Contents
Why it matters to distinguish between business customers and private customers
Selling to a private customer: the REBU scheme
Selling to a company or sole trader: itemised VAT
Practical comparison with real figures
When you cannot apply REBU even if you sell to a private customer
Intra-Community supplies and exports
Simplified invoice vs full invoice: when to use each one
Common tax mistakes in dealerships
How Dealcar simplifies invoicing
Frequently asked questions
In the buying and selling of used cars, not every transaction is taxed in the same way. The same car, bought at the same price, creates completely different tax obligations depending on whether you sell it to a private customer, a company, a sole trader or a customer in another EU country.
Most dealerships know that REBU exists and know that when they sell to private customers they are taxed on the margin. But when you get into the detail (when REBU can and cannot be applied, what happens if the car was bought with deductible VAT, how to invoice a sale to a company that will deduct the VAT) that is where the doubts appear and, with them, the mistakes that can end in an inspection.
In this article we review the real tax differences between selling to companies and to private customers, with practical examples and concrete figures.
Why it matters to distinguish between business customers and private customers
From a tax point of view, the type of customer determines three things: which tax regime you apply to the transaction, how you issue the invoice, and what documentation obligations you have.
When you sell to a private customer, you can normally opt for the Special Scheme for Used Goods (REBU), which allows you to pay tax only on the profit margin. VAT is not itemised on the invoice and the private customer pays a final closed price.
When you sell to a company or sole trader who will use the car in their business, the transaction is handled with standard VAT (21%). The invoice must itemise the taxable base and VAT, and the buyer can deduct that VAT on their return.
Mixing up one scheme with another, applying REBU when it does not apply, or failing to itemise VAT when the customer needs it to deduct are mistakes that create problems for both you and your customer. And the tax authorities notice.
Selling to a private customer: the REBU scheme
REBU is the tax scheme that benefits used-car dealerships most when selling to private customers. Its main advantage is that you are taxed only on the profit margin, not on the total sale price.
How it works
You buy a car for 6,000 euros from a private customer (with no right to deduct VAT, because the private customer does not issue you a VAT invoice). You sell it for 8,000 euros. Your gross margin is 2,000 euros. Under REBU, you only pay VAT on those 2,000 euros of margin, not on the full 8,000 euros.
The VAT you pay to the tax authorities is: 2,000 / 1.21 = 1,652.89 euros taxable base, and 347.11 euros VAT. Your net profit before personal income tax or Corporation Tax is 1,652.89 euros.
How it appears on the invoice
When you apply REBU, the invoice to the private customer does not itemise VAT. The price shown is the final price. The invoice must include the wording "Special scheme for used goods" or a reference to Article 135 of the VAT Act, but the buyer does not see the breakdown of base + VAT.
This is important: because VAT is not itemised, the private buyer cannot deduct anything (which does not affect them, because private customers do not deduct VAT). But if your customer is a company that needs to deduct, you cannot use REBU. We look at that in the next section.
Requirement to apply REBU
You cannot always apply REBU. The scheme is only applicable when the car was acquired without the right to deduct VAT. In other words, when you bought it from a private customer, from another dealership that also applied REBU, or from a company that did not charge VAT on the sale.
If you bought the car with an invoice showing VAT separately (for example, from a leasing company or an official dealership that invoiced you at the standard VAT rate) and you deducted that VAT, you cannot apply REBU on resale. You will have to invoice with standard VAT, regardless of whether the buyer is a private customer or a company.
Selling to a company or sole trader: itemised VAT
When your customer is a company or a sole trader who will use the car for their professional activity, the transaction must be invoiced with VAT itemised at the standard rate of 21%.
How it works
You sell the same car for 8,000 euros, but to a company. The invoice will be: taxable base 8,000 euros + 21% VAT (1,680 euros) = total 9,680 euros.
The company pays 9,680 euros but can deduct the 1,680 euros of VAT on its quarterly return. For the company, the real cost is 8,000 euros.
For you as the dealership, the gross profit is 2,000 euros (8,000 - 6,000 purchase cost). But unlike REBU, the VAT you pay to the tax authorities is 1,680 euros (21% on the total), not on the margin. If you deducted VAT when you bought the car, it balances out. If you did not (because you bought it from a private customer), the tax impact is greater.
