VAT on the core and the margin scheme: German VAT on exchange and used parts

Parts trading raises two VAT questions that are easily confused. The first concerns the exchange part: the customer pays and hands back their defective old unit, the core — so what is the taxable amount? The second concerns the used part: is VAT due on the full selling price, or only on the difference from the purchase price? What distinguishes the kinds of part is covered in New, used, remanufactured, replica: four terms, two dimensions; how core returns are organised, in Exchange parts and remanufacturing: managing core returns digitally. This article deals with tax alone.

Why VAT is also charged on the core

Under section 10.5 (3) UStAE, transactions in the motor-trade exchange procedure are generally exchanges with a cash payment. The supply of a reconditioned, working exchange part — the decree cites engine, assembly, axle, fuel pump, crankshaft and carburettor as examples — is matched by two considerations from the customer: a cash payment and the supply of the defective old part. In an exchange, § 10 (2) sentence 2 UStG treats the value of each supply as the consideration for the other. The consideration for the exchange part therefore comprises the agreed cash payment and the subjective value of the core, each net of the VAT it contains.

In German practice the VAT on this core value is called Altteilsteuer. The decree does not mention a core deposit, as many suppliers agree by contract, at this point: it refers to the customer supplying the old part.

The 10 per cent average value

Invoicing and records in the exchange procedure

To simplify invoicing (§ 14 UStG) and record-keeping (§ 22 UStG), the decree permits a specific procedure. It consists of these points:

1. The supply of the core itself is not taxed. Supplies of old parts by businesses taking part in the exchange procedure are not subjected to VAT. If the end customer is a farmer or forester using the flat-rate scheme under § 24 UStG, the supplier of the exchange part must issue a self-billed credit note for the core on request.
2. Every supplier includes the core value. Manufacturer, wholesaler and repair workshop always include the value of the returned core in the taxable amount for the exchange part.
3. Stating the tax on the invoice is enough. The core value need not be included in the invoice amount; it suffices to state the VAT attributable to it. On an e-invoice this can be done, for example, with one line carrying the core’s taxable amount and the tax rate and a second line with an identical but negative net amount and no tax rate.
4. VAT on core values is recorded separately. At the end of the advance-return period and the tax period, the supplier derives the corresponding net amounts from the total of these tax amounts.
5. The recipient separates them too. A business that records purchase amounts and VAT as a single total under § 63 (5) UStDV records the gross amounts reduced by the VAT on the core and that VAT separately.

1 exchange engine                              EUR 1,000.00
+ VAT (19 %)                                    EUR   190.00
+ VAT (19 %) on the core value
  of EUR 100 (10 % of EUR 1,000)                EUR    19.00
= invoice amount                                EUR 1,209.00

When the core does not come back

The average value applies to a core the customer actually supplies. Section 10.5 (3) UStAE contains no separate rule for the case where no core is returned. Without a core, the exchange element the average value refers to is missing. The decree does not say there how an amount charged afterwards or retained is to be treated; the general VAT rules apply. Clarify how your own contract terms are classified with your tax adviser before invoice templates and inventory systems are set up for it.

The margin scheme for used parts

§ 25a UStG allows resellers to pay VAT only on the amount by which the selling price exceeds the purchase price. A reseller is anyone who deals commercially in movable tangible goods or auctions such goods publicly in their own name; under section 25a.1 (2) UStAE, buying and selling may be confined to one part of the business. The supply to the reseller must have taken place within the Community territory, and either no VAT was due on it or the margin scheme was applied. Section 25a.1 (1) of the decree puts it this way: there must have been no right to deduct input VAT, not even a partial one.

Parts from a dismantled vehicle

The item bought and the item sold need not be identical. Under section 25a.1 (4a) UStAE, the margin scheme also applies to parts a business has obtained by dismantling used vehicles it previously acquired. The purchase prices of the removed and resold parts must then be estimated on a reasonable basis; the basis of the estimate must be explained in an annex to the purchase invoices and, where available, supported by documents. How a vehicle’s purchase price is calculated is described in Vehicle purchasing: what an end-of-life vehicle is really worth.

• Vehicles no longer usable and resold unchanged may fall under the margin scheme according to section 25a.1 (4b) if they still contain components that retain their original function. If they are sold so that the buyer scraps them or converts them into a different item, the rule does not apply. Where waste law draws the line is a separate question, covered in Used part or waste? Classifying vehicle components correctly.
• Items containing precious metals that can no longer perform their original function and are traded only for the value of the metal are excluded from the margin scheme under section 25a.1 (1) sentence 9. Platinum, palladium and rhodium are expressly listed there as precious metals; how catalytic converters are settled by precious-metal content is described in Catalytic converters: why they belong in the record individually.
• An item newly assembled from several parts does not fall under the margin scheme according to section 25a.1 (4c), even if each part would have met the conditions.
• Repair costs after acquisition do not reduce the taxable amount (section 25a.1 (8) sentence 2).

Calculating, invoicing, recording

What tapinomahub contributes and what it does not

tapinomahub does not determine any tax treatment, gross exchange price or purchase price. The API does not know whether a specific item was sold against a returned core or bought with VAT shown; that is in your documents. GET /parts/oe/{oeNumber}/price accepts only new and used for condition, with no separate value for exchange parts. The market ranges it returns are therefore not the gross exchange price within the meaning of the decree.

For a dismantled vehicle the platform provides working material, not an estimate: GET /vin/{vin}/parts matches part assignments to the VIN, and GET /vin/{vin}/economic-evaluation returns an indicative economic evaluation with parts, revenuePotential and assumptions. What is owed is carrying out the query, not a particular result. Whether and how such market data may feed into a reasonable estimate of purchase prices is not something the API answers — clarify that with your tax adviser.

This article is general professional guidance and does not replace legal advice. The applicable statute and the conditions imposed by your competent authority prevail.