The Court of Cassation confirmed that the burden of proof lies with the taxpayer to demonstrate good faith when the Financial Administration disputes the undue use of the VAT margin regime. The margin regime is a special and optional VAT regime applicable to the trade of used movable goods, art, antiques and collectibles, where VAT is calculated on the difference between the sale and purchase price. The Court clarified that this regime must be interpreted restrictively and applied rigorously as it constitutes a special regime favorable to the taxpayer. In the case at hand, the Court rejected the appeal filed by the car dealership, as it had purchased cars from rental or leasing companies, which use new vehicles excluded from the scope of the margin regime.
Source PwC
