In this section:
Application: ImmoPlus
States :
The company ImmoPlus, specializing in the sale of renovated real estate, must calculate the VAT applicable on the margin made on its sales. The company recently sold an apartment for €320 including tax, knowing that the purchase price of this property was €000 and that it applies a VAT rate of 280% on the margin. In order to plan its finances, ImmoPlus wishes to determine the amount of VAT to be paid and assess its net profitability.
Work to do :
- Calculate the margin made by ImmoPlus on the sale of this apartment.
- Determine the amount of VAT due on this margin.
- Calculate the selling price excluding tax of the apartment.
- Evaluate the net profitability as a percentage after paying the margin VAT.
- Analyze the impact of VAT on the margin on the final profitability of the sale.
Proposed correction:
-
The margin is calculated by subtracting the purchase price from the selling price including tax:
Margin = €320 – €000 = €280.
The margin achieved is €40. -
Margin VAT is determined by multiplying the margin by the VAT rate:
Margin VAT = €40 x 000% = €20.
The amount of VAT due is €8. -
The selling price excluding VAT is found by subtracting the VAT on margin from the selling price including VAT:
Selling price excluding VAT = €320 – €000 = €8.
The selling price excluding VAT is €312.
-
Net profitability is calculated as follows:
Net profitability (%) = ((Margin – VAT on margin) ÷ purchase price) x 100 = ((€40 – €000) ÷ €8) x 000 = 280%.
Net profitability after VAT is 11,43%. -
Margin VAT reduces available net margin. With an imposed VAT of €8, net profitability decreases, showing the importance of integrating taxes into profit analysis.
Formulas Used:
| Title | Formulas |
|---|---|
| Margin | Sale including VAT – Purchase price |
| Margin VAT | Margin x VAT rate |
| Selling price excluding tax | Sale including VAT – VAT on margin |
| Net profitability (%) | ((Margin – VAT on margin) ÷ Purchase price) x 100 |
Application: GreenHouse
States :
MaisonVerte, a green construction company, purchased a plot of land for €150 and carried out improvements for €000. It resells the land, with the improvements, for €50 including VAT. MaisonVerte must calculate the VAT on margin at a rate of 000%. The aim is to determine the amount of VAT to be paid and the impact of this VAT on the company's net profits.
Work to do :
- Identify the total cost of acquiring the land and improvements.
- Calculate the gross margin made on the sale.
- Estimate the VAT applicable on this margin.
- Calculate net profits after deducting margin VAT.
- Discuss how margin VAT affects MaisonVerte’s pricing strategy.
Proposed correction:
-
The total acquisition cost includes the purchase of the land and the works:
Total cost = €150 + €000 = €50.
The total cost is €200. -
The gross margin is determined as follows:
Gross margin = €250 – €000 = €200.
The gross margin is €50. -
Margin VAT is calculated by applying the 20% VAT rate to the gross margin:
Margin VAT = €50 x 000% = €20.
The margin VAT is €10.
-
Net profits are found by subtracting VAT from gross margin:
Net profits = €50 – €000 = €10.
Net profits after VAT amount to €40. -
The VAT on margin reduces net profit, which requires MaisonVerte to set its sales prices carefully to maintain satisfactory profitability, while remaining competitive on the market.
Formulas Used:
| Title | Formulas |
|---|---|
| Total cost | Land Price + Improvements |
| Gross margin | Sale including VAT – Total cost |
| Margin VAT | Gross margin x VAT rate |
| Net profits | Gross margin – VAT on margin |
Application: Résidentia
States :
The company Résidentia, specializing in the sale of individual houses, wants to calculate the VAT on the margin for a recent transaction where it resold a house for an amount of €380 including VAT after having purchased it for €000. The VAT rate on the margin applied is 350%. Résidentia needs to know the exact amount of VAT and how it affects its final margins.
Work to do :
- Determine the margin made by Résidentia on the sale of the house.
- Calculate the VAT to be paid on this margin.
- Evaluate the selling price excluding VAT after VAT.
- Calculate the net margin after taking into account VAT.
- Analyze how margin VAT influences the calculation of profit margins.
Proposed correction:
-
The margin achieved is calculated as follows: Margin = €380 – €000 = €350.
Résidentia made a margin of €30 on this sale. -
Margin VAT is calculated by multiplying the margin by the VAT rate:
VAT = €30 x 000% = €20.
Résidentia must pay €6 as margin VAT. -
The selling price excluding VAT is the selling price including VAT reduced by VAT:
Selling price excluding VAT = €380 – €000 = €6.
The selling price excluding VAT is €374.
