Contents
General VAT vs REBU: what each scheme is and how they differ
When to issue an invoice with itemised VAT
When to apply REBU
Practical example: the same car with VAT and with REBU
How the choice of scheme affects the buyer
Common mistakes when choosing between VAT and REBU
How to manage both schemes without mistakes
Conclusion
Frequently asked questions
One of the decisions that raises the most questions in the day-to-day management of a used car dealership is when to issue an invoice with itemised VAT and when to apply the Special Scheme for Second-Hand Goods (REBU). It is not a minor detail: choosing the wrong scheme can mean paying more tax than necessary, issuing incorrect invoices or facing a tax inspection.
The problem is that many dealerships work with both schemes at the same time (because they buy cars both from private individuals and companies) and do not always know which one applies in each transaction. The usual consequence: REBU is applied by default "because that's what is always done", when in some cases general VAT should be charged, or vice versa.
This article explains in practical terms when to use each scheme, with numerical examples showing the real impact on the final price and profitability, and the most common mistakes to avoid.
General VAT vs REBU: what each scheme is and how they differ
Invoice with itemised VAT (general scheme)
In the general scheme, the dealership charges 21% VAT on the total selling price and shows it separately on the invoice. The buyer, if professional (a company or sole trader), can reclaim that VAT.
This scheme applies when the dealership has bought the car from a supplier who issued an invoice with itemised VAT: leasing companies, fleets, other dealerships under the general scheme or intra-Community suppliers. In these transactions, the dealership has reclaimed the input VAT on the purchase, so it must charge it on the sale.
REBU (Special Scheme for Second-Hand Goods)
REBU allows the dealership to tax only the profit margin on the transaction, not the total selling price. VAT is not itemised on the invoice and the buyer cannot reclaim it.
It applies when the car has been bought from a private individual or a professional who did not itemise VAT on their invoice (for example, another dealership that sold under REBU). REBU is regulated in Article 135 of VAT Act 37/1992 and is voluntary, although practically all used car dealerships use it in transactions where it is allowed.
The key difference is clear: under general VAT you are taxed on the total price. Under REBU you are taxed only on what you earn. For transactions with private individuals, REBU is almost always more favourable. If you want to go deeper into the scheme, we explain it in our complete guide to REBU in the buying and selling of second-hand cars.
When to issue an invoice with itemised VAT
The general scheme with itemised VAT applies when one of these conditions is met:
The car was bought from a company that issued an invoice with VAT. If you bought the vehicle from a leasing company (LeasePlan, ALD, Arval), from a corporate fleet or from another dealership that charged you 21% VAT, you have reclaimed that VAT on purchase. When you resell, you have to apply VAT to the total selling price.
The buyer is a company or sole trader who needs to reclaim VAT. If your customer is a professional who will use the car in their business, it is in their interest to receive an invoice with itemised VAT so they can reclaim it. In these cases, although you could apply REBU, it may make more commercial sense to invoice under the general VAT scheme.
Intra-Community transactions. If you buy cars in another EU country from a professional supplier with a VAT number, the reverse charge applies. When you resell in Spain, you must invoice with general VAT.
When to apply REBU
REBU applies when the dealership buys the car from a party that has not itemised VAT on the invoice or purchase document:
Purchases from private individuals. This is the most common case. A private individual sells their car to the dealership, signs a sale and purchase agreement and the dealership issues a purchase receipt. There is no deductible VAT on the acquisition, so on resale REBU can be applied.
Purchases from another dealership that sold under REBU. If the supplier also applied REBU and their invoice does not itemise VAT, you can continue applying REBU on resale.
Part exchanges. When a customer trades in their car as part payment for another vehicle, that trade-in is documented as a purchase from a private individual and allows REBU to be applied to the later resale. To fully understand the tax implications of part exchanges, we recommend reading our article on what ITP is on car sales and when it applies.
The REBU invoice must meet specific requirements: VAT is not itemised, it must include the legal wording that the transaction is covered by the special scheme for second-hand goods, and the dealership must keep a separate register for these transactions.
Practical example: the same car with VAT and with REBU
To see the real difference, let's take a car that the dealership buys for 10,000 euros and sells for 13,000 euros. Gross margin: 3,000 euros.