Formal invoice requirements
The invoice to a company must include the buyer's full tax details (registered name, tax ID, fiscal address), taxable base and VAT rate applied (21%), the itemised VAT amount, date of the transaction and consecutive invoice number.
A common mistake is for the dealership not to ask for the buyer company's full tax details. Without the correct tax ID on the invoice, the buyer will not be able to deduct the VAT, which leads to complaints and a poor image.
When the company cannot deduct 100%
Not every company deducts 100% of the VAT on a car. Spanish law limits the deduction to 50% if the vehicle is not used exclusively for professional activity. You can only deduct 100% if the car is used entirely for the activity (commercial vehicles, taxis, driving schools, rental, sales representatives with justification, etc.).
It is worth informing the business customer of this limitation if they ask you, but the responsibility for the deduction is theirs, not yours. Your obligation is to issue the invoice correctly with itemised VAT.
Practical comparison with real figures
To make the differences clear, let us look at the same car sold under the two schemes.
Base data: Car bought from a private customer for 6,000 euros (no VAT). Sale price: 8,000 euros.
Item | Sale to private customer (REBU) | Sale to company (standard VAT) |
|---|---|---|
Sale price | 8,000 € (VAT included in margin) | 8,000 € + 1,680 € VAT = 9,680 € |
VAT taxable base | 1,652.89 € (margin / 1.21) | 8,000 € |
VAT payable to the tax authorities | 347.11 € | 1,680 € |
The buyer pays | 8,000 € | 9,680 € (deducts 1,680 € if entitled) |
Dealer's net profit | 1,652.89 € | 2,000 € (before Corporation Tax) |
VAT itemised on invoice | No | Yes |
The difference in VAT paid to the tax authorities is significant: 347 euros vs 1,680 euros. That is why REBU is so advantageous for buying and selling when you sell to private customers. But you can only use it when the requirements are met.
Now let us look at the same case but with a car you bought from a leasing company with a VAT invoice (6,000 € + 1,260 € VAT = 7,260 €, and you deducted the 1,260 €).
Item | Sale to private customer (standard VAT, not REBU) | Sale to company (standard VAT) |
|---|---|---|
Sale price | 9,680 € (8,000 + VAT) | 9,680 € (8,000 + VAT) |
VAT charged | 1,680 € | 1,680 € |
VAT incurred deducted on purchase | 1,260 € | 1,260 € |
Net VAT payable | 420 € | 420 € |
In this case, because you bought with VAT, you cannot apply REBU and the tax treatment is identical whoever you sell to.
When you cannot apply REBU even if you sell to a private customer
This is one of the points that causes the most confusion. It is not enough that the buyer is a private customer in order to apply REBU. The scheme depends on how you acquired the car, not on who you sell it to.
You cannot apply REBU if you bought the car with an invoice showing VAT separately and deducted it. This happens when you buy from leasing companies, from official dealerships that invoice you at the standard VAT rate, or from companies selling vehicles from their fleet with VAT.
You can apply REBU if you bought the car from a private customer (without a VAT invoice), from another dealership that also applied REBU, or from a company that sold it without charging VAT (for example, because the car was tied to an exempt activity).
The key is the origin of the purchase, not the destination of the sale. If you have doubts about a specific car, consult your tax adviser before issuing the invoice.
Intra-Community supplies and exports
If you sell to a customer in another EU country or outside it, the tax rules change again.
Sale to an EU company (intra-Community supply)
If the buyer is a company with a valid intra-Community VAT number (verifiable in the European Commission's VIES system), the transaction may be VAT-exempt. You issue an invoice without VAT, with the wording "Exempt intra-Community supply, Article 25 VAT Act", and the buying company self-assesses the VAT in its country.
Requirements for the exemption: the buyer must have an active intra-Community VAT number in VIES, the vehicle must physically leave Spain, and you must keep proof of transport (CMR, delivery note, transport documentation).
If you do not meet these requirements and the tax authorities detect it, they will demand the VAT not charged plus surcharges and interest.
Sale to an EU private customer
If the buyer is a private customer from another EU country, you apply Spanish VAT (21%) as in any domestic sale to a private customer. The private customer cannot deduct anything.
