VAT margin scheme: an unopened bottle or a sealed sneaker box is still a second-hand good

The question and the answer

The tax authorities were asked a specific question: does an item for which a consumer has definitively borne the VAT, and which they have never used, keeping it in its original packaging, remain a second-hand good within the meaning of Article 98 A, I of Annex III to the French General Tax Code (CGI)?

Yes. And the fact that the item "may or may not have been physically used in accordance with its original purpose" is irrelevant to its classification.

The reasoning adopted

The formal ruling proceeds in two steps.

It first recalls the functional criterion established by the Court of Justice: a second-hand good is one that has retained the functionalities it possessed when new and can, therefore, be reused as is or after repair (CJEU, Jan. 18, 2017, case C-471/15, Sjelle Autogenbrug). The text says nothing about past usage: it focuses on the suitability for reuse, which is a prospective criterion.

It then reasons "in light of the objective pursued by the special scheme."

A second-hand good is any item acquired from a person who:

• on the one hand, has definitively borne the VAT
• and, on the other hand, carries out sales whose scale and frequency remain low enough not to confer the status of a taxable person.

Taxing the resale of such an item on its total price would lead to double taxation, which is precisely what the scheme under Article 297 A of the CGI is intended to avoid.

This is exactly the philosophy that also justifies the margin scheme in real estate.

Two examples accompany the answer:

• a pair of new shoes that have never been worn, kept in their original box and resold by an individual to a taxable reseller, falls under the margin scheme because the VAT not deducted by the individual is trapped in the price;
• bottles of wine purchased from a merchant by an individual and resold "in their original condition."

In both cases, the margin scheme applies.

What the ruling provides

It neutralizes a criterion of effective use that tax authorities derived from § 15 of the BOI-TVA-SECT-90-10 guidelines. This paragraph states that second-hand goods are those that "have been used" and that an item "that a company acquired new and resold without having actually used it" is not second-hand (Council of State, Feb. 24, 1964, No. 53383; Council of State, July 7, 1972, No. 78066).

The rule was intended for a narrow scenario: to prevent a taxable person remaining in the deduction chain from passing off stock they never consumed as second-hand, as the cases judged in 1964 and 1972 involved industrial scrap. When extended to acquisitions from a final consumer, it produced the opposite effect of what the regime intended.

The ruling puts an end to this extension. It also ends an insoluble evidentiary debate: proving that an item has been used is physically impossible for a card in a case, a pair of shoes in cellophane, or an unopened bottle.

Impact by market

Sneakers and deadstock

This is the first example covered by the ruling. Pairs that have never been worn, resold in their boxes several seasons after their release, qualify for the margin scheme when purchased from an individual. This solution applies to all ready-to-wear clothing and leather goods that were purchased but never used, as well as watches.

Trading cards

The market was facing a situation of uncertainty.

The BOFiP update of March 20, 2024, expressly excluded trading cards from the category of collector's items, including cards and sets graded by French or foreign certification companies (the administration cites "Pokémon" cards) for failing to meet EU criteria (BOI-TVA-SECT-90-10, § 360).

This left the classification of second-hand goods, which the BOFiP implicitly refused in the case of an encapsulated card that, by definition, had never been played with.

Because they were ineligible for classification as either second-hand or collector's items, taxation on the total price was often upheld by local authorities.

This new analysis secures the margin scheme for the sector, including for sealed products: booster packs, sets, blister-packed video games, and figurines in their original packaging.

Wine and spirits

This is the second example covered by the ruling, and the sector where the administrative position had thrived before the courts: the Paris Administrative Court of Appeal (July 20, 2022) and then the Bordeaux Administrative Court (May 30, 2024) had denied bottles the dual classification of second-hand good and collector's item.

The ruling takes the opposite view on the first point. The usage criterion was all the more paradoxical because usage destroys the item: requiring a bottle to have been opened was equivalent to requiring that it no longer exist.

Conditions that remain

The ruling nonetheless reiterates that the margin scheme is strictly applied. It is necessary to ensure that the conditions

The status of the supplier : the item must have been supplied by a non-taxable person or by someone not authorized to charge tax. Purchases from a professional who has charged VAT are excluded from this scheme.

The justification of the purchase price : its absence generally leads to the supply being taxed on the total price (BOI-TVA-SECT-90-20-20). This is now the ground on which the debate during audits will shift, rather than the usage of the item, which highlights the importance of purchase slips or registers for items bought from private individuals. On this point, the Council of State has ruled that the absence of the mandatory information required by Article 242 nonies A of Annex II to the French General Tax Code (CGI) on the purchase invoice does not prevent the application of the scheme, provided that the substantive conditions of Article 297 A are met (CE, Dec. 12, 2023, No. 466239, Sté Lefebvre Petrenko, mentioned in the tables).

For ongoing tax adjustments, the guarantee provided by Article L. 80 A of the Tax Procedures Code (LPF) requires that the invoked interpretation was in effect at the time of the transactions: a tax ruling published in 2026 does not retroactively cover audited fiscal years. The effective argument therefore remains one of positive law, as Article 98 A has never made the classification of second-hand goods conditional upon physical usage, a fact which the tax ruling confirms.

A financial stake that justifies a claim

Operators who have paid tax on the total price should precisely calculate the cost of the abandoned position, as the difference is not marginal and follows a simple rule: the excess tax corresponds exactly to one-sixth of the purchase price, which is the residual VAT that the margin scheme was intended to neutralize.

For a bottle purchased for €300 from a private individual and resold for €600 including tax.

Before the tax ruling, taxation on the total price resulted in VAT of €100 (€500 excluding tax + €100 VAT).

Under the margin scheme, the tax base is reduced to €300, resulting in VAT of €50. The difference is €50 per bottle, and €5,000 on a lot of one hundred bottles.

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For a graded card purchased for €1,200 and resold for €2,000 including tax: the VAT drops from €333 to €133, meaning €200 in VAT to be reclaimed per card.

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Filing a formal claim requires following a specific procedure and adhering to certain deadlines. Our firm is at your disposal to assist you with this matter.

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