Margin scheme for second-hand goods in NoCFO

A reseller of second-hand goods can pay VAT on the profit margin only: the difference between the selling price and the purchase price. NoCFO has no dedicated VAT treatment for the margin scheme, but you can book it correctly with dedicated accounts, a split sale entry and one tag per item. Your VAT report and the return sent to OmaVero will then be correct.

This guide covers the item-by-item method, where the margin is calculated separately for each item sold. The examples use a used car, but the same setup works for any second-hand goods taxed at the general 25.5% rate.

When you can use the margin scheme

• The item was bought without VAT from a private person, a non-VAT-registered organisation, or another reseller using the margin scheme.

• The item was bought for resale.

• New goods, goods imported from outside the EU and intra-community acquisitions are not covered.

See the full conditions in the Finnish Tax Administration's guide Käytettyjen tavaroiden arvonlisäverotus (in Finnish).

Setting up accounts and tags

NoCFO's chart of accounts already includes accounts for margin-scheme sales and purchases. If you don't see them in your chart of accounts, enable them. Also create an inventory account for items not yet sold.

One tag per item. Create a tag for each item, for example a car's registration number ABC-123 or a device's serial number. Add the tag to every document for that item: the purchase, repair costs and the sale. The tag is how you find the purchase price when the item sells.

Keep the purchase agreement or receipt, showing the seller and the price, as the purchase document. It proves the item was bought without VAT.

Buying an item

Example: car ABC-123 is bought from a private person for €8,000. The purchase goes to the inventory account, not to expenses.

In NoCFO: match the bank transaction, change the account to 1532 and the VAT treatment to Tax exempt. Add the tag ABC-123 and attach the purchase agreement.

Selling an item

Book the sale on two sales lines: the purchase-price part without VAT, and the margin part with VAT. NoCFO then calculates VAT on the margin only. Also move the item's purchase price from the inventory account to the purchases account.

Example: car ABC-123 is sold for €10,510. The margin is 10,510 − 8,000 = €2,510. The VAT included in the margin is 2,510 × 25.5 / 125.5 = €510.

In NoCFO: add two lines on account 3410: €8,000 with VAT treatment Tax exempt, and €2,510 with Domestic taxable sales 25.5%. NoCFO takes the €510 VAT out of the second line automatically. Book the 4160 / 1532 transfer in the same document or as a separate journal entry on the same date, and add the tag ABC-123.

On the VAT report: the €510 appears on the line Tax on domestic sales 25.5%. Tax-exempt lines are not reported on the VAT return, which is correct for the margin scheme.

If the margin is zero or negative, book the whole selling price on 3410 as Tax exempt. No VAT is due, and the loss cannot be offset against other items' margins or carried forward.

Tip: put the purchase price, selling price and margin in the document description, for example "ABC-123: purchase 8,000, sale 10,510, margin 2,510". This keeps the item-by-item calculation on record.

Sales invoice

A margin-scheme invoice must not show a VAT rate or VAT amount. It must include the text "Voittomarginaalijärjestelmä – käytetyt tavarat" (in English: Margin scheme – second-hand goods).

1. Add one invoice row with the item's full price, VAT treatment Tax exempt and account 3410.

2. In the invoice's additional information, write: Voittomarginaalijärjestelmä – käytetyt tavarat. You can also add: The price contains no deductible VAT.

3. Don't use a 25.5% row or the Zero-rated sale treatment. A taxable row shows the VAT on the invoice, and a zero-rated sale prints "Veroton myynti" (tax-free sale) on the invoice, which is wrong for the margin scheme.

4. Once the invoice is booked, open the document it created and split the sales line as in the example above. With cash-basis bookkeeping, split the bank transaction's document instead.

If you also sell work with the item, such as installation, put the work on its own invoice row with 25.5% VAT.

Repairs and other costs

Book repairs, new spare parts, transport and inspections as normal costs, and deduct their VAT as usual. Add the item's tag to them. Costs are not added to the purchase price, so they don't reduce the VAT on the margin.

Checklist before the VAT return

• Every item sold in the period has a sale document with the split lines and its tag.

• The period's total on account 4160 equals the purchase prices of the items sold.

• The balance of account 1532 equals the purchase prices of the items still in stock.

• Items sold at a loss have no VAT line.

• Sales invoices carry the margin-scheme text and show no VAT.

Using Luca

Luca, AI CFO, can do most of the manual work. Luca finds the purchase price by tag, calculates the margin, books the split sale, creates the sales invoice and checks the period's entries. Luca saves changes only after you approve them.

1. Tell Luca about your business. An admin can add a description under Settings → Luca → Settings → Business profile. Luca uses it as background in every conversation. Example:

We sell second-hand goods under the margin scheme (item-by-item margin, VAT 25.5%). Accounts: 1532 inventory, 3410 sales, 4160 purchases. Each item has its own tag. A sale is booked on two 3410 lines: the purchase-price part as tax exempt and the margin part as domestic taxable sales 25.5%, plus a 4160 / 1532 transfer at the purchase price. If the margin is zero or negative, the whole sale is tax exempt. The sales invoice has one tax-exempt row and the text "Voittomarginaalijärjestelmä – käytetyt tavarat".

2. Ask Luca to do the bookkeeping. Examples:

• Purchase: "Book the purchase of a margin-scheme car: ABC-123, bought from a private person for €8,000 on 15 September 2026. Create the tag ABC-123 and book the purchase to account 1532 as tax exempt."

• Sale: "Car ABC-123 was sold for €10,510. Find the purchase price from the documents tagged ABC-123, show me the margin and VAT calculation, and book the sale following our margin-scheme instructions."

• Invoice: "Create a sales invoice for car ABC-123 at €10,510 with one tax-exempt row and the margin-scheme text. Don't send it. Then fix the document the invoice created, following our instructions."

• Check: "Run the margin-scheme check for September: are any sales missing a tag, the 4160/1532 transfer or the VAT line, and does the balance of 1532 match the purchase prices of the items in stock?"

Check the numbers before approving: the purchase price Luca found, the margin, and the VAT (margin × 25.5 / 125.5).

Automatic bookkeeping does not recognise margin-scheme sales on its own. Bank transactions are booked as ordinary sales unless you handle them with Luca or by hand. That's why the checklist is worth running before every VAT return.

Limitations

• The aggregate method, where the margin is calculated for the whole VAT period and a negative margin is carried forward, is not supported. Track any negative margin carried forward outside NoCFO.

• Goods taxed at a reduced rate, such as used books (13.5%), need their own sales and purchase accounts.

• Art, collectibles and antiques have their own accounts in the chart of accounts: 3430 and 4180.