VAT margin scheme calculator: worked examples for car dealers
Calculate VAT under the margin scheme step by step – purchase price, selling price, margin, VAT fraction at your country's rate and net profit.
· 7 min read
A VAT margin scheme calculator needs only three inputs: the purchase price, the selling price and your country's standard VAT rate. Subtract the purchase price from the selling price to get the margin, multiply the margin by rate ÷ (100 + rate) to get the VAT, and deduct that VAT and your costs to see the net profit. Below are worked examples at 19%, 21%, 22% and 23%.
How to calculate VAT on the margin: the formula
Under the margin scheme (Articles 311–343 of the VAT Directive 2006/112/EC), the taxable amount is the dealer's profit margin less the VAT on it. In practice you calculate it in four steps:
- Margin = selling price − purchase price.
- VAT on the margin = margin × rate ÷ (100 + rate).
- Net margin = margin − VAT on the margin.
- Net profit = net margin − direct costs (net of reclaimable VAT).
The selling price is everything the customer pays you for the car, including any charges you add, such as delivery. The purchase price is what you paid your supplier. Nothing else goes into the margin, which matters for reconditioning costs (see below).
The reason the VAT is a fraction rather than the plain rate: the margin already includes VAT. At 19%, a margin of €119 contains €19 of VAT and €100 of taxable amount.
VAT fractions at 19%, 20%, 21%, 22%, 23% and 25%
Use the fraction of your national standard rate. The country that counts is where the car is supplied from, normally your own premises.
| Standard rate | Countries (examples) | VAT fraction | VAT on a €1,000 margin |
|---|---|---|---|
| 19% | Germany | 19/119 = 15.97% | €159.66 |
| 20% | Austria, France | 20/120 = 16.67% | €166.67 |
| 21% | Belgium, Netherlands, Spain, Czech Republic | 21/121 = 17.36% | €173.55 |
| 22% | Italy | 22/122 = 18.03% | €180.33 |
| 23% | Poland, Portugal, Slovakia, Ireland | 23/123 = 18.70% | €186.99 |
| 25% | Denmark, Sweden | 25/125 = 20.00% | €200.00 |
| 25.5% | Finland | 25.5/125.5 = 20.32% | €203.19 |
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 accessExample 1: Germany at 19%
A German dealer buys a model year 2022 Volkswagen Golf from a private seller. For orientation, according to listings tracked by MyCarDealer in Germany in October 2026, model year 2022–2023 Golfs had a median asking price of €20,000.
| Step | Amount |
|---|---|
| Purchase price (private seller) | €16,500 |
| Selling price | €19,800 |
| Margin | €3,300 |
| VAT on the margin: €3,300 × 19/119 | €526.89 |
| Net margin | €2,773.11 |
| Preparation (net) | €450 |
| Net profit | €2,323.11 |
Example 2: Belgium at 21%
Belgian prices for the same model and years were higher: listings tracked by MyCarDealer in Belgium in October 2026 showed a median of €26,997 for 2022–2023 Golfs. Assume a Belgian dealer buys a car from a private seller at €21,500 and sells it for €26,500.
| Step | Amount |
|---|---|
| Margin | €5,000 |
| VAT on the margin: €5,000 × 21/121 | €867.77 |
| Net margin | €4,132.23 |
| Preparation (net) | €450 |
| Net profit | €3,682.23 |
A higher margin in euros also means more margin VAT in euros, and at 21% the fraction is higher than in Germany.
Example 3: Italy at 22% and Poland at 23%
Medians from listings tracked by MyCarDealer in October 2026 for 2022–2023 Golfs were €21,499 in Italy and €15,859 in Poland.
Italy: purchase €17,800, sale €21,300.
- Margin €3,500; VAT €3,500 × 22/122 = €631.15; net margin €2,868.85; after €450 preparation, net profit €2,418.85.
Poland: purchase €12,800, sale €15,600.
- Margin €2,800; VAT €2,800 × 23/123 = €523.58; net margin €2,276.42; after €450 preparation, net profit €1,826.42.
