What tax obligations does a dealer that sells used cars have?
If you run a used car dealership in Spain, you know that the paperwork and tax obligations are part of everyday life. And although it may seem like a lot, the truth is that correctly declaring vehicle buying and selling need not be complicated if you know the key points well.
The aim is not just to comply with the tax authorities, but also to avoid penalties, save time and keep the accounts clear.
Which taxes affect the buying and selling of used cars
VAT or Transfer Tax (ITP)
The key here is who the seller is and which tax regime the dealership is under:
If a dealership sells to a private individual, VAT normally applies, unless it uses the Special Scheme for Second-hand Goods (REBU).
If a private individual sells a car to another private individual, ITP applies, which is paid by the buyer.
In sales between businesses, VAT is applied at the standard rate (21%).
Special Scheme for Second-hand Goods (REBU)
This is very common in dealerships that sell used cars. Why? Because it allows you to tax only on the profit margin, not on the total sale price.
For example: you buy a car for €8,000 and sell it for €10,000. Instead of applying VAT to the total (€10,000), it is applied only to the margin (€2,000).
This has several tax advantages, but it also involves specific accounting obligations, such as keeping a detailed purchases ledger.
How to invoice a used vehicle sale correctly
Invoicing properly is not only mandatory, it is also essential in order to declare correctly. Depending on whether you are under the standard scheme or REBU, the invoice must include different elements.
If you are in REBU:
VAT is not itemised (it is considered included in the final price).
It must include the wording: “Transaction covered by the Special Scheme for Second-hand Goods. VAT included in accordance with Article 135 of Law 37/1992”.
If you are under the standard scheme:
The taxable base, VAT rate (normally 21%) and the corresponding amount must be clearly itemised.
In addition, it is important to keep the following documents:
Copy of the sale and purchase agreement
Purchase invoice (if the car was bought from another professional)
Vehicle registration document
Proof of payment and receipt
And what about Form 347? When does it have to be filed?
Form 347 is an annual information return, which includes transactions with third parties that exceed €3,005.06 in the calendar year.
What is included?
Purchases of cars from professionals
Sales to companies or self-employed persons that exceed that amount
Sales to private individuals are not included
It is filed every year in February and does not involve any tax payment, but it is mandatory to maintain tax transparency.
Tax differences depending on the type of customer
Sale to private individuals
VAT applies (REBU or standard scheme)
No invoice with a VAT breakdown is issued if you are in REBU
Sale to companies/self-employed persons
An invoice must always be issued with all the details
The standard scheme usually applies (with VAT itemised)
These transactions must appear on Form 347 (if they exceed the threshold)
Tips to avoid mistakes (and losing money)
Do not use REBU if you buy cars from companies with an invoice showing deductible VAT; it is not compatible. Check the vehicle’s origin carefully: whether it was bought from a private individual or a professional. Do not mix tax regimes on the same invoice. If you make self-sales or internal transfers, record them properly.
A common mistake is failing to document the purchase properly. If you cannot justify the acquisition cost, the tax authorities may assume that your margin is the full sale price. And that means paying more tax.
Conclusion
Buying and selling used cars in a dealership involves more than showing a car and closing a sale. You need to know your tax obligations, correctly declare each transaction and keep the appropriate documentation.
It is not just about “doing things properly”, but also about protecting your business and optimising your tax position. And if you can also rely on systems that make everything easier, even better.
Want to know how to declare your sales clearly and in order?
Visit www.dealcar.io and discover everything you can simplify.
Frequently asked questions (FAQ)
What is the REBU scheme and when does it apply?
It is a special VAT scheme for second-hand goods that is taxed on the profit margin. It applies when you buy from private individuals or in transactions with no right to deduct VAT.
Can I use REBU if I buy the car from a company?
Only if the company does not issue you with an invoice showing deductible VAT. Otherwise, you must use the standard scheme.
Do I have to issue an invoice to a private individual?
Yes, but if you are in REBU it is not mandatory to itemise VAT. It is enough to indicate that VAT is included.
What happens if I do not file Form 347?
It is a tax offence. You may receive penalties for omitting relevant transactions.
How do I know which scheme to apply to each transaction?
It depends on who sells you the vehicle and whether there is deductible VAT on the purchase. Check the source documentation carefully.
