Annual accounts for a car dealership: used cars, margin scheme and warranty

The short answer

A car dealership values every used car separately at purchase price plus repair and incidental costs, or at the lower net realisable value. Under the margin scheme the VAT is due on the profit margin; the net turnover is the selling price minus that VAT. For warranty you still have to honour after the sale, you form a provision. Demo cars and courtesy cars are fixed assets.

Updated 30 October 2026

Key facts

Inventory: every car its own cost

Cars are not like-for-like inventory: year of manufacture, mileage and condition differ per unit. You therefore value them separately (art. 2:385(1) DCC), in practice per licence plate. The cost is the purchase or trade-in price plus what you spend to make the car ready for sale: repair, parts, transport (art. 2:388(1) DCC). BPM belongs in the acquisition cost as soon as the registration certificate has been obtained (RJ 220.303). If the value falls, for example because of a model change or a long time in stock, you write the car down to the net realisable value (art. 2:387(2) DCC). You assess that per car: a gain on one does not offset the loss on another.

Demo cars, courtesy cars and the tow truck serve the business on a lasting basis. They are tangible fixed assets that you depreciate (art. 2:364(1) DCC).

Margin scheme: VAT on the margin, turnover without VAT

If you buy a car from a private individual, the purchase contains no deductible VAT. According to the Dutch Tax Administration you may then apply the margin scheme: you calculate the VAT on the difference between selling and purchase price, and you state no VAT on the invoice. With a negative margin no VAT is due, but you get nothing back either. If you buy for € 500 or more from one supplier, you prepare a purchase declaration.

The cost of the car does not change as a result. The net turnover does: that is the revenue after deduction of the taxes levied on turnover (art. 2:377(6) DCC). For a margin car you therefore deduct the margin VAT, for a VAT car the full 21%. Record per licence plate which regime applies, because one wrongly labelled car causes an error in the turnover and in the VAT liability.

Workshop and open work orders

Workshop revenue is earned when the repair has been carried out (RJ 270.115). If a car is still on the lift on 31 December, you include the hours spent and parts used as work in progress. If the work is finished but not yet invoiced, it is a receivable. Count the parts warehouse and write down parts for models you no longer service.

Warranty: provision or deferred revenue?

After the sale you remain obliged to repair defects. For an obligation that is probable at the balance sheet date, but whose size or timing is still uncertain, you form a provision (art. 2:374(1) DCC). RJ 270 distinguishes two cases (para. 109b):

• Warranty that only gives assurance that the car meets the agreement belongs to the sale. The expected costs are an expense in the year of sale and appear as a provision on the balance sheet.
• Warranty that the buyer can buy separately, such as an extended twelve-month package, is a separate performance. That part of the price is revenue over the term; what is still running on 31 December is an amount received in advance.

Worked example: trade-in, margin sale and warranty

Three items of a fictitious car dealership:

The write-down and the addition to the provision are expenses of the financial year. The € 420 is a debt to the Dutch Tax Administration and not turnover.

Mistakes that cost a car dealership money or profit

• Booking margin cars and VAT cars mixed up.
• Depreciating trade cars as if they were company cars, instead of writing them down one by one.
• Booking repair costs as general costs and not allocating them to the car.
• Taking warranty costs only when the claim comes in.

Garage as sole proprietorship, vof or BV

Many garage businesses are a sole proprietorship or vof; these generally do not fall under Title 9 and file no annual accounts. For the BV the trade says nothing about the size class: a dealer with expensive inventory reaches the thresholds sooner than a workshop. The size criteria and the audit requirement check show where your BV stands.

Jaarrekening.io at a car dealership in a BV

The inventory list per licence plate, the margin records and the warranty calculation you keep in your dealer or bookkeeping system. In Jaarrekening.io you import the trial balance as an XAF audit file or as an Excel or CSV file. The software prepares the publication version that belongs to your size class and sends nothing to the KVK.

Sources

• Art. 2:364 DCC: layout of the balance sheet
• Art. 2:374 DCC: provisions
• Art. 2:377 DCC: profit and loss account
• Art. 2:385 DCC: cost sequence
• Art. 2:387 DCC: impairments
• Art. 2:388 DCC: acquisition and production cost
• RJ-Uiting 2017-4: draft guideline 220 Inventories
• RJ-Uiting 2020-15: Guideline 270 The profit and loss account
• Dutch Tax Administration (Belastingdienst): margin scheme
• Dutch Tax Administration (Belastingdienst): calculating VAT on margin goods

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