Small business regulation – used goods dealer

According to the so-called small business regulation

the tax rate applicable to sales pursuant to § 1 para. 1 No. 1 UStG is not levied on domestic entrepreneurs if their “total turnover” (including turnover tax) in the previous calendar year did not exceed 17,500 euros and is not expected to exceed 50,000 euros in the current calendar year. Total revenue is measured on the basis of consideration received, but excluding certain tax-exempt sales and proceeds from the sale of fixed assets.

It is unclear how to proceed in the case of second-hand dealers who make use of the margin scheme according to § 25a UStG. In this form of taxation, the sales tax due is generally calculated on the basis of the difference between the sales price and the purchase price (so-called margin) and not on the total consideration received. However, the examination of whether a dealer in second-hand goods is eligible for the small business regulation has so far been carried out on the basis of the remuneration received.

In the opinion of the Federal Fiscal Court

On the other hand, higher-ranking EU law provides that in the case of dealers in second-hand goods, the small business thresholds are to be examined on the basis of the margins – which are significantly lower than the remuneration received. The court referred the issue to the European Court of Justice for clarification.

(Further comments & information on this can be found in our information letter 08/2018 under item 9.)