REBU in the buying and selling of used cars: Complete guide

Index

1. What REBU is and what it is used for

2. When you can apply REBU and when you cannot

3. How to calculate VAT with REBU: transaction-by-transaction method

4. Global REBU: quarterly calculation for high-volume dealerships

5. Formal obligations: invoice, registry book and tax return

6. Which VAT you can deduct with REBU

7. Full numerical example: REBU vs. general scheme

8. Frequent mistakes when applying REBU and their consequences

9. Frequently asked questions

What REBU is and what it is used for

The Special Scheme for Used Goods (REBU, by its Spanish acronym) is a tax mechanism designed to avoid double VAT taxation on the purchase and sale of goods that have already circulated on the market. It is regulated by Article 135 of Spanish VAT Law 37/1992 and is voluntary for second-hand vehicle dealerships and car traders.

The logic is simple. When a private individual sells their car, they do not charge VAT because they are not a business. If the dealership bought that car and sold it applying the general VAT scheme (21% on the total sale price), it would be paying tax that the market already bore in its day, when the car was new. REBU corrects this: it allows the dealership to pay tax solely on the margin obtained from the transaction, not on the total value of the vehicle.

For a dealership that moves dozens of cars a month, the difference between paying tax on the total price and paying tax only on the margin can mean thousands of pounds annually in VAT to be paid. REBU is not an exceptional tax benefit: it is the logical scheme for an activity in which the value of the good was already taxed when it left the factory.

If you are already familiar with the general functioning of REBU, also check out the special cases: 4% VAT for reduced mobility, negative margin and exports.

When you can apply REBU and when you cannot

Not all second-hand car sales transactions can qualify for REBU. The fundamental requirement is the origin of the vehicle: how you acquired it.

You can apply REBU when you have bought the car from:

• A private individual (with no VAT on the purchase transaction)

• A company or self-employed person who did not have the right to deduct VAT on the vehicle (for example, a company that used it for exempt activities)

• Another dealership that sold to you under REBU (with no itemised VAT on its invoice)

You cannot apply REBU when you have bought the car from:

• A leasing or fleet company that issued you an invoice with itemised VAT

• Another dealership under the general scheme (with itemised VAT)

• An intra-Community supplier with deductible VAT

• An auction where the seller invoiced with VAT

The rule of thumb: if there is itemised VAT on the purchase invoice and you have deducted it, you must apply the general scheme, not REBU, on resale. If there is no itemised VAT on the purchase (or the VAT was not deductible), apply REBU.

This means that both schemes can coexist in the same dealership, depending on how each vehicle was purchased. It is not the scheme of the business, but the scheme of each individual transaction.

To learn more about when you should issue an invoice with itemised VAT and when you should not, you can consult our guide on when to invoice with VAT and when to apply REBU.

How to calculate VAT with REBU: transaction-by-transaction method

The most common method, and the one that best suits dealerships with varied stock, is the transaction-by-transaction calculation. VAT is calculated individually for each vehicle at the time of sale.

Base formula:

Gross margin = Sale price (VAT included) − Purchase price
Taxable base = Gross margin ÷ 1.21
VAT to be paid = Taxable base × 0.21

Example:

A dealership buys a Volkswagen Golf from a private individual for €9,500 and sells it for €12,000.

The dealership pays €433.88 in VAT to the Spanish Tax Agency (AEAT) for this transaction, not 21% on the €12,000 (which would be €2,479). The difference is over €2,000 in a single transaction.

Important: if the margin is negative (you sell below the purchase price), the taxable base is zero. No VAT is paid, but no credit to be offset in the next transaction is generated under the individual method either.

For the details of the REBU margin calculation with a numerical example and the expenses that reduce it, read also REBU: special cases and reduced VAT.

Global REBU: quarterly calculation for high-volume dealerships

There is a second calculation method: global REBU or by period, which allows the margin of all REBU transactions for the quarter to be calculated jointly.

Formula:

Global margin = (Total REBU sales for the quarter) − (Total purchases of cars sold under REBU in that quarter)
Taxable base = Global margin ÷ 1.21
VAT to be paid = Taxable base × 0.21

The advantage of the global REBU is that negative margins from some transactions offset positive margins from others. If in a quarter you sell ten cars with an average margin of €1,800 but one with losses of €800, the VAT is calculated on the net margin for the period, not transaction by transaction.