Export outside the EU
Exports to countries outside the EU are exempt from VAT. You issue an invoice without VAT with the export wording and keep the SAD (Single Administrative Document) as proof.
Simplified invoice vs full invoice: when to use each one
The regulations allow a simplified invoice (similar to a receipt) to be issued in sales to private customers when the amount does not exceed 400 euros. In practice, this rarely applies in car sales.
For all vehicle sales, the recommendation is to always issue a full invoice. This includes all the seller's and buyer's details, vehicle description (make, model, registration number, chassis number), taxable base, VAT (or REBU wording), and invoice date and number.
When the buyer is a company, a full invoice is mandatory without exception. When it is a private customer, it is not strictly mandatory if the amount is low, but in car sales it should always be a full invoice because of the traceability required by the DVLA and the tax authorities for these goods.
Common tax mistakes in dealerships
Applying REBU to a car bought with deductible VAT. This is the most serious mistake and the one that generates the most penalties. If you bought with a VAT invoice and deducted it, you must sell with standard VAT. Applying REBU in this situation is an irregularity that the tax authorities will detect by cross-checking data.
Not verifying the intra-Community VAT number on sales to EU companies. Selling without VAT to a company whose VAT number is not active in VIES forces you to pay the VAT that you did not charge. Always verify before issuing the invoice.
Not asking companies for full tax details. Without the correct tax ID, registered name and fiscal address, the invoice is not valid and the buyer cannot deduct. This creates complaints and loss of trust.
Confusing negative margin with REBU. If you sell a car for less than you paid for it (negative margin), there is no VAT to pay under REBU, but you must still record the transaction correctly. A negative REBU margin cannot be offset against other REBU transactions.
Not keeping transport documentation for intra-Community transactions. Without proof that the car left Spain, the VAT exemption is not valid. The tax authorities can claim the 21% years later.
How Dealcar simplifies invoicing
Correctly managing the tax treatment of each transaction requires knowing which scheme to apply, issuing the invoice in the correct format and keeping the right documentation. Doing it manually, transaction by transaction, is a constant source of errors.
Dealcar integrates features designed so the dealership does not have to worry about these details.
Automatic application of the tax scheme. When registering a vehicle purchase, Dealcar identifies whether it was bought with or without VAT. When the time comes to sell, the platform automatically suggests whether REBU or standard VAT applies, reducing the risk of error.
Verifactu e-invoicing. Dealcar generates invoices compliant with Verifactu regulations, with all mandatory fields, the correct tax scheme and the traceability required by the tax authorities.
Margin control by transaction. Each sales file shows the real margin, the VAT to be paid and the net profit. You have full visibility over the profitability of each transaction before closing it.
Documented files. All documentation for each purchase and sale (purchase invoice, sales invoice, contract, DVLA report) is centralised in the vehicle file, ready for any tax authority request.
If you want to see how it works, request a Dealcar demo.
Frequently asked questions
Can I choose between applying REBU or standard VAT?
It is not a free choice. If you bought the car without the right to deduct VAT (from a private customer or under REBU), you must apply REBU when you sell. If you bought it with deductible VAT, you must apply standard VAT. The scheme depends on the origin, not on your preference.
What happens if a company buys a car from me and I applied REBU?
If you sell under REBU, the invoice does not itemise VAT. The buying company will not be able to deduct anything. Some professional buyers will ask you to invoice with standard VAT so they can deduct it. You can only do that if the car was acquired with deductible VAT. If not, you must apply REBU even if the buyer is a company.
Are the penalties for incorrectly applying REBU serious?
Yes. The tax authorities can claim the unpaid VAT plus surcharges ranging from 1% to 100% of the amount, depending on severity and intent. In addition, if a pattern of irregularities is detected, it may lead to a full audit of the business.
How do I invoice if I sell a car to a sole trader who uses it for their business?
The same as to a company: invoice with VAT itemised at 21% (provided the car was bought with deductible VAT). The sole trader will be able to deduct the VAT to the extent that the car is used for their professional activity.
What happens if I sell a car and the margin is zero or negative?
If you apply REBU and the margin is zero or negative, there is no VAT to pay on that transaction. You must still record the invoice and the transaction. You cannot offset negative REBU margins against positive margins from other transactions.
