How does differential taxation work for used goods?
March 6, 2023 | 40,00 EUR | answered by Lina Sauer
Dear Sir or Madam,
my name is Laura Lauer and I run an online shop where I mainly sell used electronic devices. So far, I have been calculating the VAT based on the regular taxation method. However, I have recently heard about the possibility of using the margin scheme for second-hand goods and I am wondering if this would be suitable for me as a business owner and how exactly it works.
Currently, my situation is as follows: I purchase used electronic devices from individuals, repair them if necessary, and then sell them through my online shop. Since these are second-hand goods, it is difficult for me to determine the exact purchase price as I acquire the devices at different prices. Additionally, the selling price varies depending on the condition and demand.
My concern is that the regular taxation method may be too complex for me and that I could make mistakes in calculating the VAT as a result. Therefore, I would like to know how exactly the margin scheme works and if it is suitable for my online shop selling used electronic devices. Are there any specific requirements or conditions that I need to consider? How do I calculate the VAT in this case?
I hope you can help me with these questions and provide me with possible solutions. Thank you in advance for your support.
Sincerely,
Laura Lauer
Dear Mrs. Lauer,
Thank you for your inquiry regarding value-added tax and the possibility of differential taxation for used goods in your online shop. I am happy to explain to you in detail how differential taxation works and whether it is suitable for your business case.
Differential taxation is a special regulation in the value-added tax law that is specifically intended for the trade of used items. With differential taxation, the value-added tax is not calculated on the full selling price, but only on the difference between the selling price and the purchase price of the goods. This has the advantage that as a business owner, you do not need to determine the exact purchase price, as only the difference is taxed.
However, there are certain conditions for applying differential taxation. Firstly, the goods you sell must be used, and you must acquire them from private individuals or other non-value-added tax liable sellers. Additionally, you must specify differential taxation in writing on your invoice and indicate that this special regulation is being applied.
To calculate the value-added tax with differential taxation, you proceed as follows: You use the selling price minus the purchase price as the basis for calculating the value-added tax. The applicable value-added tax rate is then applied to this difference. The amount due is then shown as value-added tax in your value-added tax pre-registration.
In your case, as the operator of an online shop for used electronic devices, differential taxation could be a suitable option to simplify your value-added tax accounting. Since you have difficulty determining the exact purchase price, which also varies depending on the condition and demand for the devices, differential taxation could be a practical solution.
However, I recommend that you consult with a tax advisor or a specialist in value-added tax to discuss your individual situation and ensure that differential taxation is indeed the best option for your online shop.
I hope that I could assist you with this information. If you have any further questions, please feel free to contact me.
Best regards,
Lina Sauer