When global REBU is suitable:

• Dealerships with a high volume of transactions (more than 15-20 cars monthly under REBU)

• Businesses with variable margins where some vehicles are sold at a loss

Important limitation: global REBU can only be applied to second-hand movable goods bought from private individuals within the territory of application of Spanish VAT. It cannot be combined in the same period with the transaction-by-transaction method for the same categories of goods. Once the global method is chosen for a category, it must be maintained for at least one calendar year.

Formal obligations: invoice, registry book and tax return

Applying REBU correctly involves complying with specific formal requirements. An error here can invalidate the scheme in an audit.

The invoice in REBU transactions

The sales invoice under REBU has specific characteristics that distinguish it from an invoice under the general scheme:

• VAT is not itemised. The sale price is expressed as a single amount that includes the implicit VAT, but without showing it separately.

• Mandatory wording. The invoice must expressly indicate that the transaction is subject to REBU. The standard wording accepted by the AEAT is: "Régimen especial de los bienes usados. IVA incluido en el precio. Sin derecho a deducción."

• The buyer cannot deduct the VAT. This is a consequence of the scheme, not an error. If the buyer is a business and wants to deduct the VAT, you must sell to them under the general scheme, which implies that the purchase of the vehicle must also have been made with VAT.

Purchase document from a private individual

When you buy a car from a private individual, the individual cannot issue you an invoice (they are not a business). Instead, you must generate a purchase document or self-invoice proving the transaction. This document must include: seller's details, vehicle details (registration plate, chassis number), purchase price and date. Both parties sign it.

This document is what proves to the tax authorities that the transaction can qualify for REBU.

The REBU registry book

You are obliged to keep a specific registry book for transactions subject to REBU, separate from the general VAT registry book. It must record for each transaction:

• Transaction number

• Purchase date and sale date

• Description of the good (make, model, registration plate, chassis number)

• Purchase price and sale price

• Margin obtained and corresponding VAT amount

The preservation of the registry book and supporting documents is mandatory for at least four years (the general limitation period for taxes). In the event of an audit, it is the document that proves you have applied the scheme correctly in each transaction.

VAT return (Form 303)

The VAT calculated under REBU is settled together with the VAT of the rest of the transactions on Form 303 (quarterly or monthly depending on the taxpayer's scheme). The specific boxes for REBU transactions are box 11 (taxable base) and box 12 (accrued tax). If you apply the global method, the calculation is consolidated at the end of the period before transferring it to the form.

To understand how these invoices fit into the complete invoicing process of a dealership, we recommend the guide on how to correctly issue invoices in car sales.

Which VAT you can deduct with REBU

One of the most common misconceptions about REBU is assuming that no VAT can be deducted. This is incorrect. What you cannot deduct is the input VAT on the acquisition of the vehicle (although in most purchases from private individuals there is no VAT to deduct). But you can deduct VAT on:

• Repairs and workshop work carried out on the vehicles

• Spare parts and materials incorporated into the vehicle during preparation

• Management, appraisal or inspection services (MOT, DGT reports)

• Rent of the premises or warehouse where you carry out the activity

• Office supplies, utility bills and other general business expenses

The key is that these expenses are related to the business activity in general, not to the acquisition of the specific good being resold. REBU limits the deduction of the VAT on the purchase of the vehicle, not the VAT on the operating expenses of the business.

Full numerical example: REBU vs. general scheme

To make the economic impact of the scheme clear, we compare the same transaction under two scenarios.

Transaction: Purchase of a car from a private individual for €14,000 and sale to a final customer for €17,500.

In this example, under REBU the dealership pays €607.44 to the AEAT. Under the general scheme, it would pay €3,675, although it could deduct the input VAT on the purchase if it had bought it from a supplier who invoiced it with VAT. For a purchase from a private individual (with no deductible VAT), REBU represents a direct saving of over €3,000 in this specific example.

