Key Points when Repossessing and Reselling Goods After Buyer Default
When a business sells goods under a conditional installment sale and later repossesses the goods due to the buyer’s failure to pay, the seller must still issue a GUI and pay VAT upon resale.
According to Article 26 of the Secured Transactions Act, in a conditional sale, the buyer takes possession of the goods but ownership transfers only after full or partial payment or fulfillment of specific conditions. Therefore, when the goods are repossessed due to the buyer’s failure to make payments as agreed, the ownership of the goods remains with the seller. When the goods are resold, the seller must issue a GUI and pay VAT based on the resale price.
An example for clarification: Company A sold a piece of machinery to Party B under a conditional sale with installment payments for a total price of NTD1.2 million, agreeing to receive payment in six installments and issue a GUI for each, at NTD200,000 per installment. However, Party B only paid two installments and then ceased payment. Company A, in accordance with the agreement, repossessed the machine and later resold it to Party C for NTD700,000. Company A must issue a GUI and pay VAT based on the resale price of NTD700,000.