Under REBU:
VAT is calculated only on the margin. The taxable base is the margin between selling price and purchase price. As VAT is included within that margin, the calculation is: taxable base = 3,000 / 1.21 = 2,479.34 euros. VAT = 520.66 euros. The customer pays 13,000 euros in total. The dealership accounts for 520.66 euros of VAT.
Under general VAT (21%):
VAT is applied to the total selling price. Price excluding VAT: 13,000 euros. VAT: 2,730 euros. The customer pays 15,730 euros. The dealership charges 2,730 euros of VAT (although it reclaims the input VAT on purchase, if there was any).
The difference for the private buyer is 2,730 euros. For a professional who reclaims VAT, the net cost may be similar, but for a private individual the impact is huge. That is why REBU is so relevant in sales to end consumers: it allows you to offer more competitive prices without sacrificing margin.
How the choice of scheme affects the buyer
The choice of scheme affects not only the dealership. It has direct consequences for the buyer:
Private buyer. They benefit from REBU, because the final price is significantly lower. With REBU they cannot reclaim VAT, but that does not matter to them: a private individual does not file VAT returns. What matters is what they pay.
Company or sole trader buyer. They benefit from an itemised VAT invoice, because they can reclaim that VAT in their quarterly return. If you issue a REBU invoice, the price may seem lower, but they will not be able to reclaim anything, and the real cost may be higher than with general VAT.
Subsequent resale. If a private buyer acquires a car under REBU and later sells it to another private individual, that second transaction will be subject to the Property Transfer Tax (ITP), not VAT. It is worth making this clear to the customer to avoid confusion.
A good dealership not only chooses the right scheme: it explains to the customer why the invoice is being issued one way or the other. That builds trust and avoids complaints.
Common mistakes when choosing between VAT and REBU
Applying REBU when the car was bought with deductible VAT. If you bought the car from a company that charged you VAT and you reclaimed it, you cannot apply REBU when you sell. They are incompatible. If you do, the tax authorities can claim the difference plus a penalty.
Not keeping the private-purchase document. To justify applying REBU, you need to prove that you bought the car without deductible VAT. If you do not have the sale and purchase contract signed by the private seller, you lose the basis for using the scheme. If you want to see the most common REBU mistakes in detail, we explain them in our article on common mistakes when applying REBU in dealerships.
Itemising VAT on a REBU invoice. This is a serious error. A REBU invoice must not show itemised VAT. Including it invalidates the transaction for tax purposes and may lead the buyer to believe they are entitled to reclaim a VAT amount that legally is not theirs to reclaim.
Not including the mandatory legal wording. Every REBU invoice must include wording such as: "Transaction covered by the Special Scheme for Second-Hand Goods. VAT included in the price, no right to deduction". Omitting it can trigger an inspection.
Mixing transactions without control. Many dealerships work with both schemes, which is perfectly legal. The problem is not knowing which applies to each transaction. If you do not classify each purchase from the outset, you end up with a tax mess that is hard to untangle at the end of the quarter. To issue each type of invoice correctly, we recommend our guide on how to issue invoices correctly when buying and selling used vehicles.
How to manage both schemes without mistakes
The key is to classify each transaction from the moment of purchase, not at the point of sale. When a car enters stock, the dealership should immediately record:
Who it was bought from (private individual, company, another dealership). Whether there is an invoice with deductible VAT or not. Which scheme applies to the resale (REBU or general).
If this step is done properly, the rest follows: the sales invoice is issued in the correct format, VAT is calculated on the right base and the register is kept up to date.
Doing it manually with spreadsheets is viable if you handle 10-15 cars a month, but it quickly becomes difficult as volume grows. A management system that automatically classifies each transaction and generates the invoice in the correct legal format (REBU or general VAT) eliminates most errors and saves administrative time.
At Dealcar, for example, each transaction is classified from the purchase. The system generates the invoice with the relevant legal wording, calculates VAT on the margin or on the total depending on the scheme, and links the entire file (purchase, preparation, sale, invoice) to the vehicle. To learn more about the tax implications when you sell to different buyer profiles, see our article on the tax differences between selling vehicles to companies and to private individuals.
