Reverse charge on used cars bought from EU dealers
Reverse charge on used cars bought from another EU country: intra-community acquisition, self-accounting VAT, deduction and when margin cars are excluded.
· 7 min read
Reverse charge on a used car bought from an EU dealer means the seller invoices the VAT-qualifying car net and you, the buying dealer, account for VAT in your own country at your own rate. You declare the VAT as an intra-community acquisition and deduct it in the same return, so the cash effect is normally zero. Margin-scheme cars never follow this route.
What "reverse charge" means when buying a car from another EU country
Dealers say "reverse charge", but legally the purchase is an intra-community acquisition of goods, taxed in the buyer's country. The VAT Directive 2006/112/EC sets out the mechanism:
- Article 2(1)(b)(i) makes the intra-community acquisition of goods by a taxable person taxable.
- Article 20 defines it as acquiring ownership of goods transported to you from another member state.
- Article 40 places the acquisition where transport ends, i.e. in your country.
- Article 200 makes you, the acquirer, liable to pay the VAT.
- Article 168(c) gives you the right to deduct that same VAT if you use the car for taxable sales.
On the seller's side, the same transaction is a VAT-exempt intra-community supply under Article 138. The two sides mirror each other: no VAT in the seller's country, VAT in yours. The seller's conditions are explained in intra-community supply of cars.
How the reverse charge works step by step
The process for a VAT-registered dealer is the same in every member state, even if the return boxes have different numbers.
- Give the seller your VAT number and make sure it is valid in VIES. If you use a number from a different member state than the one where the car arrives, Article 41 can make the acquisition taxable in that other state as well until you prove VAT was paid where transport ended.
- Receive a net invoice showing both VAT numbers and an exemption reference. The mention "Reverse charge" is required only where the customer is liable for the VAT on the supply itself (Article 226(11a)); for intra-community supplies, the exemption reference under Article 226(11) is what matters.
- Arrange or confirm transport and, if asked, sign the seller's entry confirmation.
- Declare the acquisition in your VAT return: the net price as the taxable amount and VAT at your standard rate.
- Deduct the same amount as input VAT in the same return.
- Resell with full VAT on the selling price.
When the acquisition VAT is reported
VAT on an intra-community acquisition becomes chargeable when the invoice is issued, or on the fifteenth day of the month after the acquisition if no invoice has been issued by then (Articles 69 and 222). In practice, report the acquisition in the return covering the invoice date. A late invoice from the seller does not postpone your obligation beyond the fifteenth of the following month.
For car dealers
Know your margin before you buy
MyCarDealer compares any car from an auction or listing with the market in your country and shows the net margin after VAT, transport and costs – and the maximum bid.
Request accessIs a margin-scheme car subject to reverse charge?
No. A car that a foreign dealer sells under the margin scheme is not an intra-community acquisition for you. Article 4 of the Directive states that the acquisition of second-hand goods is not subject to VAT where the seller is a taxable dealer who applied the margin scheme in the country of dispatch, and Article 139(3) excludes margin goods from the seller's exemption.
The seller invoices gross with the "Margin scheme — Second-hand goods" mention, pays VAT on his margin at home, and you declare nothing on arrival. You resell under your own country's margin scheme. The full comparison is in VAT margin scheme EU rules.
| VAT-qualifying car | Margin-scheme car | |
|---|---|---|
| Seller's invoice | Net, both VAT numbers, exemption reference | Gross, margin mention, no VAT shown |
| VAT in seller's country | None | On the seller's margin |
| Your VAT return | Acquisition VAT declared and deducted | Nothing to declare |
| Your resale | Full VAT on the selling price | VAT on your margin only |
| Entry confirmation | Usually required by the seller | Not needed for VAT |
A worked example
Take an Austrian dealer buying a 2022 VW Passat diesel from a German dealer. According to listings tracked by MyCarDealer in Germany in October 2026, 313 Passat diesels from 2021 to 2023 had a median asking price of €19,490 — a useful check that a trade price is realistic.
- Purchase: €15,000 net, VAT-qualifying, invoiced as an intra-community supply.
- Austrian acquisition VAT at 20%: €3,000, declared and deducted in the same return.
- Resale in Austria at €21,000 including VAT: output VAT €21,000 × 20/120 = €3,500, net revenue €17,500.
- Gross profit before transport, NoVA, preparation and fees: €2,500.
The acquisition VAT itself costs nothing; the real VAT cost is the €3,500 charged on the full resale price. That is why net cars must be compared with margin cars only after converting both to your own VAT position. Registration tax comes on top: see NoVA on imported used cars for Austria. MyCarDealer runs this comparison from current listings in your country; you can try one car with the free valuation.
What if the seller wrongly charged foreign VAT?
If a foreign dealer charges his own VAT on a sale that should have been exempt, you cannot deduct that foreign VAT in your domestic return, and it is not "your" acquisition VAT either. Ask the seller to cancel the invoice and issue a corrected net invoice, then account for the acquisition at home.
If the seller refuses, the foreign VAT generally becomes a cost. The EU VAT refund procedure for businesses established in another member state is meant for VAT that was legally due, so a refund of VAT charged in error is unlikely. Settle the VAT status in the contract before payment.
The opposite error is more dangerous: a seller who invoices a VAT-qualifying car as "margin". You might then resell it under the margin scheme, which a tax inspector can later reject. One question to the seller about the car's origin, for example whether it came from a leasing company, avoids most of these cases.
Young cars and private buyers
Cars supplied within six months of first registration or with no more than 6,000 km are "new means of transport". They are always taxed in the destination country, even when the seller or the buyer is a private person, and they can never be sold cross-border under the margin scheme (Article 313(2)). Check the first registration date and odometer on every young car; details are in new means of transport VAT.
Frequently asked questions
How does reverse charge work when buying a car from another EU country?
The seller invoices the VAT-qualifying car without VAT, and you declare an intra-community acquisition in your own VAT return at your standard rate. As a fully taxable dealer you deduct the same amount in the same return, then charge full VAT when you resell.
Is a margin-scheme car subject to reverse charge?
No. Under Article 4 of the VAT Directive, buying a margin-scheme car from a foreign dealer is not a taxable acquisition. The seller pays VAT on his margin at home, you declare nothing on arrival and you resell under your own margin scheme.
When is the acquisition VAT reported and deducted?
VAT becomes chargeable when the invoice is issued, or on the fifteenth day of the following month at the latest. You report it in the return for that period and deduct it in the same return.
What if the seller wrongly charged foreign VAT?
Ask for a cancelled and corrected net invoice. Foreign VAT charged in error cannot be deducted in your domestic return and is generally not refundable through the EU refund procedure, so it becomes a cost if the seller does not correct it.
Can I sell a car bought under the reverse charge under the margin scheme?
No. A car you acquired VAT-free and on which you deducted the acquisition VAT is VAT-qualifying in your hands. You must charge VAT on the full selling price.