Margin Scheme VAT 2026: Section 25a UStG Explained for Resellers

You buy used goods from private individuals, resell them, and still pay VAT on the full sale price? Then you are giving money away. The margin scheme (Differenzbesteuerung) under Section 25a UStG means you, as a reseller, are taxed only on your markup – not on the entire proceeds. For dealers in second-hand goods, art, or antiques, it is the single most important VAT rule there is.

The logic: when you buy goods without any VAT shown – for example from a private person, a small-business owner, or another margin-scheme dealer – you cannot reclaim input VAT. In return, you tax only the difference between your purchase and sale price when you resell, not the full amount. That margin is subject to 19% VAT.

It sounds simple, but there are traps: separate per-item records, a special invoice note, no openly shown VAT, and a choice between individual and total-margin methods. Get sloppy and a tax audit can hit you with steep back payments. This guide walks you through how the margin scheme works in 2026.

What is the margin scheme?

The margin scheme (Differenzbesteuerung) is a special rule in German VAT law. Normally you charge VAT on the full sale price and, in return, deduct input VAT from your purchases. With used goods this breaks down: if you buy from a private individual, you get no invoice with VAT shown – and therefore cannot reclaim any input VAT.

Section 25a UStG solves this by taxing only the margin. That avoids double-taxing the goods and keeps second-hand items price-competitive. The VAT is hidden inside the difference – it is never shown openly on the invoice.

Who can use the margin scheme?

The rule applies to resellers: businesses that commercially trade in movable tangible goods or auction them in their own name. Typical cases:

• Second-hand dealers – from the local buy-and-sell shop to the eBay or Vinted power seller
• Used-car dealers
• Art, antiques, and collectibles dealers
• Thrift and consignment shops

What matters is where the goods come from. The margin scheme is only allowed when you could not reclaim input VAT on the purchase. That is the case when the seller is:

• a private individual with no VAT,
• a small-business owner under Section 19 UStG (see the Kleinunternehmer VAT exemption),
• or another margin-scheme dealer.

New goods that you buy normally with an input-VAT deduction do not qualify – those follow standard VAT with the regular input-VAT deduction.

How to calculate the margin

The tax base is the difference between sale and purchase price. This difference counts as a gross amount including VAT, so you back out the 19%. Important: the margin scheme always uses the standard 19% rate, even for goods that would otherwise fall under the reduced 7% rate.

Example: You buy a used camera for €200 from a private individual and sell it for €350.

• Margin: €350 − €200 = €150
• VAT: €150 × 19/119 = €23.95
• Net margin (your taxable turnover): €126.05

Under standard VAT you would owe 19% on the full €350 – that is €55.88. The margin scheme saves you roughly €32 of VAT per sale here. If the margin is zero or negative, no VAT is due – but a loss does not reduce the margin on your other sales.

Individual margin or total margin?

The default is the individual margin: you work out the margin and tax for each single item. That is clean but laborious at high volumes.

For low-value goods, Section 25a(4) UStG allows the total margin: if an item's purchase price was no more than €500, you may bundle the margins of one filing period. You then offset the sum of all purchases against the sum of all sales – ideal for dealers with many small items, such as thrift or consignment stock. Both methods require complete records.

Invoices and records: your obligations

This is where the most common mistake hides. Under the margin scheme you must not show VAT openly – if you do, you owe it on top under Section 14c UStG. Instead, Section 14a(6) UStG requires a note on the invoice, depending on the goods:

• "Gebrauchtgegenstände/Sonderregelung" (used goods/special scheme)
• "Kunstgegenstände/Sonderregelung" (works of art/special scheme)
• "Sammlungsstücke und Antiquitäten/Sonderregelung" (collectibles and antiques/special scheme)

The other mandatory invoice fields still apply. For your buyer this means: they cannot reclaim input VAT from your invoice – a point that matters for B2B customers.

On top comes the record-keeping duty under Section 25a(6) UStG: you must log sale price, purchase price, and the tax base (margin) per item, separately from your other turnover. This is exactly where clean software becomes essential – automated bookkeeping assigns margin-scheme sales straight to the right account and keeps them apart from standard-rated turnover, so your VAT return adds up.

When standard VAT is the better choice

The margin scheme is optional. Under Section 25a(8) UStG you may switch to standard VAT for any single sale. That makes sense when your buyer is a VAT-registered business: they want VAT shown openly so they can reclaim it. With a high margin, the scheme can be unattractive for them.

Rule of thumb: private customers benefit from the lower final price of the margin scheme, business customers often want standard VAT. Documenting both routes cleanly lets you serve both audiences – part of the basics of taxes for the self-employed.

Conclusion

The margin scheme under Section 25a UStG is real money for any used-goods dealer: you tax only the margin at 19%, not the full sale price. The price of that is discipline – separate per-item records, the correct invoice note, and no openly shown VAT. Master the individual and total-margin methods and switch flexibly to standard VAT for B2B customers, and you capture the full benefit. With software that automatically separates margin-scheme turnover, this complex special rule becomes a routine task.