Buying a vehicle in France as an EU business: VAT, the margin scheme and new vehicles
Prices excluding VAT, recoverable VAT or the margin scheme, vehicles that are ‘new’ for VAT purposes: the rules to know when a European business buys a vehicle in France.
In brief
When a business established in another European Union country buys a vehicle in France, there are three possible cases:
| Case | VAT charged in France | VAT in the buyer’s country |
|---|---|---|
| Used vehicle under the normal VAT rules (‘recoverable VAT’) | No, if the buyer has a valid VAT number and the vehicle leaves for the buyer’s country | Yes: the buyer declares it and usually deducts it |
| Used vehicle under the margin scheme | Yes, on the seller’s margin, included in the price and not deductible | No |
| ‘New’ vehicle for VAT purposes (6 months or less, or 6,000 km or less) | No | Yes, in all cases, even for a private individual |
Registration taxes in the destination country (registreringsafgift in Denmark, BPM in the Netherlands…) apply on top in all cases: they are not VAT.
1. Vehicles under the normal VAT rules: sold without French VAT
This is the most common case for a recent vehicle that one business buys from another with deductible VAT, and it is what the prices excluding VAT in our good deals mean.
When the seller ships the vehicle to another EU country for a business buyer with a valid EU VAT number, the seller does not charge VAT: this is an intra-Community supply. The buyer declares the purchase in their own country as an intra-Community acquisition and pays VAT there at the local rate, which they can usually deduct straight away.
What is needed for everything to be in order:
- a valid VAT number, which can be checked on the EU’s VIES service;
- actual transport to the other country, with proof of it;
- a French invoice bearing the exemption wording, for example ‘Exonération de TVA, article 262 ter, I du CGI’ (VAT exemption, Article 262 ter, I of the French General Tax Code).
Without a valid VAT number, the seller must charge French VAT.
2. Vehicles under the margin scheme: VAT stays in France
When the seller bought the vehicle from a private individual, or from another business that was itself selling it under this scheme, the seller resells it under the margin scheme:
- VAT is due only on the seller’s margin;
- it is included in the price and does not appear on the invoice, which bears the wording ‘Régime particulier – Biens d’occasion’ (special scheme – second-hand goods);
- the buyer cannot deduct it;
- the purchase is not taxed a second time in the buyer’s country.
For a business, the difference matters: the scheme affects the VAT it can deduct and how it will resell the vehicle later. You should always know which scheme a vehicle is sold under.
3. ‘New’ vehicles for VAT purposes
For VAT purposes, a vehicle is considered new (a ‘new means of transport’) if, at the time of sale, it was first put into service no more than 6 months earlier or has travelled no more than 6,000 km. This applies even if it is registered and sold as a used vehicle.
In that case, VAT is always due in the country where the vehicle will be registered, whether the buyer is a business or a private individual. The French seller invoices without VAT and the buyer pays the VAT in their own country.
What MC Export states for each vehicle
- the price excluding VAT for businesses;
- the vehicle’s VAT scheme;
- an invoice with the corresponding wording, and the export and transport documents.
If you have any doubt about a vehicle, ask us before you commit: we reply within 24 hours.
Keep in mind
This guide summarises the general rules of the European Union. Check your specific situation (status, country, type of vehicle) with your accountant.
Sources
- European Commission – Buying and selling cars (VAT)
- Your Europe – VAT on cross-border sales
- Directive 2006/112/EC on the common system of VAT (Articles 2, 4, 138 and 311 to 343)
- VIES – VAT number validation
A question about a vehicle?
Your contact is Channing: channing@mc-export.com · +33 6 28 09 49 76 · WhatsApp.