As a car dealer you may use the margin scheme if you bought a used car without VAT, within the EU, from someone who could not deduct VAT themselves. Think of a private seller or another dealer who sold the car under the margin scheme. You then pay VAT on the profit margin, not on the full selling price. The VAT is 21/121 of the difference between the selling price and the purchase price.
If you bought the car with VAT, for example from a leasing company, or brought it in from outside the EU, it is a VAT car. Cars also have a fixed calculation method: global accounting, where you add up all margin sales and margin purchases per return period.
In short
- You buy a margin car without VAT, within the EU, from a private seller, another margin dealer or a business that could not deduct VAT. You pay 21/121 of the margin.
- For cars, global accounting is mandatory. Anyone who wants to calculate per car must notify this by letter and is then bound to it for at least 5 years.
- A car from outside the EU is not a margin car. The small business scheme does not fit, because it counts the full selling price and not the margin.
In this article
- What is the margin scheme for used cars?
- Who do you have to buy the car from to sell it as a margin car?
- When is a car a VAT car?
- Why do you have to use global accounting for cars?
- Can you use the margin scheme for a car from outside the EU?
- Do refurbishment costs reduce the margin?
- Is the small business scheme useful for a car dealer?
What is the margin scheme for used cars?
The margin scheme is a VAT scheme for dealers in second-hand goods. You do not calculate VAT on the selling price, but on the profit margin: the difference between what you paid for the car and what the customer pays you (VAT Act, article 28b). You do not show VAT on the invoice.
The VAT is 21/121 of the margin, because the margin already includes the VAT (Belastingdienst, calculating VAT on margin goods). A worked example: you buy a car from a private seller for € 8,000 and sell it for € 10,495. The margin is € 2,495. The VAT is 21/121 of that, rounded € 433.02.
The difference from the normal rule is large. If the same car falls outside the margin scheme, you calculate 21/121 on the full price. In the example that is € 1,821.40, before any deduction of residual BPM.
Who do you have to buy the car from to sell it as a margin car?
From someone who did not deduct the VAT on that car. The Belastingdienst lists four types of supplier, and the purchase must be within the EU (Belastingdienst, margin scheme):
- a private individual or another non-business
- a business that only used the car for activities without a right to deduct VAT, such as exempt services
- a business using the small business scheme (KOR) that used the car as a business asset
- another dealer who supplied the car to you under the margin scheme
A car you buy from a private seller always counts as a second-hand good, even if it has hardly been driven (Belastingdienst, what are margin goods). If you buy for € 500 or more from one supplier, you must draw up a purchase statement (Belastingdienst, margin scheme). For a car, it also states the registration number.
You can also buy margin cars in another EU country. If the foreign dealer applies the margin scheme, you receive an invoice without VAT and it remains a margin car (Belastingdienst, buying margin goods from EU countries).
When is a car a VAT car?
If the previous owner was able to deduct the VAT. A leasing company or a business that bought the car with VAT and deducted that VAT supplies you with a VAT car. You sell it with 21% VAT on the price. You may then deduct the VAT on your purchase.
With a VAT car, you take the residual BPM out of the price before you calculate the VAT. The law says that for a used passenger car, van or motorcycle that you do not sell under the margin scheme, the consideration is reduced by the BPM still resting on the vehicle (VAT Act, article 8(5)). Have that amount calculated per car.
You may also deliberately sell a margin car with VAT. That is beneficial if your customer is a business that can deduct the VAT (Belastingdienst, when not to apply the margin scheme). You may never sell a new or nearly new vehicle to another EU country under the margin scheme.
Why do you have to use global accounting for cars?
Because the law sets it up that way for vehicles. With global accounting you do not calculate per car, but per return period: all margin sales minus all margin purchases in that period (VAT Implementing Decree, article 4c). The Belastingdienst calls the method mandatory for cars, motorcycles, bicycles and caravans (Belastingdienst, records for margin goods).
The Belastingdienst's example: in a quarter you sell € 40,000 of margin goods and buy € 25,000. The margin is € 15,000 and the VAT € 2,603 (Belastingdienst, VAT return for margin goods). A purchase therefore counts in the period in which you buy, not only when you sell the car.