Summary of the four examples:
| Country | Rate | Margin | Margin VAT | Net profit after €450 prep |
|---|---|---|---|---|
| Germany | 19% | €3,300 | €526.89 | €2,323.11 |
| Belgium | 21% | €5,000 | €867.77 | €3,682.23 |
| Italy | 22% | €3,500 | €631.15 | €2,418.85 |
| Poland | 23% | €2,800 | €523.58 | €1,826.42 |
How reconditioning costs affect the margin calculation
Reconditioning costs do not reduce the margin. The margin is the selling price minus the purchase price, and the Directive defines the purchase price as what you paid your supplier (Article 312). Costs incurred after the purchase, such as repairs, tyres or bodywork, are separate costs. German chambers of commerce state the same rule for § 25a UStG: repair costs after the purchase do not reduce the taxable amount.
What you can do is reclaim the VAT on those invoices under the normal deduction rules, because they are ordinary business purchases.
Using Example 1:
| Wrong method | Correct method | |
|---|---|---|
| "Purchase price" used | €16,500 + €450 = €16,950 | €16,500 |
| Margin | €2,850 | €3,300 |
| VAT on the margin | €455.04 | €526.89 |
| VAT on the repair invoice (€450 + 19%) | not reclaimed | €85.50 reclaimed as input VAT |
The wrong method understates the VAT due by €71.85 per car. Across a year of stock, that is a tax audit finding waiting to happen.
What net profit remains: normal VAT and loss-making sales
The net profit depends heavily on the VAT status of the car and on whether the sale makes a margin at all.
Margin scheme vs normal VAT
The same car bought with a VAT invoice leaves far less room. Suppose the Golf from Example 1 had been bought from a leasing company for €16,500 net plus VAT. You reclaim the purchase VAT, but you must charge 19% on the full selling price:
- Selling price €19,800 incl. VAT → net €16,638.66.
- Net margin before costs: €16,638.66 − €16,500 = €138.66.
To keep the same €2,773.11 net margin as under the margin scheme, the net purchase price would have to be €16,638.66 − €2,773.11 = €13,865.55. That is why every auction listing and invoice has to be checked for the VAT status before you calculate a bid. Our article what VAT margin means at car auction explains how auction platforms label it.
Example 4: a sale at a loss
A car bought for €16,500 sells for €16,200. The margin is −€300, so the VAT on the margin is zero. There is no VAT refund, and under the per-car calculation the loss cannot reduce the margin VAT on other cars. With €450 of preparation, the real loss is €750. More on this and other rules in our guide to the VAT margin scheme for used cars.
A VAT margin scheme calculator that runs for every car
Doing these steps by hand is fine for one car and slow for fifty. MyCarDealer runs the same margin-scheme calculation for every car: it takes the market price in the dealer's own country, applies the VAT fraction of that country's rate, deducts transport and other costs and shows the net margin and the maximum bid. You can try it on one car with the free valuation.
Frequently asked questions
How do I calculate VAT on the margin for a used car?
Subtract the purchase price from the selling price to get the margin, then multiply the margin by your VAT rate divided by 100 plus the rate. At 19%, a margin of €3,300 contains €3,300 × 19/119 = €526.89 of VAT.
What is the VAT fraction at 19%, 20%, 21% or 23%?
The fraction is the rate divided by 100 plus the rate: 19/119 (15.97%), 20/120 (16.67%), 21/121 (17.36%), 22/122 (18.03%) and 23/123 (18.70%). Multiply the margin including VAT by this fraction to get the VAT due.
Do reconditioning costs reduce the margin scheme VAT?
No. Only the purchase price paid to your supplier is deducted from the selling price. Repairs and other costs after the purchase are separate business costs, and the VAT on those invoices can usually be reclaimed under the normal rules.
Can I claim back VAT on a margin scheme car?
No VAT is reclaimable on the car itself under the margin scheme, and a business customer cannot deduct VAT on a car you sell under the scheme either. Only the VAT on your separate costs can be reclaimed.
What net profit remains after margin VAT?
Deduct the margin VAT and all direct costs from the margin. In our German example, a €3,300 margin left €2,773.11 after VAT and €2,323.11 after €450 of preparation.