VAT car or margin car: what's the difference?

VAT car

For a VAT car, the VAT is shown separately on the invoice. If you use the car for VAT-taxable turnover, you can, in principle, deduct that VAT.

Margin car

For a margin car, VAT has only been calculated on the seller's profit margin, and this is not shown on the invoice. Therefore, you cannot reclaim this VAT. See also VAT or margin car.

When is a car a VAT car or a margin car?

A margin car, on the other hand, is a vehicle that was sold new to a private individual, or traded in by a private individual at a car dealership. Because private individuals cannot charge VAT, the car is treated under the margin scheme (margeregeling) when resold by a car dealership. This means that VAT is only levied on the car dealership's profit margin, instead of on the full selling price. This distinction is crucial for entrepreneurs purchasing a car.

Consequences of VAT car or margin car with financial lease?

If a margin car is chosen for financial lease, there is no VAT on the purchase price that can be reclaimed. The entrepreneur pays the full purchase price, including any VAT included in the margin, and cannot deduct it. Although the lease instalments are still deductible as business expenses for income tax or corporate tax, the VAT advantage on the initial investment is absent. This can affect the total cost of the car and is an important consideration when choosing between a VAT or margin car.

Frequently asked questions