Conclusion
Choosing between general VAT and REBU is not a matter of preference: it depends on the origin of the car and the type of transaction. Applying the wrong scheme can mean paying too much, issuing incorrect invoices or facing penalties. The good news is that the rules are clear once you understand them, and with an orderly process from the purchase onwards, managing both schemes is perfectly manageable.
More than 500 dealerships already use Dealcar to manage their invoicing without errors.
From the platform, you can classify each transaction as REBU or general VAT from the purchase, generate automatic invoices in the correct legal format and keep clear control of the margin and tax treatment of each car. If you want to see how it works, request a demo and we'll show you for free.
Frequently asked questions
Can I freely choose between REBU and general VAT?
Not always. REBU can only be applied when the car was bought without deductible VAT (from a private individual or a professional who did not itemise VAT). If you bought it with deductible VAT, you have to sell with general VAT. In cases where REBU is possible, application is voluntary: you can waive it and invoice under general VAT, although it is rarely worthwhile.
What happens if I apply REBU to a car I bought with deductible VAT?
It is a tax offence. The tax authorities can claim the VAT not charged, plus late-payment interest and a penalty that can range from 50% to 150% of the unpaid amount. It is one of the most expensive mistakes a dealership can make.
Can the buyer demand one scheme or the other?
They cannot demand it, but they can prefer it. A professional buyer will ask you for a VAT invoice so they can reclaim it. If the car allows both schemes (an uncommon case), you can adapt. But if only REBU is available, the professional buyer must know they will not be able to reclaim VAT on that transaction.
How do I know which scheme to apply in a part exchange?
If the customer who gives you the car is a private individual, that purchase is documented as an acquisition from a private individual (without deductible VAT). When you resell that car, you can apply REBU. If the customer is a company that issues you an invoice with VAT, the general scheme applies.
What documentation do I need to justify REBU to the tax authorities?
The sale and purchase contract or purchase receipt signed by the private seller, with full identification (ID number, vehicle details, price, date). In addition, you must keep a separate REBU register from the general one. Without this documentation, the tax authorities may consider that you are not entitled to apply the scheme and recalculate VAT on the total sale.
Contents
General VAT vs REBU: what each scheme is and how they differ
When to issue an invoice with itemised VAT
When to apply REBU
Practical example: the same car with VAT and with REBU
How the choice of scheme affects the buyer
Common mistakes when choosing between VAT and REBU
How to manage both schemes without mistakes
Conclusion
Frequently asked questions
One of the decisions that raises the most questions in the day-to-day management of a used car dealership is when to issue an invoice with itemised VAT and when to apply the Special Scheme for Second-Hand Goods (REBU). It is not a minor detail: choosing the wrong scheme can mean paying more tax than necessary, issuing incorrect invoices or facing a tax inspection.
The problem is that many dealerships work with both schemes at the same time (because they buy cars both from private individuals and companies) and do not always know which one applies in each transaction. The usual consequence: REBU is applied by default "because that's what is always done", when in some cases general VAT should be charged, or vice versa.
This article explains in practical terms when to use each scheme, with numerical examples showing the real impact on the final price and profitability, and the most common mistakes to avoid.
General VAT vs REBU: what each scheme is and how they differ
Invoice with itemised VAT (general scheme)
In the general scheme, the dealership charges 21% VAT on the total selling price and shows it separately on the invoice. The buyer, if professional (a company or sole trader), can reclaim that VAT.
This scheme applies when the dealership has bought the car from a supplier who issued an invoice with itemised VAT: leasing companies, fleets, other dealerships under the general scheme or intra-Community suppliers. In these transactions, the dealership has reclaimed the input VAT on the purchase, so it must charge it on the sale.
REBU (Special Scheme for Second-Hand Goods)
REBU allows the dealership to tax only the profit margin on the transaction, not the total selling price. VAT is not itemised on the invoice and the buyer cannot reclaim it.
It applies when the car has been bought from a private individual or a professional who did not itemise VAT on their invoice (for example, another dealership that sold under REBU). REBU is regulated in Article 135 of VAT Act 37/1992 and is voluntary, although practically all used car dealerships use it in transactions where it is allowed.