The advantage: a car sold at a loss reduces the VAT on the other cars. A negative margin does not give you a VAT refund, but you carry it forward to a later period in the same year. At the end of the year you may make an annual balance, and a negative annual balance carries over to the next year (Belastingdienst, offsetting a negative profit margin).
If you still want to calculate per car, you notify the Belastingdienst by letter. The new method starts on 1 January of the following year, and you are bound to it for at least 5 years (Belastingdienst, changing method). With the per car method, losses do not count.
Can you use the margin scheme for a car from outside the EU?
No. The margin scheme only applies to goods you bought within the EU from one of the four types of supplier (Belastingdienst, margin scheme). The law only makes an exception for art, antiques and collectors' items that you import yourself (Belastingdienst, what are margin goods).
A car you import from outside the EU is therefore a VAT car. On import you pay 21% VAT (VAT Act, article 20). As a business you can deduct that VAT, and on sale you charge VAT on the full price excluding the residual BPM. Take that into account in your costing, because you do not sell such a car at a margin price.
Do refurbishment costs reduce the margin?
No. You do not deduct the cost of parts from the profit margin. The margin remains selling price minus purchase price. You do deduct the VAT on new parts as input tax in your VAT return (Belastingdienst, VAT when repairing margin goods).
Anyone who thinks € 600 of parts reduces the margin pays 21/121 of € 600 too little in this worked example, about € 104. So keep refurbishment costs separately per car, with the registration number on every receipt. They reduce your profit, not the VAT on the margin.
Is the small business scheme useful for a car dealer?
Almost never. With the small business scheme (KOR) you do not charge VAT if your annual turnover in the Netherlands is not more than € 20,000 (VAT Act, article 25a). For that threshold, the selling price counts for margin goods, not the profit margin (Belastingdienst, calculating VAT on margin goods).
With two cars of € 10,495 you are already above the threshold. Moreover, under the KOR you may not deduct any VAT, not even on parts, pre-delivery services and advertising. For a dealer who buys and refurbishes cars, that weighs heavily.
Research in the United Kingdom shows how such a VAT threshold works. There, many small firms keep their turnover just below the threshold. At the same time, almost half of the firms below the threshold still chose to register for VAT, especially firms with a lot of purchasing and few sales to consumers (Liu et al., 2021). The study covered British firms from 2004 to 2014, not the car trade, but it shows that opting out of an exemption is common for firms with high purchases.
Sources
- VAT Act 1968 (Wet op de omzetbelasting 1968), articles 8, 20, 25a and 28b, in force from 1 January 2026. wetten.overheid.nl
- VAT Implementing Decree 1968 (Uitvoeringsbeschikking omzetbelasting 1968), article 4c, in force from 1 April 2026. wetten.overheid.nl
- Belastingdienst, Margin scheme: VAT on the profit margin instead of turnover, accessed 22 October 2026. belastingdienst.nl
- Belastingdienst, What are margin goods?, accessed 22 October 2026. belastingdienst.nl
- Belastingdienst, Calculating VAT on margin goods, accessed 22 October 2026. belastingdienst.nl
- Belastingdienst, Buying margin goods from EU countries, accessed 22 October 2026. belastingdienst.nl
- Belastingdienst, When not to apply the margin scheme?, accessed 22 October 2026. belastingdienst.nl
- Belastingdienst, Keeping records when trading in margin goods, accessed 22 October 2026. belastingdienst.nl
- Belastingdienst, Filing a return when trading in margin goods, accessed 22 October 2026. belastingdienst.nl
- Belastingdienst, Offsetting a negative profit margin, accessed 22 October 2026. belastingdienst.nl
- Belastingdienst, Switching between global accounting and the per item method, accessed 22 October 2026. belastingdienst.nl
- Belastingdienst, Calculating VAT when you repair margin goods, accessed 22 October 2026. belastingdienst.nl
- Liu, L., Lockwood, B., Almunia, M. & Tam, E.H.F. (2021). VAT notches, voluntary registration, and bunching: theory and U.K. evidence. The Review of Economics and Statistics, 103(1), 151-164. doi.org