Marginal VAT vs Standard VAT: What B2B Phone Resellers Need to Know

Every wholesale used phone invoice you receive carries one of two VAT treatments, and the difference between them changes your landed cost more than most resellers realize before they've compared the numbers directly. Standard VAT and the EU Margin Scheme aren't just two lines of invoice wording — they determine how much tax sits inside the price you pay, whether you can reclaim any of it, and what you're legally allowed to do when you resell the unit. This guide lays out exactly how the two schemes differ mechanically, walks through a worked calculation, and covers where resellers most often get the distinction wrong.

How the Two VAT Schemes Actually Work

Under standard VAT, tax is charged on the full sale price of the phone. If a supplier sells a unit for €200 and the local VAT rate is 21%, €42 of that price is VAT, charged on top of and separate from the net price. A VAT-registered buyer can typically reclaim that €42 as input VAT.

Under the Margin Scheme (Article 315 of EU VAT Directive 2006/112/EC), VAT is charged only on the dealer's margin — the difference between what the dealer paid for the unit and what they sell it for. If a dealer bought a used iPhone for €150 and sells it for €200, VAT applies only to the €50 margin, not the full €200. The invoice shows no separate VAT line; it simply states the sale is made under the Margin Scheme.

The Margin Scheme exists specifically for second-hand goods, because taxing the full price of an already-once-taxed used item at every resale would compound VAT across the supply chain in a way that doesn't happen with new goods. Used phones are a textbook case for the scheme.

A Worked Margin Calculation

Numbers make the gap concrete. Take a Grade A iPhone 13 that a wholesaler buys for €180 and resells for €230, in a market with 21% VAT.

• Under standard VAT: VAT is calculated on the full €230 sale price. VAT due = €230 × 21% = €48.30 (assuming the net price before VAT is back-calculated accordingly, the tax burden scales with the full transaction value).
• Under the Margin Scheme: VAT is calculated only on the €50 margin. VAT due = €50 × 21⁄121 ≈ €8.68.

The Margin Scheme VAT liability is roughly one-fifth of the standard VAT liability on the same transaction. That difference is why Margin Scheme stock is consistently priced more competitively at wholesale — the tax embedded in the price is a fraction of what standard VAT stock carries, without any change to the underlying phone, grade, or condition.

Invoicing Differences You'll See

The two schemes produce visibly different paperwork, and knowing what to expect prevents costly mistakes:

• Standard VAT invoices show a net price, a VAT rate, and a VAT amount as separate line items, with the VAT amount reclaimable by a VAT-registered buyer.
• Margin Scheme invoices show a single total price with wording such as "Margin scheme — second-hand goods" and no separate VAT breakdown. There is no VAT to reclaim on these invoices — the amount doesn't exist as a distinct line because it was never charged that way.
• Mixing the two in your own resale invoicing means tracking, unit by unit, which scheme applies to which purchase, and issuing the matching invoice type on resale. Standard VAT stock cannot be resold under the Margin Scheme, and vice versa.

When Standard VAT Stock Still Makes Sense

For the large majority of used phone resellers — buying to resell on Back Market, eBay, or through B2B distribution to other resellers — Margin Scheme stock is the better default, since almost none of these buyers need to reclaim VAT downstream. But standard VAT stock has a narrow use case: when your buyer is a VAT-registered business that specifically needs to reclaim input VAT, such as a corporate leasing program or an IT asset disposition buyer with its own VAT reporting requirements. In those cases, standard VAT invoicing is the only option that satisfies the buyer's own compliance needs, even though it results in a higher pre-tax cost.

Cross-Border B2B Sales Under Each Scheme

For most European resellers buying from a supplier in another member state, the Margin Scheme simplifies things rather than complicating them. Under Article 315, the Margin Scheme takes precedence over standard intra-community supply rules — a Margin Scheme sale from an Estonian wholesaler to a German reseller stays under the Margin Scheme. No German VAT is charged, and the German buyer doesn't reclaim anything, because there's nothing separate to reclaim. This is one reason Margin Scheme sourcing is popular for cross-border B2B buyers: it removes the reverse-charge and VAT registration complexity that standard cross-border B2B sales typically require. For a deeper look at how the scheme behaves across specific EU markets, see our Marginal VAT guide for used phones in Europe.

Getting the Scheme Right Before You Order

The practical takeaway for a new B2B buyer is simple: ask your supplier which scheme their stock is sold under, and get it confirmed in writing before placing a first order. A 100% Margin Scheme supplier removes the guesswork entirely — every invoice follows the same format, every unit carries the same VAT treatment, and your own resale invoicing stays consistent. This also interacts directly with how you plan order volume and pricing tiers; see our MOQ and pricing tiers guide for how VAT scheme and volume pricing combine to set your actual landed cost.

Current Margin Scheme stock by model and grade is available at shop.smartchoice.ee/stock.

FAQ

What's the core difference between Marginal VAT and standard VAT for used phones?

Standard VAT taxes the full invoice value of the sale. The Margin Scheme taxes only the dealer's profit margin — sale price minus purchase price. On used phones, where the margin is a small fraction of the unit's value, this produces a dramatically lower VAT bill under the Margin Scheme.

Can a reseller choose which scheme to invoice under?

Not freely. Whether you can apply the Margin Scheme depends on how you acquired the stock. If you bought from a Margin Scheme dealer, a private individual, or another qualifying source, you can resell under the Margin Scheme. If you bought stock with standard VAT charged and deducted, that stock must be resold under standard VAT.

Does buying from a 100% Margin Scheme supplier simplify accounting?

Yes. When every unit in your stock arrives under the Margin Scheme, every resale invoice follows the same format and every unit's VAT treatment is identical. Mixed-origin stock forces you to track scheme eligibility per unit and issue two different invoice types, which is where most bookkeeping errors happen.

Which scheme results in a lower final price for my customer?

Margin Scheme, in almost every case. Because VAT applies only to the margin rather than the full price, the tax component embedded in the final invoice is smaller. This is the main reason Margin Scheme stock is priced more competitively than equivalent standard-VAT stock at the same grade.

Is it ever better to buy standard-VAT stock as a reseller?

Occasionally — if a VAT-registered buyer downstream wants to reclaim input VAT, only standard VAT stock allows that. This is rare in the used consumer phone market, where nearly all buyers are resellers who will apply the Margin Scheme onward, but it does happen with corporate refurbishment or leasing buyers.