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The margin scheme: VAT only on the reseller's margin
The module’s worked examples, then cases to attempt before revealing their solution · 3 sections · 313 words · 4 min
Worked example
The camera from the buy-back counter
The Leipzig shop bought the camera for 400 euros from a private individual and sold it for 638 euros. The margin is 238 euros. Divided by 1.19, that gives a taxable amount of 200 euros, so the tax is 38 euros. Under the general rules, 101.87 euros of tax would have had to be extracted from the 638 euros.
Worked example
The antiquarian bookshop works out the whole year in one total
An antiquarian bookshop buys used books from estates for a total of 8,000 euros over the year, no single item costing more than 750 euros, and sells books for 11,570 euros in the same year. The global margin is 3,570 euros. Divided by 1.19, that gives a taxable amount of 3,000 euros and a tax of 570 euros, however many of the individual sales ended in a loss.
Practical case
The used e-bike
A bicycle dealer buys a used e-bike from a private seller for 1,200 euros and sells it to a customer for 1,795 euros. The dealer wants to know how much VAT is owed under the margin scheme, how much it would be under the general rules, and whether the bike may go into the global margin used for small items.
Hint: First work out the margin and extract the tax from it. Then compare the purchase price with the limit in paragraph 4.
Show the solution
The margin is 1,795 minus 1,200, so 595 euros. Because the tax is inside the margin, it is divided by 1.19: a taxable amount of 500 euros and tax of 95 euros. Under the general rules, 286.60 euros of tax would have to be extracted from 1,795 euros. The purchase price of 1,200 euros exceeds 750 euros, so the global margin is ruled out for this bike; it stays in the individual margin.
Answer: 95 euros of VAT instead of 286.60 euros, no global margin
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