Insights & Tax
VAT and the Profit Margin Scheme (Optional)
VAT and the profit-margin scheme for second-hand goods.
If you deal in second-hand goods - used phones, pre-owned vehicles, trade-ins, antiques - many tax authorities let you charge VAT only on your profit margin rather than on the full selling price. This is commonly called the profit margin scheme or second-hand margin scheme.
To use it, enable Settings > Modules & Features > Enable Profit Margin Scheme (VAT must be on first).
How It Works
On an invoice line, mark the line as margin scheme. EVRST then calculates VAT on the difference between what you paid for that unit and what you sold it for, instead of on the whole sale price. If you sold at or below cost, the VAT on that line is zero - a loss never creates a VAT liability.
The cost side comes from the actual unit where possible. If the item is serialized, EVRST uses the cost of the specific unit you picked, which is exactly what a margin scheme audit expects.
On the Printed Invoice
Margin-scheme lines do not show a VAT amount to the customer, because under the scheme you are not permitted to state it. Instead, the invoice prints the declaration you configure in Settings > Modules & Features ("Invoice statement (printed on margin-scheme invoices)").
| Ask your accountant for the exact wording your jurisdiction requires and paste it into that box once. It then prints automatically on every margin-scheme invoice. |
At Filing Time
The VAT Return report separates margin-scheme sales from normal sales and shows the margin, the cost of goods, and the VAT due on it as its own block. Purchases of margin-scheme goods are correctly kept out of your input VAT, since you cannot reclaim VAT on goods you bought under the scheme.
Margin-scheme lines are also tagged in the report on screen, in the printed PDF, and in the CSV export, so the figures are traceable line by line.
| The margin scheme has strict eligibility rules that vary by country. EVRST does the arithmetic and the paperwork correctly, but whether a given sale qualifies is a decision for you and your accountant. |
Frequently asked questions
Does a margin-scheme invoice show VAT to the customer?
No. Margin-scheme lines do not show a VAT amount, because under the scheme you are not permitted to state it. The invoice instead prints the declaration you configure in Settings > Modules & Features.
What happens if I sell a second-hand item at a loss?
The VAT on that line is zero. EVRST calculates VAT on the difference between what you paid for the unit and what you sold it for, so a loss never creates a VAT liability.
Does EVRST decide whether a sale qualifies for the margin scheme?
No. EVRST does the arithmetic and the paperwork correctly, but the margin scheme has strict eligibility rules that vary by country. Whether a given sale qualifies is a decision for you and your accountant.
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