Contents
Why it matters to distinguish between business customers and private customers
Selling to a private customer: the REBU scheme
Selling to a company or sole trader: itemised VAT
Practical comparison with real figures
When you cannot apply REBU even if you sell to a private customer
Intra-Community supplies and exports
Simplified invoice vs full invoice: when to use each one
Common tax mistakes in dealerships
How Dealcar simplifies invoicing
Frequently asked questions
In the buying and selling of used cars, not every transaction is taxed in the same way. The same car, bought at the same price, creates completely different tax obligations depending on whether you sell it to a private customer, a company, a sole trader or a customer in another EU country.
Most dealerships know that REBU exists and know that when they sell to private customers they are taxed on the margin. But when you get into the detail (when REBU can and cannot be applied, what happens if the car was bought with deductible VAT, how to invoice a sale to a company that will deduct the VAT) that is where the doubts appear and, with them, the mistakes that can end in an inspection.
In this article we review the real tax differences between selling to companies and to private customers, with practical examples and concrete figures.
Why it matters to distinguish between business customers and private customers
From a tax point of view, the type of customer determines three things: which tax regime you apply to the transaction, how you issue the invoice, and what documentation obligations you have.
When you sell to a private customer, you can normally opt for the Special Scheme for Used Goods (REBU), which allows you to pay tax only on the profit margin. VAT is not itemised on the invoice and the private customer pays a final closed price.
When you sell to a company or sole trader who will use the car in their business, the transaction is handled with standard VAT (21%). The invoice must itemise the taxable base and VAT, and the buyer can deduct that VAT on their return.
Mixing up one scheme with another, applying REBU when it does not apply, or failing to itemise VAT when the customer needs it to deduct are mistakes that create problems for both you and your customer. And the tax authorities notice.
Selling to a private customer: the REBU scheme
REBU is the tax scheme that benefits used-car dealerships most when selling to private customers. Its main advantage is that you are taxed only on the profit margin, not on the total sale price.
How it works
You buy a car for 6,000 euros from a private customer (with no right to deduct VAT, because the private customer does not issue you a VAT invoice). You sell it for 8,000 euros. Your gross margin is 2,000 euros. Under REBU, you only pay VAT on those 2,000 euros of margin, not on the full 8,000 euros.
The VAT you pay to the tax authorities is: 2,000 / 1.21 = 1,652.89 euros taxable base, and 347.11 euros VAT. Your net profit before personal income tax or Corporation Tax is 1,652.89 euros.
How it appears on the invoice
When you apply REBU, the invoice to the private customer does not itemise VAT. The price shown is the final price. The invoice must include the wording "Special scheme for used goods" or a reference to Article 135 of the VAT Act, but the buyer does not see the breakdown of base + VAT.
This is important: because VAT is not itemised, the private buyer cannot deduct anything (which does not affect them, because private customers do not deduct VAT). But if your customer is a company that needs to deduct, you cannot use REBU. We look at that in the next section.
Requirement to apply REBU
You cannot always apply REBU. The scheme is only applicable when the car was acquired without the right to deduct VAT. In other words, when you bought it from a private customer, from another dealership that also applied REBU, or from a company that did not charge VAT on the sale.
If you bought the car with an invoice showing VAT separately (for example, from a leasing company or an official dealership that invoiced you at the standard VAT rate) and you deducted that VAT, you cannot apply REBU on resale. You will have to invoice with standard VAT, regardless of whether the buyer is a private customer or a company.
Selling to a company or sole trader: itemised VAT
When your customer is a company or a sole trader who will use the car for their professional activity, the transaction must be invoiced with VAT itemised at the standard rate of 21%.
How it works
You sell the same car for 8,000 euros, but to a company. The invoice will be: taxable base 8,000 euros + 21% VAT (1,680 euros) = total 9,680 euros.
The company pays 9,680 euros but can deduct the 1,680 euros of VAT on its quarterly return. For the company, the real cost is 8,000 euros.
For you as the dealership, the gross profit is 2,000 euros (8,000 - 6,000 purchase cost). But unlike REBU, the VAT you pay to the tax authorities is 1,680 euros (21% on the total), not on the margin. If you deducted VAT when you bought the car, it balances out. If you did not (because you bought it from a private customer), the tax impact is greater.