-
The net margin after VAT is obtained by the formula:
Net margin = €30 – €000 = €6.
The net margin after VAT is €24. -
The calculation of VAT on margin reduces the net margin and impacts the final financial assessment. Résidentia must take this into account in its forecast estimates to remain profitable.
Formulas Used:
| Title | Formulas |
|---|---|
| Margin | Sale including VAT – Purchase price |
| Margin VAT | Margin x VAT rate |
| Selling price excluding tax | Sale including VAT – VAT on margin |
| Net margin | Margin – VAT on margin |
Application: HabitatEco
States :
HabitatEco, a company that renovates and resells apartments, recently made a sale for €450 including VAT. It had purchased this apartment for €000. The company uses a margin VAT rate of 420%. It would like to know how much VAT it has to pay and how this affects its profitability.
Work to do :
- Calculate the gross margin of the sale made by HabitatEco.
- Estimate the VAT associated with this margin.
- What is the value of the payment excluding VAT for the buyer?
- How much is left for HabitatEco after paying the margin VAT?
- Consider margin VAT in post-sale free cash flow analysis.
Proposed correction:
-
The gross margin is: Gross margin = €450 – €000 = €420.
HabitatEco has a gross margin of €30. -
The margin VAT, applied to the gross margin, is calculated as follows:
Margin VAT = €30 x 000% = €20.
VAT to be paid: €6. -
The price excluding VAT paid by the buyer is obtained by subtracting the VAT:
Price excluding VAT = €450 – €000 = €6.
The buyer pays €444 excluding VAT.
-
Margins after payment of VAT:
Remainder = €30 – €000 = €6.
HabitatEco has €24 left after VAT. -
Margin VAT reduces post-sale cash available but must still be managed in financial planning to avoid budgetary surprises.
Formulas Used:
| Title | Formulas |
|---|---|
| Gross margin | Sale including VAT – Purchase price |
| Margin VAT | Gross margin x VAT rate |
| Ht price | Sale including VAT – VAT on margin |
| Remainder after VAT | Gross margin – VAT on margin |
Application: UrbanDevelopment
States :
UrbainDeveloppement bought a building to renovate for €600 and resold it for €000 including tax. Committed to improving urban real estate assets, it must calculate the VAT on margin at the rate of 750% in order to understand the tax impact on its net profits.
Work to do :
- What is the margin made on this real estate transaction?
- Calculate the VAT to be paid on this margin according to the applicable rate.
- Deduct the price excluding VAT of the property sold.
- Calculate net profitability after VAT.
- Explain the effect of VAT on the valuation of post-sale profits.
Proposed correction:
-
The margin achieved is: Margin = €750 – €000 = €600.
The company achieves a margin of €150. -
The VAT on this margin is: VAT margin = €150 x 000% = €20.
The tax payment amounts to €30. -
The final price excluding VAT is obtained by: Price excluding VAT = €750 – €000 = €30.
The selling price excluding VAT is €720.
-
Net profitability calculated as follows: Net profitability = (Margin – VAT) ÷ Purchase price x 100 = (€150 – €000) ÷ €30 x 000 = 600%.
UrbainDeveloppement has a net profitability of 20% after VAT. -
The collection of VAT reduces after-sales margins, thus impacting the profit analysis. This forces the company to optimize its cost-income ratios.
Formulas Used:
| Title | Formulas |
|---|---|
| Margin | Sale including VAT – Purchase price |
| Margin VAT | Margin x VAT rate |
| Ht price | Sale including VAT – VAT on margin |
| Net profitability (%) | (Margin – VAT) ÷ Purchase price x 100 |
Application: EcoHabitat
States :
EcoHabitat, a player in the development of sustainable spaces, wants to understand the amount of VAT on the margin for a recent transaction. It sold a renovated plot of land for €500 including tax, after having acquired it for €000. EcoHabitat must integrate this tax burden into its financial statement by applying a VAT on margin of 450%.
Work to do :
- What is the margin achieved by EcoHabitat?
- What amount of VAT corresponds to this margin?
- Estimate the selling price excluding VAT after payment of VAT.
- What is the net margin after VAT?
- What influence does margin VAT have on EcoHabitat’s investment strategy?
Proposed correction:
-
The margin achieved by EcoHabitat is: Margin = €500 – €000 = €450.
The margin achieved is €50. -
The VAT on this margin is: VAT = €50 x 000% = €20.
EcoHabitat must pay €10 in VAT. -
The price excluding VAT is: Price excluding VAT = €500 – €000 = €10.
Hence a sale price excluding tax of €490.
