Differential taxation

The differential taxation is of importance when trading with already used movable tangible assets. It is intended to prevent VAT from being charged in full on the entire used item when it is resold.

In the case of differential taxation, only the difference between the purchase price and the sales price is subject to VAT. The differential taxation does not apply in the case of own use of the acquired item by the company or in the case of acquisition for private purposes.

In order to apply the margin scheme, it is required that there is a resale, that the item was acquired in the Community and that the seller does not owe VAT on the sale to resellers or that the seller is subject to the margin scheme.

The primary requirement is that no sales tax was incurred on the acquisition. This is the case, for example, with acquisitions by private individuals, small businesses that have not opted for VAT, and professional groups that are not subject to VAT.

A reseller is an entrepreneur who commercially acquires mainly commodities and resells them himself. This is the case, for example, with second-hand watch dealers.
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