The value added tax (short: VAT) is a tax that the seller pay a product or service to the tax office must. The value added tax is therefore a liability of the seller towards the tax office. The value added tax is currently 19% or 0.19 or for food or similar. 7% and is posted to the “VAT” account.
- If the value added tax can be shown when buying a car, the buyer can include the vehicle in the value added tax statement if the vehicle is mainly used for business purposes. This can be done by the self-employed who are themselves subject to VAT. The seller, in turn, who shows the VAT, has to pay this to the tax office, which he only does if he is not selling the vehicle purely privately but is an entrepreneur himself.
This is not a problem for car dealerships, they generally show the value added tax and are also obliged to do so. In the case of sales by other self-employed persons, a sales advertisement refers to “VAT can be shown”. If this is not the case, the buyer cannot claim any input tax deduction, a VAT invoice is required for this. This must contain the gross price of the vehicle, the value added tax in percent (currently 19 percent) and as a total as well as the net price and finally a receipt for the gross price actually paid. The VAT included is calculated using the gross price times 19 divided by 119. As you calculate sales tax you can make use of the online calculator.
Sample calculation:
- Gross vehicle price: 15,000 euros
- VAT included: 15,000 x 19/119 = 2,394.96 euros
- Net amount: 12,605.04 euros
Receive gross amount in cash without discount: 15,000 euros or by bank transfer by … (account receipt must be presented)
VAT for the self-employed
If a self-employed person would like to buy a used car and would like to receive an invoice with VAT, but the seller is a private person who does not want to report VAT, there are basically two ways (if it is absolutely necessary to be this vehicle):
- The self-employed person convinces the private person and may pay a slightly higher price, because the private person actually has to pay the VAT to the tax office. That is difficult to communicate, the tax office then asks a lot of questions, the private person is suddenly a small trader, especially if the vehicle cost over 17,500 euros (limit for VAT liability for small businesses). Nobody wants this discussion.
- The private person sells the car to a car dealership, from there the self-employed person buys it and thus receives the VAT shown.