The key difference is clear: under general VAT you are taxed on the total price. Under REBU you are taxed only on what you earn. For transactions with private individuals, REBU is almost always more favourable. If you want to go deeper into the scheme, we explain it in our complete guide to REBU in the buying and selling of second-hand cars.
When to issue an invoice with itemised VAT
The general scheme with itemised VAT applies when one of these conditions is met:
The car was bought from a company that issued an invoice with VAT. If you bought the vehicle from a leasing company (LeasePlan, ALD, Arval), from a corporate fleet or from another dealership that charged you 21% VAT, you have reclaimed that VAT on purchase. When you resell, you have to apply VAT to the total selling price.
The buyer is a company or sole trader who needs to reclaim VAT. If your customer is a professional who will use the car in their business, it is in their interest to receive an invoice with itemised VAT so they can reclaim it. In these cases, although you could apply REBU, it may make more commercial sense to invoice under the general VAT scheme.
Intra-Community transactions. If you buy cars in another EU country from a professional supplier with a VAT number, the reverse charge applies. When you resell in Spain, you must invoice with general VAT.
When to apply REBU
REBU applies when the dealership buys the car from a party that has not itemised VAT on the invoice or purchase document:
Purchases from private individuals. This is the most common case. A private individual sells their car to the dealership, signs a sale and purchase agreement and the dealership issues a purchase receipt. There is no deductible VAT on the acquisition, so on resale REBU can be applied.
Purchases from another dealership that sold under REBU. If the supplier also applied REBU and their invoice does not itemise VAT, you can continue applying REBU on resale.
Part exchanges. When a customer trades in their car as part payment for another vehicle, that trade-in is documented as a purchase from a private individual and allows REBU to be applied to the later resale. To fully understand the tax implications of part exchanges, we recommend reading our article on what ITP is on car sales and when it applies.
The REBU invoice must meet specific requirements: VAT is not itemised, it must include the legal wording that the transaction is covered by the special scheme for second-hand goods, and the dealership must keep a separate register for these transactions.
Practical example: the same car with VAT and with REBU
To see the real difference, let's take a car that the dealership buys for 10,000 euros and sells for 13,000 euros. Gross margin: 3,000 euros.
Under REBU:
VAT is calculated only on the margin. The taxable base is the margin between selling price and purchase price. As VAT is included within that margin, the calculation is: taxable base = 3,000 / 1.21 = 2,479.34 euros. VAT = 520.66 euros. The customer pays 13,000 euros in total. The dealership accounts for 520.66 euros of VAT.
Under general VAT (21%):
VAT is applied to the total selling price. Price excluding VAT: 13,000 euros. VAT: 2,730 euros. The customer pays 15,730 euros. The dealership charges 2,730 euros of VAT (although it reclaims the input VAT on purchase, if there was any).
The difference for the private buyer is 2,730 euros. For a professional who reclaims VAT, the net cost may be similar, but for a private individual the impact is huge. That is why REBU is so relevant in sales to end consumers: it allows you to offer more competitive prices without sacrificing margin.
How the choice of scheme affects the buyer
The choice of scheme affects not only the dealership. It has direct consequences for the buyer:
Private buyer. They benefit from REBU, because the final price is significantly lower. With REBU they cannot reclaim VAT, but that does not matter to them: a private individual does not file VAT returns. What matters is what they pay.
Company or sole trader buyer. They benefit from an itemised VAT invoice, because they can reclaim that VAT in their quarterly return. If you issue a REBU invoice, the price may seem lower, but they will not be able to reclaim anything, and the real cost may be higher than with general VAT.
Subsequent resale. If a private buyer acquires a car under REBU and later sells it to another private individual, that second transaction will be subject to the Property Transfer Tax (ITP), not VAT. It is worth making this clear to the customer to avoid confusion.
A good dealership not only chooses the right scheme: it explains to the customer why the invoice is being issued one way or the other. That builds trust and avoids complaints.
Common mistakes when choosing between VAT and REBU
Applying REBU when the car was bought with deductible VAT. If you bought the car from a company that charged you VAT and you reclaimed it, you cannot apply REBU when you sell. They are incompatible. If you do, the tax authorities can claim the difference plus a penalty.
