The margin scheme is a special VAT scheme for entrepreneurs who trade in used goods.
To which goods does the margin scheme apply?
Do you trade in second-hand goods? Then you may be allowed to apply the margin scheme. The margin scheme applies to most used goods that you have purchased without VAT. These are all goods that your customer can use again, whether or not after repair. Goods that you buy from a private individual always count as used goods, even if they have never been used. Under certain conditions, the margin scheme also applies to art, antiques, or collectables that you have purchased without VAT.
How do you calculate the VAT you have to pay with the margin scheme?
With the margin scheme, you do not calculate VAT on your turnover, but on the difference between the selling price and the purchase price of the goods: the profit margin. Are you selling at a profit? Then your profit margin is positive and you have to pay VAT. If you sell at a loss, you have a negative profit margin. In that case, you do not have to pay VAT, but you will not be refunded any VAT either.
Sell margin goods with VAT
With each sale, you may choose not to apply the margin scheme, but the normal VAT scheme. You then calculate the VAT on the sales price. You will usually do this if your customer is an entrepreneur and can deduct VAT.
The margin scheme in your VAT return
When filing a VAT return, you enter the VAT on your turnover from margin goods at question 1. If you have margin turnover (with a positive profit margin) and also a 'normal' turnover, you add up the VAT.
The margin scheme in your administration: 2 methods
You must record the purchase and sale of second-hand goods in your administration. There are 2 methods for this with margin goods:>
1. The globalisation scheme
You calculate the VAT on the total profit margin in a declaration period (turnover minus purchase costs). You may offset the negative profit margins against positive profit margins. This globalisation method is mandatory for:
- means of transport
- household appliances
- electrical devices
- books and magazines
- photo, film, and video equipment
- video tapes, music cassettes, CDs, LPs, etc.
- musical instruments
- art, antiques, and collectables
2. The individual method
You calculate the VAT per individual item and you keep track of purchases and sales per good in your administration. You may not offset negative profit margins against positive profit margins. You use the individual method for all goods for which the globalisation method is not mandatory.
For both methods, the Netherlands Tax Administration imposes additional requirements (in Dutch) on your administration:
- You must keep margin goods separate from other goods in your administration.
- You must keep goods with different VAT rates separate in your administration.
- You do not charge VAT on the invoice to your customer. But you do put one of the following terms in Dutch on the invoice:
- bijzondere regeling - gebruikte goederen (special scheme - used goods)
- bijzondere regeling – kunstvoorwerpen (special scheme - works of art)
- bijzondere regeling - voorwerpen voor verzamelingen of antiquiteiten (special scheme - collectors' items or antiques)
- You draft a purchase statement (in Dutch) for purchases of €500 or more on which you do not pay VAT.
With the individual method, you also have to keep your purchases and sales separate (in Dutch) in your administration.
Do you want to switch methods (in Dutch)? Then you can send a request to your tax office. Do they permit you to switch methods? Then you can use the new method from 1 January of the following year. You must use the new method for at least 5 years. If you want to return to the previous method, you must send a request to your tax office again.
Export and import of margin goods within the EU
The margin scheme for used goods, art, collectables, and antiques applies throughout the European Union. So, you can buy and sell goods within the EU in the same way as you do in the Netherlands.