Comments on ECJ C-365/22: Out-of-service cars bought to be sold for parts may be subject to VAT margin scheme.

The VAT directive defines “second-hand goods” as movable tangible property that is suitable for further use as it is or after repair, and such goods are subject to the VAT margin scheme.
However, in a case where a taxpayer purchases vehicles taken out of service and resells them as vehicles sold “for parts,” the tax authorities and national court have ruled that these sales do not fall under the VAT margin scheme as the vehicles are not “suitable for further use.”
The Court’s reasoning is that if some of the parts that make up the car are “suitable for further use,” then the car is also considered a “second-hand good.”
The national court must evaluate whether the cars in question still have parts that retain their functionalities and were not sold solely for scrapping or transformation.
The evaluation should consider all objective circumstances of the sale, including the condition of the vehicle, the subject of the contract, the price, and the business of the buyer.
The purpose of the VAT directive is to avoid double taxation, and this interpretation is in line with that purpose.