What is the margin scheme?
The margin scheme, in full the special scheme for second-hand goods, is a VAT arrangement that exists throughout the European Union and in Belgium is laid down in Article 58, § 4, of the VAT Code. It prevents VAT from being charged again and again on the same goods. When a private individual sells a watch to a dealer, that individual charges no VAT. If the dealer charged VAT on the full selling price when reselling, VAT would be levied on an amount on which it was already paid at the original purchase. The margin scheme therefore limits the VAT to the dealer's margin: the difference between selling price and purchase price.
How is the VAT calculated?
The VAT is calculated on the margin, and that margin includes VAT. At the standard Belgian rate of 21 per cent, the VAT is therefore 21/121 of the margin. An example with round numbers: if the margin on a watch is 1,210 euros, it contains 210 euros of VAT and the dealer keeps 1,000 euros. If there is no margin, because the watch is sold at the same price or at a loss, no VAT is due either. The scheme is applied watch by watch.
When does it apply?
The margin scheme can only be applied to goods the dealer bought without being able to deduct VAT on them: from a private individual, from another dealer who applied the margin scheme themselves, or from someone who charged no VAT for another reason. If the dealer bought the watch with an ordinary VAT invoice, for example a new watch from a distributor, the normal scheme applies on resale and the VAT is shown separately on the invoice. The same dealer can therefore sell watches under both schemes.
What does the invoice show?
An invoice under the margin scheme shows the total price, but no separate VAT amount. The dealer may not even show the VAT separately, because the buyer would otherwise assume it can be deducted. Instead there is a mandatory statement that the special scheme for second-hand goods has been applied, in Dutch 'Bijzondere regeling – Gebruikte goederen' and in French 'Régime particulier – Biens d'occasion'. The price you pay is the full price; no VAT is added.
As a private individual or a business
For a private buyer the scheme makes little practical difference: you pay the stated price, and the VAT is already included. For a business the difference matters. VAT that is not on the invoice cannot be deducted; a business that buys a watch under the margin scheme therefore cannot reclaim the VAT. If you buy as a business, ask before the purchase which scheme the watch is sold under, and discuss the consequences with your accountant. Business purchases with us are also subject to separate terms.
Across borders
If a Belgian dealer sells a watch under the margin scheme to a consumer in another member state, Belgian VAT on the margin generally remains due. If a watch is exported to a country outside the European Union, the sale can be exempt from VAT under certain conditions, provided the export is proven. Because the details depend on the situation, we prefer to discuss this with you in advance. More about how a purchase works can be found in our guide to buying pre-owned and in how we work.