Is Selling a Car Purchased Without Input Tax Subject to VAT?

A GbR consisting of tax consultants bought a car from a private person, i.e. without VAT for their company. After using it for some time, they wanted to sell it – again without VAT. The tax office disagreed and wanted to collect value added tax from the company. With the ruling of March 2, 2006, re V R 35/04 (published on July 19, 2006), the BHF put an end to that dispute.


The tax consulting company had purchased a car for one its members without collecting any input tax. The seller of the car was a wholesale business being allowed to use a special, differential tax rate (§25a UStG). Since the company did not have to pay VAT when purchasing the car, they were of the opinion that they now also did not have to sell with value added tax. The tax office considered this sale as taxable business income, and since no exceptions were applicable, this turnover was subject to taxation.
The BFH followed the opinion of the tax office. When removing the car from the company’s ownership, the only time this will be without VAT is when taking it into private property. Since all business turnover is subject to VAT, only conveying it from professional to private property will be without VAT. This is ruling case law of the BFH.
The suing tax consulting company wanted to apply a differential taxation pursuant to §25a I Nr. 1 UStG. To apply a differential taxation requires that a reseller sells certain objects. A “reseller” in terms of this law is anybody who professionally sells tangible movables. The tax consulting company does not professionally sell anything and surely not cars; this company renders its services in consulting on taxation matters. The plaintiff soldits car to a person outside the company. It only sold an item from its assets. Since this does not constitute the status of a reseller according to §25a UStG, this turnover is subject to the general rules on value added taxation.
This article shows that selling one‘s assets is always subject to VAT. The only time that selling assets will be without value added tax will be, when it is taken out of the company’s / professional’s assets.

Published on the old CMS: 2007/7/23
Read on the old CMS till November 2008: 130 reads

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