Formal invoice requirements
The invoice to a company must include the buyer's full tax details (registered name, tax ID, fiscal address), taxable base and VAT rate applied (21%), the itemised VAT amount, date of the transaction and consecutive invoice number.
A common mistake is for the dealership not to ask for the buyer company's full tax details. Without the correct tax ID on the invoice, the buyer will not be able to deduct the VAT, which leads to complaints and a poor image.
When the company cannot deduct 100%
Not every company deducts 100% of the VAT on a car. Spanish law limits the deduction to 50% if the vehicle is not used exclusively for professional activity. You can only deduct 100% if the car is used entirely for the activity (commercial vehicles, taxis, driving schools, rental, sales representatives with justification, etc.).
It is worth informing the business customer of this limitation if they ask you, but the responsibility for the deduction is theirs, not yours. Your obligation is to issue the invoice correctly with itemised VAT.
Practical comparison with real figures
To make the differences clear, let us look at the same car sold under the two schemes.
Base data: Car bought from a private customer for 6,000 euros (no VAT). Sale price: 8,000 euros.
Item | Sale to private customer (REBU) | Sale to company (standard VAT) |
|---|---|---|
Sale price | 8,000 € (VAT included in margin) | 8,000 € + 1,680 € VAT = 9,680 € |
VAT taxable base | 1,652.89 € (margin / 1.21) | 8,000 € |
VAT payable to the tax authorities | 347.11 € | 1,680 € |
The buyer pays | 8,000 € | 9,680 € (deducts 1,680 € if entitled) |
Dealer's net profit | 1,652.89 € | 2,000 € (before Corporation Tax) |
VAT itemised on invoice | No | Yes |
The difference in VAT paid to the tax authorities is significant: 347 euros vs 1,680 euros. That is why REBU is so advantageous for buying and selling when you sell to private customers. But you can only use it when the requirements are met.
Now let us look at the same case but with a car you bought from a leasing company with a VAT invoice (6,000 € + 1,260 € VAT = 7,260 €, and you deducted the 1,260 €).
Item | Sale to private customer (standard VAT, not REBU) | Sale to company (standard VAT) |
|---|---|---|
Sale price | 9,680 € (8,000 + VAT) | 9,680 € (8,000 + VAT) |
VAT charged | 1,680 € | 1,680 € |
VAT incurred deducted on purchase | 1,260 € | 1,260 € |
Net VAT payable | 420 € | 420 € |
In this case, because you bought with VAT, you cannot apply REBU and the tax treatment is identical whoever you sell to.
When you cannot apply REBU even if you sell to a private customer
This is one of the points that causes the most confusion. It is not enough that the buyer is a private customer in order to apply REBU. The scheme depends on how you acquired the car, not on who you sell it to.
You cannot apply REBU if you bought the car with an invoice showing VAT separately and deducted it. This happens when you buy from leasing companies, from official dealerships that invoice you at the standard VAT rate, or from companies selling vehicles from their fleet with VAT.
You can apply REBU if you bought the car from a private customer (without a VAT invoice), from another dealership that also applied REBU, or from a company that sold it without charging VAT (for example, because the car was tied to an exempt activity).
The key is the origin of the purchase, not the destination of the sale. If you have doubts about a specific car, consult your tax adviser before issuing the invoice.
Intra-Community supplies and exports
If you sell to a customer in another EU country or outside it, the tax rules change again.
Sale to an EU company (intra-Community supply)
If the buyer is a company with a valid intra-Community VAT number (verifiable in the European Commission's VIES system), the transaction may be VAT-exempt. You issue an invoice without VAT, with the wording "Exempt intra-Community supply, Article 25 VAT Act", and the buying company self-assesses the VAT in its country.
Requirements for the exemption: the buyer must have an active intra-Community VAT number in VIES, the vehicle must physically leave Spain, and you must keep proof of transport (CMR, delivery note, transport documentation).
If you do not meet these requirements and the tax authorities detect it, they will demand the VAT not charged plus surcharges and interest.
Sale to an EU private customer
If the buyer is a private customer from another EU country, you apply Spanish VAT (21%) as in any domestic sale to a private customer. The private customer cannot deduct anything.
