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ALERT: interesting and positive news about the EU airline exemption with 0% VAT

October 2019

The Danish Tax Authority have recently confirmed 2 interesting points about the practical use of the airline exemption in order to allow a full importation with 0% VAT imposed. The 2 points reflect upon basic terms an operator needs in order to import an aircraft into the EU through Denmark. Other EU member states have different definitions of the same 2 points and we therefore see the confirmation of both points as extremely positive and important as it gives the operator way more flexibility and makes the terms more realistic to meet in the aviation world.

1. An AOC license is not needed!
An AOC license is not needed, but the importer/operator must have some kind of operating structure where the aircraft is used commercially, and such a usage will often require an AOC license or similar structure. Other company structures may qualify as well, e.g. if an operating company is delivering flight services to companies under the same company umbrella and all services are invoiced at market rate.

2. What is commercial use?
It is a precondition that the aircraft is used solely for commercial use, but commercial use is not necessarily charter work as many AOC operators might think. The below understanding of the definition of commercial use gives more flexibility:
‘commercial operation’ shall mean any operation of an aircraft, in return for remuneration or other valuable consideration, which is available to the public or, when not made available to the public, which is performed under a contract between an operator and a customer, where the latter has no control over the operator’.

Who can use the airline exemption?
The airline exemption is available for operators both inside and outside the EU. There are also other preconditions than the 2 mentioned above, so please ask for the full set of preconditions if relevant. All operators should also be aware that customs and VAT rules may sometimes contradict with the aviation regulation, and it is always the responsibility of the operator to stay compliant in all areas.

Always ask first
Our advice has always been to ask the local tax authorities for a binding advance tax ruling prior to any importation in order to eliminate any doubt about the outcome. All cases have different details and a binding advance tax ruling will also consider all new European Court of Justice (ECJ) judgements. Even if you have a fully working set-up, we believe an importation without a binding advance tax ruling from the EU member state into which the aircraft is to be imported is too great a risk to take.

This update relates only to a full importation into the EU. It does not apply to the Temporary Admission regulation.

Please feel to ask if you have any questions.

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