REBU in the buying and selling of used cars: Complete guide
1 Mar 2024
The Special Scheme for Used Goods (REBU) is a tax system applied in the sector of buying and selling second-hand vehicles in Spain. This scheme allows for the avoidance of double taxation of VAT and offers advantages for both sellers and buyers of used cars.
In this comprehensive guide on REBU, we will explain in detail what it consists of, its advantages, obligations, VAT calculation, and we will resolve the most frequent questions about its application in the second-hand vehicle market.
What is REBU (Special Scheme for Used Goods)?
The Special Scheme for Used Goods (REBU) is a tax system of voluntary nature applied to the deliveries of used goods made by businesses or self-employed individuals acting on their own behalf.
This scheme is outlined in Article 135 of the Law 37/1992 on VAT, and its objective is to prevent double taxation that would occur by applying the general VAT regime on goods that have already borne that tax.
REBU particularly applies to the buying and selling of second-hand vehicles, allowing sellers to tax only the profit margin obtained from each transaction.
What are the requirements to apply REBU in the sale of cars?
To be eligible for the special scheme for used goods when selling a second-hand car, the following requirements must be met:
Acquire vehicles from non-professional taxable persons: individuals or companies that have not previously deducted VAT.
Act in their own name: does not apply to intermediaries or commission agents.
Be registered in the special scheme for used goods with the tax authorities.
Keep a registration book of operations covered by REBU
To buy second-hand vehicles under REBU, merchants must record each transaction in detail.
Additionally, the application of REBU is voluntary, so the seller can choose to waive this special scheme if they deem appropriate.
What advantages does the Special Scheme for Used Goods offer in the buying and selling of cars?
The main advantages of applying REBU to the buying and selling of used cars are:
Prevents double taxation of VAT: the seller only taxes the margin obtained, not the total value of the vehicle.
Allows for maintaining competitive prices: by paying less tax, better prices can be offered.
Simplifies tax obligations: the VAT calculation is simpler since only the margin is considered.
Reduces the tax burden on transactions involving second-hand vehicles.
In short, REBU benefits both sellers and buyers of used cars by reducing the tax costs of these transactions.
Obligations in invoicing and registration
Sellers under the special scheme for used goods must comply with certain formal obligations:
Invoicing
Do not separate the VAT amount: it is included in the total price.
Indicate on the invoice that the "Special scheme for used goods" applies.
Issue a signed assignment document in sales between individuals.
Registration
Register in the special scheme when starting the activity.
Keep a REBU registration book to record all transactions.
Keep purchase invoices for 5 years.
Failure to comply with these formal obligations can result in tax penalties, so it is essential to adhere to the regulations when applying this special tax regime.
VAT calculation with REBU
The main feature of REBU is that the taxable base for VAT calculation is not the total selling price of the vehicle, but only the gross margin obtained.
There are two methods to determine the taxable base in the used goods regime. To avoid errors and save time, our revolutionary dealership management platform, Dealcar, performs these calculations automatically and reflects them in the invoicing.
Operation by operation
The gross margin is calculated for each transaction using the formula:
Taxable base = Selling price - Purchase price
The corresponding VAT rate, currently 21%, is applied to that margin.
Global determination
It is calculated quarterly or annually considering the gross margin of all transactions collectively. It can only be applied to certain products.
In any case, VAT with REBU only taxes the seller's margin, not the total value of the car. This represents a significant tax saving.
VAT deduction in REBU operations
Although in general the VAT paid when acquiring vehicles is not deductible with REBU, the VAT on the following items can be deducted:
Services received for repairs or maintenance
Replacement parts incorporated into vehicles
Rental of premises or machinery related to the activity
Therefore, while the VAT paid when acquiring a used car cannot be deducted, there are certain deductible items that reduce the tax bill.
Practical example of selling a car with REBU
Let's look at a simple example to understand how REBU is applied in the sale of a second-hand car:
A dealership buys a used vehicle for €8,000 (without VAT) from an individual and subsequently sells it for €10,000 plus VAT. What is the taxable base and VAT under the used goods regime?
Solution:
Purchase price: €8,000
Selling price: €10,000
Buying and selling margin: €10,000 - €8,000 = €2,000
Taxable base = : €2,000/1.21 = €1,652.90
REBU = €2,000 - €1,652.90 = €347.10
Thus, the dealership would only pay VAT on €347.10 corresponding to its profit margin, not on the total value of the vehicle.
Frequently asked questions about REBU
What happens if I sell a car at a loss with REBU?
In that case, the taxable base is 0. The negative margin is added to the purchase price of the next transaction.
Can all the VAT incurred with REBU be deducted?
No. Only the VAT on certain services/goods can be deducted, not the VAT paid when acquiring the vehicles.
What penalties exist for failing to comply with REBU obligations?
Mainly tax fines for not properly keeping the registration book, not informing on the invoice, or accounting irregularities.
Conclusion
In conclusion, the Special Scheme for Used Goods is very beneficial for companies and self-employed individuals engaged in the buying and selling of second-hand vehicles, as it allows for significant savings on their tax bill.
However, to properly apply REBU, it is necessary to comply with certain requirements and formal obligations set out in the current regulations. Additionally, the VAT calculation is performed in a special way considering only the margin obtained in the transactions.
We hope that this comprehensive guide has resolved your questions about the practical application of the used goods regime in the second-hand car market.
