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Frequently asked questions · Margin VAT

How do you tell a supplier is using the margin scheme?

From the invoice. No VAT amount on it, and a reference to the special scheme.

From the invoice. A margin invoice shows no separate VAT amount: there is one total price, with a reference to the special scheme for second-hand goods. If your supplier reverse-charges, the invoice carries two VAT numbers and a note that VAT is reverse-charged. In doubt, ask before you buy rather than after.

Two invoices side by side

Margin invoice

One total priceNo separate VAT amount, but a reference to the special scheme for second-hand goods.

Reverse charge

Two VAT numbersAnd a note that VAT is reverse-charged.

In doubt? Ask before you buy rather than after.

The difference is not cosmetic. Bought under your supplier's margin scheme, you may resell the piece under the margin scheme yourself. Bought with reverse charge, that VAT was deductible and the piece now falls outside the margin scheme.

What it means when you sell the piece

How did you buy the piece?

under your supplier's margin scheme

You may resell it under the margin scheme

with reverse charge

The piece falls outside the margin schemeThat VAT was deductible.

So keep that document with the piece itself, not loose in a folder of invoices. In an inspection, provenance is the first thing asked, and for a unique piece it cannot be reconstructed afterwards.

Read next

Buying in the EU: margin or reverse charge? What must a margin invoice say? What if you have no proof of purchase? All frequently asked questions

Also worth knowing

What must a margin invoice say?

No separate VAT amount — that is the hallmark of a margin invoice — and the name of the scheme. In Belgium, Royal Decree no. 53, article 8, prescribes it word for word: “Bijzondere regeling - gebruikte goederen” (“Régime particulier - Biens d'occasion”), or the versions for works of art and for collectors' items and antiques. Your customer therefore sees a single total price. Adding “VAT not deductible” is allowed, but the law does not ask for it. Check which wording is compulsory in your country.

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What if you have no proof of purchase for a piece?

Then applying the margin scheme correctly becomes difficult or impossible. The scheme taxes the difference between purchase and sale. According to the Belgian FPS Finance, without proof of the purchase price the margin cannot be established, and the full selling price is taxed. In the UK, HMRC says so in as many words.

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