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Margin VAT is a specific tax mechanism that allows only the difference between the purchase price and the sale price of a good or service to be taxed, rather than subjecting the entire turnover to VAT. How to calculate margin VAT? How to account for it? All the answers to your questions in this article.

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What is Margin VAT?

Margin VAT is a specific tax regime defined by Article 297 A of the CGI , which applies to certain transactions, in particular for certain goods and services. Unlike traditional VAT which is calculated on turnover, margin VAT only applies to the difference between the purchase price and the sale price , i.e. the margin made by the seller.

This system aims to avoid double taxation, especially in cases where the property has already been taxed when it was first sold.

Who is affected by margin VAT?

Margin VAT applies to companies that meet the following 4 conditions :

• She is recognized as a taxable reseller
• The company exclusively carries out transactions on second-hand goods, which have not been subject to repair or intervention.
• Goods are purchased from persons not subject to VAT, such as individuals or sole traders exempt from VAT
• Purchases and resales are made within member countries of the European Union

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There are also some cases of exclusions . This concerns:

• Goods obtained for free
• Goods purchased from a taxable person who has already charged VAT on delivery
• Imported goods
• Goods acquired through an intra-Community purchase subject VAT

Global calculation

The global calculation method represents the simplest and most common method for calculating margin VAT. For this method, it is sufficient to calculate the difference between the total amount of sales including VAT and the total amount of purchases including VAT.

How to account for margin VAT?

The accounting of margin VAT is carried out in the usual VAT declaration forms, at the line level corresponding to the VAT collected .

It is important to properly document each transaction, keeping clear traceability of purchase and sale prices to justify the margin and the applicable VAT amount.

How to create an invoice with margin VAT?

In addition to the mandatory information on an invoice , it is imperative to indicate the margin VAT when this regime is applied. It is also important to clearly detail the calculation method on the invoice to ensure its compliance.

It is recommended to add a statement specifying the type of sale, such as:

• “Special regime – Second-hand goods”
• “Special regime – Works of art”
• “Special regime – Collectibles or antiques”

‍

Margin VAT is a specific tax mechanism that allows only the difference between the purchase price and the sale price of a good or service to be taxed, rather than subjecting the entire turnover to VAT. How to calculate margin VAT? How to account for it? All the answers to your questions in this article.

What is Margin VAT?

Margin VAT is a specific tax regime defined by Article 297 A of the CGI , which applies to certain transactions, in particular for certain goods and services. Unlike traditional VAT which is calculated on turnover, margin VAT only applies to the difference between the purchase price and the sale price , i.e. the margin made by the seller. This system aims to avoid double taxation, especially in cases where the property has already been taxed when it was first sold.

Who is affected by margin VAT?

Margin VAT applies to companies that meet the following 4 conditions :

• She is recognized as a taxable reseller
• The company exclusively carries out transactions on second-hand goods, which have not been subject to repair or intervention.
• Goods are purchased from persons not subject to VAT, such as individuals or sole traders exempt from VAT
• Purchases and resales are made within member countries of the European Union

‍

There are also some cases of exclusions . This concerns:

• Goods obtained for free
• Goods purchased from a taxable person who has already charged VAT on delivery
• Imported goods
• Goods acquired through an intra-Community purchase subject VAT

Global calculation

The global calculation method represents the simplest and most common method for calculating margin VAT. For this method, it is sufficient to calculate the difference between the total amount of sales including VAT and the total amount of purchases including VAT.

How to account for margin VAT?

The accounting of margin VAT is carried out in the usual VAT declaration forms, at the line level corresponding to the VAT collected .

It is important to properly document each transaction, keeping clear traceability of purchase and sale prices to justify the margin and the applicable VAT amount.

How to create an invoice with margin VAT?

In addition to the mandatory information on an invoice , it is imperative to indicate the margin VAT when this regime is applied. It is also important to clearly detail the calculation method on the invoice to ensure its compliance.

It is recommended to add a statement specifying the type of sale, such as:

• “Special regime – Second-hand goods”
• “Special regime – Works of art”
• “Special regime – Collectibles or antiques”

‍

Margin VAT is a specific tax mechanism that allows only the difference between the purchase price and the sale price of a good or service to be taxed, rather than subjecting the entire turnover to VAT. How to calculate margin VAT? How to account for it? All the answers to your questions in this article.

What is Margin VAT?

Margin VAT is a specific tax regime defined by Article 297 A of the CGI , which applies to certain transactions, in particular for certain goods and services. Unlike traditional VAT which is calculated on turnover, margin VAT only applies to the difference between the purchase price and the sale price , i.e. the margin made by the seller.

This system aims to avoid double taxation, especially in cases where the property has already been taxed when it was first sold.

Who is affected by margin VAT?

Margin VAT applies to companies that meet the following 4 conditions :

• She is recognized as a taxable reseller
• The company exclusively carries out transactions on second-hand goods, which have not been subject to repair or intervention.
• Goods are purchased from persons not subject to VAT, such as individuals or sole traders exempt from VAT
• Purchases and resales are made within member countries of the European Union

There are also some cases of exclusions . This concerns:

• Goods obtained for free
• Goods purchased from a taxable person who has already charged VAT on delivery
• Imported goods
• Goods acquired through an intra-Community purchase subject VAT

Global calculation

The global calculation method represents the simplest and most common method for calculating margin VAT. For this method, it is sufficient to calculate the difference between the total amount of sales including VAT and the total amount of purchases including VAT.

How to account for margin VAT?

The accounting of margin VAT is carried out in the usual VAT declaration forms, at the line level corresponding to the VAT collected .

It is important to properly document each transaction, keeping clear traceability of purchase and sale prices to justify the margin and the applicable VAT amount.

How to create an invoice with margin VAT?

In addition to the mandatory information on an invoice , it is imperative to indicate the margin VAT when this regime is applied. It is also important to clearly detail the calculation method on the invoice to ensure its compliance.

It is recommended to add a statement specifying the type of sale, such as:

• “Special regime – Second-hand goods”
• “Special regime – Works of art”
• “Special regime – Collectibles or antiques”