What tax obligations does a dealer that sells used cars have?
If you run a used car dealership in Spain, you know that the paperwork and tax obligations are part of everyday life. And although it may seem like a lot, the truth is that correctly declaring vehicle buying and selling need not be complicated if you know the key points well.
The aim is not just to comply with the tax authorities, but also to avoid penalties, save time and keep the accounts clear.
Which taxes affect the buying and selling of used cars
VAT or Transfer Tax (ITP)
The key here is who the seller is and which tax regime the dealership is under:
If a dealership sells to a private individual, VAT normally applies, unless it uses the Special Scheme for Second-hand Goods (REBU).
If a private individual sells a car to another private individual, ITP applies, which is paid by the buyer.
In sales between businesses, VAT is applied at the standard rate (21%).
Special Scheme for Second-hand Goods (REBU)
This is very common in dealerships that sell used cars. Why? Because it allows you to tax only on the profit margin, not on the total sale price.
For example: you buy a car for €8,000 and sell it for €10,000. Instead of applying VAT to the total (€10,000), it is applied only to the margin (€2,000).
This has several tax advantages, but it also involves specific accounting obligations, such as keeping a detailed purchases ledger.
How to invoice a used vehicle sale correctly
Invoicing properly is not only mandatory, it is also essential in order to declare correctly. Depending on whether you are under the standard scheme or REBU, the invoice must include different elements.
If you are in REBU:
VAT is not itemised (it is considered included in the final price).
It must include the wording: “Transaction covered by the Special Scheme for Second-hand Goods. VAT included in accordance with Article 135 of Law 37/1992”.
If you are under the standard scheme:
The taxable base, VAT rate (normally 21%) and the corresponding amount must be clearly itemised.
In addition, it is important to keep the following documents:
Copy of the sale and purchase agreement
Purchase invoice (if the car was bought from another professional)
Vehicle registration document
Proof of payment and receipt
And what about Form 347? When does it have to be filed?
Form 347 is an annual information return, which includes transactions with third parties that exceed €3,005.06 in the calendar year.
What is included?
Purchases of cars from professionals
Sales to companies or self-employed persons that exceed that amount
Sales to private individuals are not included
It is filed every year in February and does not involve any tax payment, but it is mandatory to maintain tax transparency.
Tax differences depending on the type of customer
Sale to private individuals
VAT applies (REBU or standard scheme)
No invoice with a VAT breakdown is issued if you are in REBU
Sale to companies/self-employed persons
An invoice must always be issued with all the details
The standard scheme usually applies (with VAT itemised)
These transactions must appear on Form 347 (if they exceed the threshold)
Tips to avoid mistakes (and losing money)
Do not use REBU if you buy cars from companies with an invoice showing deductible VAT; it is not compatible. Check the vehicle’s origin carefully: whether it was bought from a private individual or a professional. Do not mix tax regimes on the same invoice. If you make self-sales or internal transfers, record them properly.
A common mistake is failing to document the purchase properly. If you cannot justify the acquisition cost, the tax authorities may assume that your margin is the full sale price. And that means paying more tax.
Conclusion
Buying and selling used cars in a dealership involves more than showing a car and closing a sale. You need to know your tax obligations, correctly declare each transaction and keep the appropriate documentation.
It is not just about “doing things properly”, but also about protecting your business and optimising your tax position. And if you can also rely on systems that make everything easier, even better.
Want to know how to declare your sales clearly and in order?
Visit www.dealcar.io and discover everything you can simplify.
Frequently asked questions (FAQ)
What is the REBU scheme and when does it apply?
It is a special VAT scheme for second-hand goods that is taxed on the profit margin. It applies when you buy from private individuals or in transactions with no right to deduct VAT.
Can I use REBU if I buy the car from a company?
Only if the company does not issue you with an invoice showing deductible VAT. Otherwise, you must use the standard scheme.
Do I have to issue an invoice to a private individual?
Yes, but if you are in REBU it is not mandatory to itemise VAT. It is enough to indicate that VAT is included.
What happens if I do not file Form 347?
It is a tax offence. You may receive penalties for omitting relevant transactions.
How do I know which scheme to apply to each transaction?
It depends on who sells you the vehicle and whether there is deductible VAT on the purchase. Check the source documentation carefully.
