Why the margin scheme is not the same as European “VAT on used goods”
Many SMEs in Switzerland resell second-hand goods or recondition them before sale: electronics, industrial equipment, furniture, musical instruments, or vehicles. Those coming from the European Union or reading guides aimed at the EU market tend to automatically associate these activities with the “VAT margin scheme.” In Switzerland the framework is different and more restrictive: taxation of profit margins is provided for in a targeted way under the Federal Act on Value Added Tax (VAT Act, RS 641.20), while most trade in used and reconditioned goods follows standard taxation on the consideration.
Confusing the two models creates concrete risks: non-compliant invoices, improper deduction of input tax, adjustments during audits by the Federal Tax Administration (FTA), and distortions in commercial margins. For a used-goods dealer or a reconditioning workshop, the decisive question is not “do I apply the margin scheme?” but “does this item qualify as a collector’s piece under the VAT Ordinance (VAT Ord.)?” — and, if not, how to document purchases from private individuals and calculate tax on the selling price.
This guide explains compliant calculation, documentation, and accounting under current federal law (standard rate 8.1% and reduced rate 2.6%, applicable from 1 Jan. 2024), with practical notes for users of accounting software such as Accountex.
Legal basis: where the margin scheme is found
Taxation of profit margins in Switzerland is governed by Art. 24a of the VAT Act and Section 1a of the VAT Ordinance (Art. 48a–48e VAT Ord.). It must not be confused with acquisition tax (Art. 45 VAT Act) or exempt supplies under Art. 21 VAT Act (for example in the cultural sector or for charitable events involving used goods).
| Aspect | Taxation of profit margins (Art. 24a VAT Act) | Standard taxation (default for used/reconditioned) |
|---|---|---|
| Material scope | Collector’s pieces: art, antiques (>100 years), stamps, numismatic items, motor vehicles whose first registration at the time of purchase was more than 30 years ago, verifiable vintage wines, jewellery, watches and coins with collector value, etc. (Art. 48a VAT Ord.) | “Ordinary” used and reconditioned goods: IT, machinery, furnishings, everyday vehicles, dismantled spare parts, etc. |
| Tax base | Difference between selling price and purchase price (losses deductible from taxable turnover) | Full consideration for the supply (selling price) |
| Input tax on purchase | Not deductible on the purchase price; on import, VAT paid may be added to the acquisition cost (Art. 24a para. 2 VAT Act) | Deductible if invoiced by a taxable supplier; otherwise possibly notional input tax (Art. 28a VAT Act) if requirements are met |
| Customer invoice | Caution: if tax is clearly shown separately, the margin scheme can no longer be applied (Art. 48c VAT Ord.) | Invoice with VAT shown separately (unless exempt) |
| Records | Mandatory register of purchases and sales per item or lot (Art. 48d VAT Ord.) | Ordinary commercial and accounting documentation; warehouse traceability recommended |
SMEs and reconditioned goods: what actually falls under the margin scheme
A computer shop reselling used notebooks, a workshop preparing second-hand company vehicles, or a company restoring machinery does not, as a rule, apply taxation of profit margins — unless they deal exclusively in categories listed in the VAT Ord. (for example classic cars with first registration more than thirty years ago).
Scenarios compatible with Art. 24a VAT Act
- Art galleries and antique dealers
- Dealers in historic motor vehicles (>30 years from first registration)
- Numismatics, philately, archaeological or ethnographic pieces
- Trade in individually identifiable vintage wines
- Qualified electronic platform as supplier of the service (Art. 20a VAT Act): margin permitted only if the private seller is resident in Switzerland and not registered for VAT (Art. 48e VAT Ord., from 1 Jan. 2025)
Scenarios with full VAT on the sale
- Reconditioning of smartphones, PCs, or household appliances
- Resale of used industrial equipment or furnishings
- Trade in used motor vehicles not qualifying as historic (less than 30 years from first registration)
- Sale of spare parts dismantled from vehicles purchased whole (federal tax case law: item no longer individually identifiable)
- Mixed used/new lots without a reliable allocation of purchase price to collector’s pieces
Reconditioning (replacing components, overhaul, testing, commercial warranty) does not automatically turn goods into a “collector’s piece.” It remains an ordinary business supply: costs of materials and taxable third-party services generally remain deductible; on receipt of the sale proceeds, VAT arises on the full price agreed with the customer.
Calculating VAT: margin scheme and standard method
For collector’s pieces, if the taxable person opts for taxation of profit margins under Art. 24a VAT Act, tax is calculated on the difference between the selling price and the purchase price of the same item. If the purchase costs more than the sale, the loss reduces taxable turnover for the period.
