Differenzbesteuerung (§ 25a UStG)

Anyone who buys used laptops, smartphones or monitors will see no VAT shown on some invoices, but the note "Used goods/special scheme". Margin scheme taxation is behind this. For companies that sell or buy used IT, it is worth knowing the principle.

When does margin scheme taxation apply?

The rule is meant to prevent VAT from being charged several times on used goods. Under § 25a UStG, three requirements must essentially be met:

• Reseller: The seller trades commercially in movable goods.
• Purchase within the Community territory: The goods were delivered to the reseller within the EU.
• No VAT on purchase: No VAT was owed on the supply to the reseller, or it was not charged because the supplier is a small business, or the supplier itself applied margin scheme taxation.

For items with a purchase price of up to 500 euros, the dealer can also calculate the difference collectively for an entire period (total margin). The dealer can also waive margin scheme taxation and tax normally.

Worked example

The figures are freely chosen and are not market prices. A dealer buys a laptop for 200 euros from a private individual and sells it for 319 euros.

Item	Margin scheme taxation	Standard taxation
Tax base	Difference: €319 − €200 = €119	Full selling price: €319
VAT included (19%)	19,00 €	50,93 €
Shown on the invoice	No tax shown, note "Used goods/special scheme"	Tax shown separately
Input tax deduction for the buyer	Not possible	Possible if the buyer is entitled to it

The difference is treated as a gross amount. The VAT is calculated out of it. If the selling price is lower than the purchase price, no VAT is due.

What does this mean for companies?

When selling old IT: If a company entitled to deduct input tax sells its retired devices to a dealer, this is generally a normal taxable supply. The dealer then cannot resell the devices under the margin scheme. The situation may differ if the company itself is not entitled to deduct input tax, for example because it mainly makes tax-exempt supplies. In that case the sale may be tax-exempt under certain circumstances. How the sale is recorded in the accounts as a Asset disposal is explained in a separate entry.

When buying used IT: Companies entitled to deduct input tax cannot claim input tax from an invoice issued under the margin scheme. For larger quantities it is therefore worth asking whether the devices are offered under standard taxation.

When selling to employees: If a company passes old devices on to employees, it is generally not a reseller. Margin scheme taxation then usually plays no role. More on this in the entry Employee sale.

Selling used IT with Second IT

Second IT buys used IT hardware from companies at market-based prices, based on database-supported price determination. CashBack options and employee sales are also possible. Before any remarketing, the data is erased with certification. Which tax treatment applies in your case should be clarified with your tax advisor. This entry does not replace tax advice. More on inventory analysis and market valuation. Why used IT is interesting for finance managers is explained in the article What CFOs should know about used IT hardware.

Frequently asked questions about margin scheme taxation

What does § 25a UStG mean, explained simply?

A dealer who bought used goods without VAT only pays tax on resale on their markup, i.e. the difference between selling and purchase price. No VAT is shown on the invoice.

Can I deduct input tax on goods sold under the margin scheme?

No. Because no VAT may be shown on the invoice, an input tax deduction is not possible for the buyer.

Does margin scheme taxation apply if my company sells old laptops?

Usually not for your company itself, because the rule applies to resellers. Your sale is generally a normal taxable supply. Clarify special cases, for example where there is no input tax deduction, with your tax advisor.

What are the requirements for margin scheme taxation under § 25a UStG?

The seller must be a reseller who trades commercially in movable goods. The goods were delivered to them in the EU. No VAT was owed or shown on the purchase, or the supplier itself applied margin scheme taxation.

What note appears on an invoice issued under the margin scheme?

The invoice bears the note "Used goods/special scheme". No VAT is shown. The buyer therefore cannot deduct input tax from such an invoice. When buying larger quantities, it is worth asking whether standard taxation is offered.