-
The net margin after payment of VAT is calculated as follows:
Net margin = €50 – €000 = €10.
The net margin stands at €40. -
Margin VAT impacts available cash and requires EcoHabitat to carefully assess the return on investment for each project.
Formulas Used:
| Title | Formulas |
|---|---|
| Margin | Sale including VAT – Purchase price |
| Margin VAT | Margin x VAT rate |
| Ht price | Sale including VAT – VAT on margin |
| Net margin | Margin – VAT |
Application: ArchiInvest
States :
ArchiInvest, an agency specializing in the transformation of old buildings into modern spaces, has finalized a real estate sale for €680 including tax. The building had been purchased for €000. The calculation of the 620% margin VAT is essential to determine the tax impact on net profit.
Work to do :
- Calculate the gross margin of the sale made by ArchiInvest.
- Determine the amount of margin VAT to be paid.
- Estimate the selling price excluding VAT after deduction of VAT.
- From the net margin after VAT.
- Discuss ArchiInvest's financial considerations related to margin VAT.
Proposed correction:
-
The gross margin achieved is: Gross margin = €680 – €000 = €620.
The gross margin amounts to €60. -
Margin VAT is calculated as follows: VAT = €60 x 000% = €20.
The VAT amount is €12. -
The price excluding tax obtained will be: Price excluding tax = €680 – €000 = €12.
The selling price excluding VAT is €668.
-
The net margin after VAT reaches: Net margin = €60 – €000 = €12.
ArchiInvest obtains a net margin of €48. -
Margin VAT requires varying pricing strategies to offset the tax impact and ensure strong profit margins.
Formulas Used:
| Title | Formulas |
|---|---|
| Gross margin | Sale including VAT – Purchase price |
| Margin VAT | Gross margin x VAT rate |
| Ht price | Sale including VAT – VAT on margin |
| Net margin | Gross margin – VAT |
Application: Immofutur
States :
Immofutur, an innovative company in the transformation of commercial premises, must analyze the tax impact of VAT on margin after selling a space for €900 including tax, initially purchased for €000. The VAT rate on margin is set at 800% and must be taken into account in the evaluation of profits.
Work to do :
- Calculate the gross margin on this sale of commercial premises.
- What is the amount of VAT to be paid according to the gross margin?
- Estimate the price excluding VAT of the transaction.
- What net margin after VAT is retained?
- Identify the strategic challenges posed to Immofutur by margin VAT.
Proposed correction:
-
The gross margin is: Gross margin = €900 – €000 = €800.
The gross margin achieved by Immofutur is €100. -
The amount of VAT will be: Margin VAT = €100 x 000% = €20.
VAT to be paid: €20. -
The sale price excluding VAT is: Price excluding VAT = €900 – €000 = €20.
The sale price excluding tax is €880.
-
The net margin after VAT reaches: Net margin = €100 – €000 = €20.
Immofutur maintains a net margin of €80. -
The management of VAT on margin pushes Immofutur to optimize its profit calculations to maintain a competitive position.
Formulas Used:
| Title | Formulas |
|---|---|
| Gross margin | Sale including VAT – Purchase price |
| Margin VAT | Gross margin x VAT rate |
| Ht price | Sale including VAT – VAT on margin |
| Net margin | Gross margin – VAT |
Application: RenovatioPro
States :
RenovatioPro, a specialist in residential renovation, is selling an apartment for €1 including tax, originally purchased for €000. The company applies a 000% VAT on the margin. It wants to know the tax burden of this VAT in order to better plan its finances.
Work to do :
- Calculate the margin that RenovatioPro has achieved.
- Establish the amount of VAT on this margin.
- What is the selling price excluding VAT?
- Evaluate the net margin after VAT.
- Analyze the financial implications of margin VAT for strategic planning.
Proposed correction:
-
The margin achieved is: Margin = €1 – €000 = €000.
RenovatioPro achieves a margin of €100. -
Margin VAT is: VAT = €100 x 000% = €20.
VAT amount is €20. -
The price excluding VAT is calculated as: Price excluding VAT = €1 – €000 = €000.
Selling price excluding VAT is €980.
-
Net margin after VAT: Net margin = €100 – €000 = €20.
The net margin is €80. -
Margin VAT influences retained profits and encourages RenovatioPro to reconsider its investment and pricing strategies.
Formulas Used:
| Title | Formulas |
|---|---|
| Margin | Sale including VAT – Purchase price |
| Margin VAT | Margin x VAT rate |
| Ht price | Sale including VAT – VAT on margin |
| Net margin | Margin – VAT |