Differenzbesteuerung

Differenzbesteuerung is the German VAT margin scheme under § 25a UStG, applied to many used-car sales in German vehicle trade. Under it, VAT is calculated only on the dealer's margin rather than on the full selling price. It applies when a dealer buys a used vehicle from a private individual or another margin-scheme seller — someone who could not charge VAT — and then resells it. The dealer pays 19 % on the difference between purchase and sale price and shows no VAT separately on the invoice; the invoice instead carries a note referring to the margin scheme. The consequence for the buyer is important and frequently misunderstood: because no VAT is shown, a business buyer cannot reclaim input tax on the purchase, and cross-border buyers cannot apply the usual intra-EU zero-rating. The opposite case is a Regelbesteuerung invoice, which shows the VAT amount separately and is what a VAT-registered buyer or an exporter usually wants. Before buying a used car in Germany for export or for business use, check which of the two applies — it can change the effective cost of the same car by a double-digit percentage.