Margin scheme taxation

The margin scheme is a special VAT procedure under § 25a UStG. It applies when dealers resell used goods, works of art, or collectibles. Instead of applying VAT to the full selling price, tax is only charged on the difference between the purchase price and the selling price.

This means: the dealer only pays VAT on their actual profit — not on the total amount the customer pays.

The margin scheme is particularly relevant for the following groups:

• Dealers of used goods (e.g. firearms, watches, electronics)

• Online platforms and retailers that resell privately owned items

• Buyers who should not expect VAT to be shown separately on the invoice (as it is not displayed separately under the margin scheme)

Since the tax is only calculated on the profit margin, the law does not permit VAT to be shown separately on the invoice. This means buyers cannot reclaim input tax — something business customers should be aware of.

• Competitive advantage for dealers: lower tax burden on used items

• Better prices for customers: since full VAT is not added on top

• Simpler pricing when purchasing from private individuals

Invoices for margin-scheme items include a note such as:

"Used item / special scheme under § 25a UStG – VAT not shown separately."

A concrete example:

• Purchase price: €800

• Selling price: €1,000

• Tax is applied only to the margin: €200

• 19% VAT on that ≈ €32