charges no VAT and did not use the car in business with a right to deduct
- the seller's signature
That last one is where it goes wrong in practice. A declaration without a signature is not proof.
Do it on the spot
Handle the declaration at the car, not afterwards. A private seller who has sold the car and has the money rarely signs anything later. Bring a printed form or use an app, and have them sign before the keys change hands.
File it with the rest of your records. In an audit it is requested per car, not as a pile.
Frequently asked questions
What is a purchase declaration?
A document recording that you bought a used good, usually a car, from a private seller who charged no VAT. It is your proof that you may apply the margin scheme.
When do I need one?
For every purchase from a private seller where you want to apply the margin scheme. For the exact thresholds and formal requirements in your country ask your accountant, because they differ per country and change.
Does the seller have to sign?
Yes. A declaration without the seller's signature is barely proof in an audit. Have them sign before the car drives away.
What if I do not have one?
Then you cannot show the margin scheme was applied correctly. The tax authority can charge VAT on the full sale price instead of on your margin.
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 · Margin or VAT · Buying cars from private sellers · Starting a car dealing business