Example A — Margin scheme (period frame from a private seller)
Purchase from a private individual: CHF 4'200 (no deductible VAT). Sale: CHF 6'800. Taxable margin: CHF 2'600. VAT due (standard rate 8.1%): CHF 210.60. The customer usually receives a document without a breakdown of tax that would bind the taxable person to the standard regime (Art. 48c VAT Ord.).
Import: if import VAT was paid, that amount is added to the purchase price for margin purposes, without separate deduction as input tax.
Example B — Reconditioning (used smartphone)
Used purchase from a private individual: CHF 180. Battery and parts from CH supplier: CHF 65 + 8.1% deductible VAT. In-house labour. Sale to customer: CHF 420 + 8.1% VAT = CHF 454.02. Tax payable: CHF 34.02; input VAT credit on parts. Commercial margin and tax margin follow different logic: for tax purposes, VAT applies to the full consideration, not only the difference.
Bulk purchases at a single price (stock or estate): for collector’s pieces the VAT Ord. requires the margin scheme to be applied to all items in the lot (Art. 48b para. 1 VAT Ord.). Individual sales are declared in the reporting period in which they are delivered; when the sum of considerations exceeds the total purchase price, the latter becomes fully taxable (Art. 48b para. 2 VAT Ord.). Mixing collector’s pieces and ordinary goods in the same lot without an approximate percentage allocation of the purchase price excludes taxation of profit margins for that batch (Art. 48b para. 3 VAT Ord.).
Documentation and invoicing that stand up to audit
A taxable person applying taxation of profit margins must keep a register of purchases and sales for each collector’s piece, with separate entries per lot if the purchase price was a single amount (Art. 48d VAT Ord.). Each entry should allow tracing: identification of the item, date, counterparty, purchase and sale amounts, any import VAT added to cost.
For purchases from private individuals, it is advisable to archive sale contracts, receipts, bank statements and, for historic vehicles, extracts from the motor vehicle register. For reconditioning: delivery notes, supplier invoices, job sheets with serial numbers, and photos of initial/final condition.
On the invoice (or sales document) under the margin scheme, avoid showing VAT explicitly as a separate line if you intend to apply Art. 24a VAT Act. As a deliberate alternative, you may choose standard invoicing with VAT on the full price — an irreversible choice for that transaction under Art. 48c VAT Ord.
Accounting in SMEs and using Accountex
Separating in the chart of accounts — or via cost centres / analytical categories — margin-scheme trade from standard-VAT trade avoids errors in periodic returns.
| Transaction | Typical entry | VAT note |
|---|---|---|
| Purchase of collector’s piece (margin) | Debit inventory / credit cash or payables — net amount, no input VAT | Link to Art. 48d VAT Ord. register |
| Sale under margin scheme | Receipt to revenue; VAT calculated on margin only in periodic return | Do not book output VAT as on a standard invoice if not shown to the customer |
| Used purchase + reconditioning | Cost of used goods; material costs with deductible VAT; revenue with full VAT on sale | Consider Art. 28a VAT Act only for identifiable movable goods without transferred VAT |
| VAT period closing | Reconcile VAT payable / input tax recovery accounts | Check consistency with effective method or flat rates (Art. 37 VAT Act) |
In Accountex, setting distinct VAT codes for “margin scheme collecting sales” and “ordinary used-goods sales” simplifies preparation of the FTA return. Linking each inventory item to a serial number or lot reduces the risk of mixing regimes at year-end inventory, in line with Swiss accounting standards (Swiss GAAP FER) on true and complete presentation.
Common mistakes and deadlines
Avoid
- Applying the EU margin scheme to used electronics or furniture
- Deducting input tax on purchases later sold under the margin scheme
- Using notional input tax on collector’s pieces under the margin scheme (Art. 28a para. 3 VAT Act)
- Dismantling a vehicle and selling parts using margin logic for the whole vehicle
- Invoicing VAT separately to the customer and still claiming the margin scheme
Good practices
- Written internal policy: decision tree margin vs standard
- Semi-annual review of the collector’s pieces register
- Sales staff training on invoicing (Art. 48c VAT Ord.)
- Alignment of warehouse, CRM, and accounting on serial numbers
- FTA or trustee consultation before changing business model
VAT return deadlines (quarterly or semi-annual, or annual if authorised) do not differ for the margin scheme: tax accrued on margins realised in the period must be declared on the periodic form. Retain documents for ten years, as for other taxable transactions.
Summary for business owners and trustees
In Switzerland the VAT margin scheme is a specialised tool for collector’s pieces and related categories, not the general rule for used and reconditioned goods trade in SMEs. Most businesses must calculate VAT on the full selling price, carefully managing input tax on purchases from taxable suppliers and, where permitted, notional input tax on identifiable movable goods bought from private individuals.
Correct calculation, a dedicated register where mandatory, and consistent accounting in tools such as Accountex reduce tax risk and make real economic margins readable — a decisive advantage for pricing, liquidity, and planning the financial year.