Not keeping the private-purchase document. To justify applying REBU, you need to prove that you bought the car without deductible VAT. If you do not have the sale and purchase contract signed by the private seller, you lose the basis for using the scheme. If you want to see the most common REBU mistakes in detail, we explain them in our article on common mistakes when applying REBU in dealerships.
Itemising VAT on a REBU invoice. This is a serious error. A REBU invoice must not show itemised VAT. Including it invalidates the transaction for tax purposes and may lead the buyer to believe they are entitled to reclaim a VAT amount that legally is not theirs to reclaim.
Not including the mandatory legal wording. Every REBU invoice must include wording such as: "Transaction covered by the Special Scheme for Second-Hand Goods. VAT included in the price, no right to deduction". Omitting it can trigger an inspection.
Mixing transactions without control. Many dealerships work with both schemes, which is perfectly legal. The problem is not knowing which applies to each transaction. If you do not classify each purchase from the outset, you end up with a tax mess that is hard to untangle at the end of the quarter. To issue each type of invoice correctly, we recommend our guide on how to issue invoices correctly when buying and selling used vehicles.
How to manage both schemes without mistakes
The key is to classify each transaction from the moment of purchase, not at the point of sale. When a car enters stock, the dealership should immediately record:
Who it was bought from (private individual, company, another dealership). Whether there is an invoice with deductible VAT or not. Which scheme applies to the resale (REBU or general).
If this step is done properly, the rest follows: the sales invoice is issued in the correct format, VAT is calculated on the right base and the register is kept up to date.
Doing it manually with spreadsheets is viable if you handle 10-15 cars a month, but it quickly becomes difficult as volume grows. A management system that automatically classifies each transaction and generates the invoice in the correct legal format (REBU or general VAT) eliminates most errors and saves administrative time.
At Dealcar, for example, each transaction is classified from the purchase. The system generates the invoice with the relevant legal wording, calculates VAT on the margin or on the total depending on the scheme, and links the entire file (purchase, preparation, sale, invoice) to the vehicle. To learn more about the tax implications when you sell to different buyer profiles, see our article on the tax differences between selling vehicles to companies and to private individuals.
Conclusion
Choosing between general VAT and REBU is not a matter of preference: it depends on the origin of the car and the type of transaction. Applying the wrong scheme can mean paying too much, issuing incorrect invoices or facing penalties. The good news is that the rules are clear once you understand them, and with an orderly process from the purchase onwards, managing both schemes is perfectly manageable.
More than 500 dealerships already use Dealcar to manage their invoicing without errors.
From the platform, you can classify each transaction as REBU or general VAT from the purchase, generate automatic invoices in the correct legal format and keep clear control of the margin and tax treatment of each car. If you want to see how it works, request a demo and we'll show you for free.
Frequently asked questions
Can I freely choose between REBU and general VAT?
Not always. REBU can only be applied when the car was bought without deductible VAT (from a private individual or a professional who did not itemise VAT). If you bought it with deductible VAT, you have to sell with general VAT. In cases where REBU is possible, application is voluntary: you can waive it and invoice under general VAT, although it is rarely worthwhile.
What happens if I apply REBU to a car I bought with deductible VAT?
It is a tax offence. The tax authorities can claim the VAT not charged, plus late-payment interest and a penalty that can range from 50% to 150% of the unpaid amount. It is one of the most expensive mistakes a dealership can make.
Can the buyer demand one scheme or the other?
They cannot demand it, but they can prefer it. A professional buyer will ask you for a VAT invoice so they can reclaim it. If the car allows both schemes (an uncommon case), you can adapt. But if only REBU is available, the professional buyer must know they will not be able to reclaim VAT on that transaction.
How do I know which scheme to apply in a part exchange?
If the customer who gives you the car is a private individual, that purchase is documented as an acquisition from a private individual (without deductible VAT). When you resell that car, you can apply REBU. If the customer is a company that issues you an invoice with VAT, the general scheme applies.
What documentation do I need to justify REBU to the tax authorities?
The sale and purchase contract or purchase receipt signed by the private seller, with full identification (ID number, vehicle details, price, date). In addition, you must keep a separate REBU register from the general one. Without this documentation, the tax authorities may consider that you are not entitled to apply the scheme and recalculate VAT on the total sale.
