Businesses that buy and resell second-hand goods, works of art, collectors’ items or antiques can, under conditions, apply the VAT margin scheme. It is a derogatory regime that avoids double taxation, but its conditions are strictly framed.
For a foreign company reselling such goods in France, it is important to understand who can use the scheme, how the margin is calculated and what the invoicing rules are, before completing French VAT returns.
How the margin scheme works
Unlike the standard regime, where VAT is calculated on the full selling price, the margin scheme calculates VAT only on the reseller’s margin, that is, the difference between the selling price and the purchase price of the item.
The aim is to prevent an item that was already “taxed” in an earlier sale, for example between private individuals, from bearing VAT again on its full value when a professional resells it.
Who can apply it: the dealer status
The margin scheme is reserved for taxable dealers (“assujettis-revendeurs”), that is, professionals whose business consists of buying, or allocating to their business, second-hand goods, works of art, collectors’ items or antiques for resale.
It applies when the item was acquired from a non-taxable person (a private individual), or from a taxable person who could not deduct VAT on the item. The origin of the goods and the purchase evidence are therefore decisive.
Actual margin or global flat-rate margin
Two calculation methods coexist:
| Method | Principle | Typical use |
|---|---|---|
| Actual margin | Calculated item by item, from the actual purchase and selling prices | Individually identifiable goods |
| Global flat-rate margin | Calculated over a given period | Lots, bulk purchases, unit purchase price impossible to determine |
The choice depends on the nature of the goods and on the company’s ability to trace each purchase. The exact conditions should be checked for the type of item concerned.
Specific invoicing rules
Under the margin scheme, the VAT on the margin must not be shown separately on the invoice issued to the customer. The invoice should, however, refer to the applicable scheme. A business customer therefore cannot deduct VAT on this purchase.
- no separate VAT line on the invoice;
- reference to the applicable special scheme;
- price shown VAT included;
- purchase evidence and calculation method kept on file.
Reporting margin VAT in France
A foreign company making taxable sales in France generally needs VAT registration France and must file VAT returns. The requirement depends in particular on the country of establishment, and filing then follows French rules.
How Hanoutax can help
As an indirect tax agent (mandataire), Hanoutax helps, under a mandate, second-hand, art and collectibles businesses secure the application of the margin scheme, keep their supporting documents and file their returns. Depending on the case, the firm acts as a French VAT agent, sometimes called a fiscal representative France.
This information is general and is not personalised advice: each situation must be analysed.
Common pitfalls to avoid
Most disputes on the margin scheme come from documentation rather than from the principle itself. A few points deserve regular checks:
- applying the scheme to goods bought from a seller who actually charged deductible VAT, which makes the item ineligible;
- showing VAT separately on an invoice issued under the scheme;
- mixing goods under the scheme and goods under the standard regime without separate tracking;
- being unable to produce the purchase evidence or the calculation of the margin during an audit.
A short internal procedure, with a register of purchases and sales and a clear rule on which regime applies to each item, significantly reduces the risk of an adjustment. The details depend on the type of goods and on your situation.
FAQ
What is the VAT margin scheme?
A derogatory regime where VAT is calculated on the reseller’s margin (selling price minus purchase price) rather than on the full selling price.
Who can benefit from it?
Taxable dealers who buy second-hand goods, works of art, collectors’ items or antiques for resale, from private individuals or from sellers who could not deduct VAT.
Must VAT appear on the invoice?
No. Margin VAT is not shown separately on the invoice issued to the customer.
What is the difference between actual margin and global margin?
The actual margin is calculated item by item; the global flat-rate margin is calculated over a period, when the purchase price of each item cannot be determined.
Can a foreign company apply the scheme in France?
It depends on its situation, in particular its place of establishment and its transactions. A prior analysis is advisable.
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Related reading
Informational content, not legal advice. The rules that apply depend on your situation.
