New means of transport VAT: young used cars across borders
New means of transport VAT rule explained: cars under six months or 6,000 km, why VAT is due in the destination country and how it affects dealers.
· 7 min read
A car is a "new means of transport" for VAT when it is supplied within six months of first entry into service or has travelled no more than 6,000 km. When such a car crosses an EU border, VAT is always due in the destination country, whoever the buyer or seller is. It cannot be sold cross-border under the margin scheme; private buyers pay the VAT at home.
What counts as a new means of transport for VAT?
Under Article 2(2) of the VAT Directive 2006/112/EC, a motorised land vehicle with an engine capacity above 48 cc or power above 7.2 kW is a "means of transport". It is "new" when either condition is met:
- the supply takes place within six months of the date of first entry into service, or
- the vehicle has travelled no more than 6,000 kilometres.
The two tests are alternatives. A three-month-old demonstrator with 9,000 km is new because of its age; a two-year-old car with 4,800 km is new because of its mileage. Only a car that is both older than six months and has more than 6,000 km is a second-hand means of transport.
Member states decide how the facts are established (Article 2(2)(c)). In practice, the date of first registration and the odometer reading at delivery are the evidence, so both belong on the contract and the invoice.
Why VAT is always due in the destination country
For new means of transport, the EU applies destination taxation to everyone, not just to businesses. Three rules work together:
- Article 2(1)(b)(ii) makes the intra-community acquisition of a new means of transport taxable for any buyer, including a private individual.
- Article 138(2)(a) exempts the supply in the seller's country, whether the buyer is a business or a private person.
- Article 9(2) treats even a private person who occasionally sells a new means of transport to another member state as a taxable person for that sale.
The result: the car leaves the seller's country VAT-free, and VAT is paid in the buyer's country at the rate there. For business buyers this is the usual intra-community acquisition described in reverse charge on used cars. For private buyers it is a separate one-off declaration.
For car dealers
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Request accessCan a nearly new car be sold under the margin scheme?
Not across a border. Article 313(2) states that the margin scheme does not apply to the supply of new means of transport carried out under the conditions of Article 138(1) and (2)(a). A dealer who took a five-month-old car in part-exchange from a private customer may resell it under the margin scheme domestically, but if he sells it to a buyer in another member state, the cross-border rules take over and the full price is taxed at destination.
This is one of the most expensive errors in the trade. A dealer who buys a "margin" demonstrator abroad at a gross price, believing no VAT is due at home, may later owe VAT on the whole purchase price in his own country. Check the first registration date and mileage before agreeing a price; our guide to VAT margin scheme EU rules shows how the treatments differ.
Who pays VAT on a new means of transport sold to a private buyer abroad?
The private buyer pays the VAT in his own country. The seller invoices without VAT, and the buyer declares the acquisition to his tax office, usually before or at registration.
Germany gives a clear example of how this works. A private buyer of a new vehicle from another member state must file a special VAT return ("Fahrzeugeinzelbesteuerung") within ten days of the acquisition and pay German VAT, under § 16(5a) and § 18(5a) UStG. Registration offices pass information to the tax office, so the obligation is difficult to avoid.
On the seller's side, German dealers who supply new vehicles to buyers in other member states without a VAT number must also report these sales to the Federal Central Tax Office under the vehicle-supply reporting ordinance (Fahrzeuglieferungs-Meldepflichtverordnung). Other member states have their own reporting routes; check yours before your first sale to a private buyer abroad.
If the seller is a private person, Article 172 lets him deduct the VAT he paid when he bought the car, but only up to the VAT that would have been due on his sale had it not been exempt, and only at the time of the supply.
A worked example
A Dutch dealer sells a four-month-old demonstrator with 3,200 km to a private customer in Belgium for €28,000.
| Step | Treatment |
|---|---|
| Status | New means of transport (under six months) |
| Dutch invoice | €28,000, VAT-exempt under Article 138(2)(a), with first registration date and km |
| Dutch VAT return | Exempt supply reported; input VAT on the demonstrator stays deductible |
| Belgian buyer | Declares the acquisition and pays Belgian VAT at 21%: €5,880 |
| Margin scheme | Not available for this cross-border sale |
Had the same car been eight months old with 9,000 km, it would be a second-hand car: sold to a Belgian consumer, the normal rules for distance and over-the-counter sales would apply, and a margin car could stay in the margin scheme. Those cases are covered in selling used cars to EU consumers abroad.
Which documents are needed for such a sale?
Keep a complete file, because the exemption depends on proving both the transport and the car's status. The invoice must show the new-means-of-transport characteristics under Article 226(12), i.e. the date of first entry into service and the mileage. Our cross-border car invoice guide gives the full layout.
Checklist:
- invoice with VIN, first registration date and mileage at delivery;
- buyer's identity document and address, or VAT number for a business buyer;
- transport documents or the buyer's signed arrival confirmation;
- a photo of the odometer at handover;
- any national reporting (for example the German report to the Federal Central Tax Office);
- the registration certificate or deregistration confirmation handed to the buyer.
How the rule affects dealers' pricing
The six-month and 6,000 km thresholds change who can buy a car competitively. Within the window, a foreign buyer pays his own country's VAT, so a car from a low-VAT country brings no VAT advantage. Once the car passes both thresholds, the margin scheme and normal intra-community rules apply again.
That is why pre-registered and demonstrator stock is often priced differently a few weeks apart. Before buying a young car abroad, calculate it twice: as a new means of transport and as a second-hand car, and check which one applies on the date of delivery. MyCarDealer shows the market price of comparable cars in your own country and the margin after VAT; you can test a car with the free valuation.
Frequently asked questions
What counts as a new means of transport for VAT?
A motor vehicle above 48 cc or 7.2 kW that is supplied within six months of first entry into service, or that has travelled no more than 6,000 km. Either condition is enough, under Article 2(2)(b) of the VAT Directive.
Can a nearly new car be sold under the margin scheme?
Not to a buyer in another member state. Article 313(2) excludes cross-border supplies of new means of transport from the margin scheme, so VAT is due on the full price in the destination country. Domestic sales of such cars can still fall under the margin scheme if the purchase qualified.
Who pays VAT on a new means of transport sold to a private buyer abroad?
The buyer, in his own country. The seller invoices without VAT, and the buyer declares and pays VAT at home; in Germany within ten days of the acquisition.
Which documents are needed for such a sale?
An invoice showing the VIN, first registration date and mileage, proof of the buyer's identity or VAT number, transport or arrival documents and any national reporting. Keep a dated photo of the odometer at handover.
Does the rule also apply when a private person sells a young car abroad?
Yes. Under Article 9(2) a private person who occasionally sells a new means of transport to another member state is treated as a taxable person for that sale. The sale is exempt in his country and the buyer pays VAT at destination.