When a car dealer sells a used vehicle bought from a non-VAT payer, both Slovakia and Czechia let the dealer tax only the margin — the positive difference between the selling and purchase price, reduced by tax — rather than the full sale price. The mechanism is the same EU-harmonised idea, but the legal basis and the VAT rate differ: Slovakia uses § 66 and a 23 % base rate, Czechia § 90 and a 21 % base rate.
What is the VAT margin scheme for used goods?
The margin scheme is a simplified way of taxing dealers in second-hand goods, works of art, collectors’ items and antiques — with used motor vehicles being the classic example. It stems from the EU VAT Directive (2006/112/EC), so its logic is shared across member states. Slovakia implements it in § 66 of Act 222/2004, Czechia in § 90 of Act 235/2004.
The point is to avoid double taxation. When a dealer buys a car from a private individual who is not a VAT payer, the purchase price contains no deductible VAT — the vehicle already passed through final consumption. Taxing the full resale price would apply VAT twice, so only the value the dealer adds is taxed. For broader context on running a company in Slovakia, see our overview of Slovak tax advisory for companies.
When can the scheme be used?
In both countries the dealer can apply the scheme to a vehicle bought for resale from a party where the purchase gave no right to deduct VAT — typically a non-taxable person (a private seller), a person whose supply was exempt without the right to deduct, or another dealer who already applied the margin scheme. The scheme cannot be used, in either country, if the dealer bought the car from a VAT payer with VAT itemised on the invoice and deducted that VAT; the standard regime then applies to the whole sale price.
Applying the scheme is a choice, not an obligation: the dealer may opt for the standard regime instead, though that forfeits the margin-scheme advantage.
How is the taxable margin calculated?
The tax base is the positive margin reduced by the tax it contains. The rate is where the two countries part ways. In Slovakia the base VAT rate is 23 % (since 1 January 2025), so tax equals margin × 23 / 123. In Czechia the base rate is 21 %, so tax equals margin × 21 / 121.
Example (Slovakia): a dealer buys a car for €10,000 and sells it for €12,300. The €2,300 margin yields VAT of 2,300 × 23 / 123 = €430.08. Example (Czechia): a dealer buys for CZK 250,000 and sells for CZK 302,500; the CZK 52,500 margin yields VAT of 52,500 × 21 / 121 = CZK 9,112. If a car is sold at a loss, there is no positive margin and no VAT on that sale, and margins on different cars are not netted against each other.
What appears on the invoice?
In both countries the dealer must not state the VAT amount separately on the invoice, and as a result the buyer — even a VAT payer — cannot deduct VAT on such a purchase. Instead the invoice carries a wording indicating the scheme: in Slovakia “úprava zdaňovania prirážky – použitý tovar”, in Czechia “zvláštní režim – použité zboží”. The dealer likewise cannot deduct VAT on buying the vehicle to which the scheme applies.
When does the scheme pay off?
The margin scheme is most attractive for cars bought from non-business sellers, because the dealer remits VAT only on the margin, keeping the final price competitive. Where the dealer sells mainly to businesses that need input VAT, the standard regime with itemised VAT may suit the buyer better, even though it raises the dealer’s tax base. The choice depends on who the dealer buys from and who they sell to — and with a mixed fleet it is worth setting the regime up in advance in whichever country the dealer operates — best handled together with the professional accounting that keeps the rest of the books in order.
Running a car dealership or regularly reselling used vehicles across Slovakia and Czechia and want to be sure the VAT margin scheme is applied correctly? We will set up the margin-taxation regime to match your purchases and customers.
FAQ
What does the dealer pay VAT on under the margin scheme?
Only on the margin — the positive difference between the selling and purchase price, reduced by the tax it contains — not on the full sale price. In Slovakia the tax is margin × 23 / 123 (base rate 23 %), in Czechia margin × 21 / 121 (base rate 21 %). If the car is sold at a loss there is no positive margin and no VAT on that sale.
What is the difference between Slovakia and Czechia?
The mechanism is the same EU-harmonised scheme, but the legal basis and rate differ. Slovakia applies § 66 of Act 222/2004 with a 23 % base rate; Czechia applies § 90 of Act 235/2004 with a 21 % base rate. The invoice wording also differs, but in both the VAT cannot be shown separately and the buyer cannot deduct it.
Can the buyer deduct VAT on a car sold under the margin scheme?
No. In both countries the dealer does not state VAT separately, so a buyer — even a VAT payer — cannot deduct input VAT on such a purchase. The invoice shows a margin-scheme note instead of an itemised tax figure. For business buyers who rely on input VAT this can be a disadvantage compared with the standard regime.