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Whether your vehicle is a VAT vehicle affects the sale. An accessible explanation, not a substitute for advice from your accountant.
When selling a company vehicle, the VAT status plays a role. The exact consequences depend on your situation, so this is a general explanation and not tax advice.
A VAT vehicle is a vehicle for which the VAT on purchase was (fully or partially) deducted. That status carries over to a later sale: VAT is generally due on the sale of a VAT vehicle.
For vehicles that are not sold as VAT vehicles, the so-called margin scheme may apply. Under this scheme, VAT is calculated only on the profit margin, not on the full price. Which scheme applies depends on the history of the vehicle.
When you sell to a professional buyer, the administrative and VAT-related handling is taken care of. Indicate in your request whether it concerns a VAT vehicle, so that the valuation and handling are aligned accordingly. For the precise consequences in your situation, it is best to consult your accountant.
Want to know more before you sell? See selling a company car or, for multiple vehicles, selling a fleet. Also read what your company car is worth.
Frequently asked questions
If your business is VAT-liable and the company car belongs to your business assets, you are in principle obliged to charge 21% VAT on the sale. This applies both to sales to private individuals and to other entrepreneurs. Only when the car is entirely private assets is VAT omitted; for a sole proprietorship this is sometimes a grey area; have this checked by your accountant.
The tax authorities allow a relaxation: the globalisation scheme (special measure) from circular 36/2015. Under this scheme, you charge VAT on your profit margin instead of on the full sale price. You may apply this scheme when you originally bought the car with partial or no VAT deduction, for example when purchasing from a private individual. The effective VAT rate thus drops to about 10.5%, a significant competitive advantage when reselling.
Sale excluding VAT: if you agree a price of €10,000 excluding VAT, the VAT amount is €2,100 (21%) and the buyer pays €12,100. If you apply the globalisation scheme on a margin of €3,000, the VAT is only €630 (21% of €3,000) and the total price is €10,630.
Sale including VAT: with an agreed total amount of €12,100 including VAT, the VAT portion is €2,100 and the net price is €10,000. Clearly agree in advance whether your price is including or excluding VAT to avoid misunderstandings.
A correct invoice avoids problems during an audit. In addition to the standard details, always state the phrase “VAT: special measure, globalisation scheme” when you apply the margin scheme. Do not forget to note the chassis number, the mileage and the sale date. When selling to a VAT-liable entrepreneur, a full invoice is required; for private individuals, a simplified invoice or proof of purchase suffices.
Request a free valuation, we will take care of the handling.