The impact on the buyer is also relevant: if the client is a private individual, under REBU they cannot deduct any VAT (they do not see it itemised). If it is a company that wants to deduct VAT, it has to buy from a dealership that sells under the general scheme. To see how this distinction affects corporate buyers, you can review our guide on when to invoice with VAT and when to apply REBU.

Frequent mistakes when applying REBU and their consequences

Mistakes in the application of REBU are not just accounting errors: they can lead to penalties of between 50% and 150% of the unpaid amount, plus late payment interest. These are the ones that appear most frequently in audits:

Applying REBU to transactions that do not meet the requirements. Buying from a leasing company with deductible VAT and selling under REBU is the most serious mistake. The AEAT considers it VAT fraud. The solution is to always check the purchase invoice before deciding on the sales scheme.

Calculating the margin on the sale price without VAT. Under REBU the sale price includes VAT, and the taxable base is calculated by dividing the margin by 1.21 (not multiplying the margin directly by 0.21). Applying 21% directly to the margin means paying more VAT than necessary.

Issuing the invoice with itemised VAT in REBU transactions. If you itemise VAT on a REBU invoice, the document is tax-incorrect. Furthermore, the buyer may try to deduct it, which generates an additional problem in their tax return.

Not including the mandatory wording on the invoice. An invoice without the REBU clause is an incomplete invoice according to regulations. In an audit, the systematic absence of this wording can lead the AEAT to consider that the scheme has not been correctly applied.

Not keeping the registry book or keeping it incomplete. Without a registry book, you cannot prove that each transaction met the requirements of REBU. The Tax Agency can recalculate the entire settlement applying the general scheme, with the cost that this implies.

Confusing REBU with ITP. ITP (Property Transfer Tax) is paid by the buyer of the vehicle, not the dealership. It is a completely different tax to REBU, which is a VAT scheme for the professional seller. If you have questions about the taxation of each party in the sale, we recommend the guide on what is the ITP on the sale of cars.

For a full review of the most common mistakes when applying REBU in dealerships and how to correct them, you can consult the specific article on common mistakes with REBU in dealerships.

More than 750 dealerships already use Dealcar to manage their daily operations

Applying REBU correctly requires each transaction to be documented: purchase price, sale price, origin of the vehicle, correctly issued invoice, updated registry book. When you manage twenty or thirty cars a month, doing this manually is a constant source of errors.

Dealcar centralises stock management, invoicing and the recording of each transaction in a single platform. You can generate purchase documents from private individuals, issue invoices under REBU with the mandatory wording included, keep the registry book automatically and have everything available for any tax audit.

If you want to see how it works, you can book a free demo at dealcar.io.

Frequently asked questions

Is REBU mandatory or can I choose not to apply it?

REBU is voluntary. You can opt out of it and apply the general VAT scheme even in transactions that would meet the requirements. However, in practice, opting out only makes sense if your buyer is a company that needs to deduct VAT and you are interested in offering them that benefit. In all other cases, REBU is tax-wise more advantageous for the dealership.

Can I apply REBU and the general scheme in the same quarter?

Yes. The scheme is determined transaction by transaction (or by the global method if you have chosen it). In the same quarter you can have REBU invoices (cars bought from private individuals) and invoices under the general scheme (cars bought from companies with VAT). Each transaction follows its scheme and both are consolidated in the quarterly Form 303.

What happens if I sell a car at a loss under REBU?

With the transaction-by-transaction method, if the sale price is lower than the purchase price, the margin is negative and the taxable base is zero. You do not pay VAT on that transaction, but you cannot offset that loss in future individual transactions either. With the global method, losses from some transactions do reduce the total margin for the quarter and therefore the VAT to be paid.

How long do I have to keep the REBU registry book?

The general period is four years (limitation period of tax obligations), but in practice it is recommended to keep it for at least six years to cover potential audits from previous years. Purchase documents from private individuals and sales invoices must be kept for the same period.

Can a private buyer claim a VAT refund in a REBU transaction?

No. In a REBU transaction, the private buyer has no right to claim a VAT refund, because the tax is included in the price but is not itemised on the invoice. The scheme does not allow the deduction of VAT by the buyer, whether a private individual or a company. If the corporate buyer needs to deduct VAT, the transaction must be carried out under the general scheme, which requires the original purchase of the vehicle to also have had deductible VAT.