Export outside the EU
Exports to countries outside the EU are exempt from VAT. You issue an invoice without VAT with the export wording and keep the SAD (Single Administrative Document) as proof.
Simplified invoice vs full invoice: when to use each one
The regulations allow a simplified invoice (similar to a receipt) to be issued in sales to private customers when the amount does not exceed 400 euros. In practice, this rarely applies in car sales.
For all vehicle sales, the recommendation is to always issue a full invoice. This includes all the seller's and buyer's details, vehicle description (make, model, registration number, chassis number), taxable base, VAT (or REBU wording), and invoice date and number.
When the buyer is a company, a full invoice is mandatory without exception. When it is a private customer, it is not strictly mandatory if the amount is low, but in car sales it should always be a full invoice because of the traceability required by the DVLA and the tax authorities for these goods.
Common tax mistakes in dealerships
Applying REBU to a car bought with deductible VAT. This is the most serious mistake and the one that generates the most penalties. If you bought with a VAT invoice and deducted it, you must sell with standard VAT. Applying REBU in this situation is an irregularity that the tax authorities will detect by cross-checking data.
Not verifying the intra-Community VAT number on sales to EU companies. Selling without VAT to a company whose VAT number is not active in VIES forces you to pay the VAT that you did not charge. Always verify before issuing the invoice.
Not asking companies for full tax details. Without the correct tax ID, registered name and fiscal address, the invoice is not valid and the buyer cannot deduct. This creates complaints and loss of trust.
Confusing negative margin with REBU. If you sell a car for less than you paid for it (negative margin), there is no VAT to pay under REBU, but you must still record the transaction correctly. A negative REBU margin cannot be offset against other REBU transactions.
Not keeping transport documentation for intra-Community transactions. Without proof that the car left Spain, the VAT exemption is not valid. The tax authorities can claim the 21% years later.
How Dealcar simplifies invoicing
Correctly managing the tax treatment of each transaction requires knowing which scheme to apply, issuing the invoice in the correct format and keeping the right documentation. Doing it manually, transaction by transaction, is a constant source of errors.
Dealcar integrates features designed so the dealership does not have to worry about these details.
Automatic application of the tax scheme. When registering a vehicle purchase, Dealcar identifies whether it was bought with or without VAT. When the time comes to sell, the platform automatically suggests whether REBU or standard VAT applies, reducing the risk of error.
Verifactu e-invoicing. Dealcar generates invoices compliant with Verifactu regulations, with all mandatory fields, the correct tax scheme and the traceability required by the tax authorities.
Margin control by transaction. Each sales file shows the real margin, the VAT to be paid and the net profit. You have full visibility over the profitability of each transaction before closing it.
Documented files. All documentation for each purchase and sale (purchase invoice, sales invoice, contract, DVLA report) is centralised in the vehicle file, ready for any tax authority request.
If you want to see how it works, request a Dealcar demo.
Frequently asked questions
Can I choose between applying REBU or standard VAT?
It is not a free choice. If you bought the car without the right to deduct VAT (from a private customer or under REBU), you must apply REBU when you sell. If you bought it with deductible VAT, you must apply standard VAT. The scheme depends on the origin, not on your preference.
What happens if a company buys a car from me and I applied REBU?
If you sell under REBU, the invoice does not itemise VAT. The buying company will not be able to deduct anything. Some professional buyers will ask you to invoice with standard VAT so they can deduct it. You can only do that if the car was acquired with deductible VAT. If not, you must apply REBU even if the buyer is a company.
Are the penalties for incorrectly applying REBU serious?
Yes. The tax authorities can claim the unpaid VAT plus surcharges ranging from 1% to 100% of the amount, depending on severity and intent. In addition, if a pattern of irregularities is detected, it may lead to a full audit of the business.
How do I invoice if I sell a car to a sole trader who uses it for their business?
The same as to a company: invoice with VAT itemised at 21% (provided the car was bought with deductible VAT). The sole trader will be able to deduct the VAT to the extent that the car is used for their professional activity.
What happens if I sell a car and the margin is zero or negative?
If you apply REBU and the margin is zero or negative, there is no VAT to pay on that transaction. You must still record the invoice and the transaction. You cannot offset negative REBU margins against positive margins from other transactions.
