Short & Sweet mail no. 4
What does ‘VAT paid’ mean?

Added April 2021
  • Are all imported aircraft VAT paid for good?
  • How to ensure that an aircraft is correctly VAT paid?
  • EU VAT is not a one-time transaction

The term ‘VAT paid’ is normally used when an aircraft has been fully imported into the EU, yet it is often used wrongly and misleadingly, rightly confusing aircraft sellers and buyers about the term ‘VAT paid’.

We frequently hear the following statement from potential aircraft buyers: “I prefer to buy a so-called VAT paid aircraft, so I do not have to pay any EU VAT”. However, this is rarely possible. The confusion might be enforced by the fact that many brokers advertise aircraft as VAT paid within the EU. The misinterpreted understanding is that “once imported, the VAT is paid for good”. However, this use of the term is simply not correct. Only if the seller is a private person and he or she already paid the VAT, then the VAT does not have to be charged again. In this context, the VAT paid status of the aircraft is also important.

EU VAT is not a one-time transaction
There are only a few examples where the EU output VAT is not due when an aircraft is sold again. One example, as mentioned above, is when a private person is selling an aircraft. Such a seller had actually paid and could not deduct and reclaim the VAT when the aircraft was bought or imported, however many other factors must also be considered, such as the place of delivery, the periods of stay outside the EU, etc. The EU VAT is simply not a one-time transaction. It is a transaction-based system, and any change of the ownership or operator will most likely mean that the EU VAT must somehow be accounted for again if the change happens within the EU. We have made some examples to illustrate the needed transaction pattern.

Example A: the VAT is exempted (0%)
Exempted VAT is often granted to commercial operators or airlines if certain preconditions are met by the operator and the specific use of the aircraft. Any change of the operator or operation will always require a reassessment of the scenario, so the 0% VAT is not granted for good. If the aircraft is handed over and a new EU operator is not qualifying for a VAT exemption, the operator must charge VAT according to the below-mentioned principles.

Example B: the VAT is deducted (rates between 17-27%)
The VAT imposed during an importation can be fully deducted if an aircraft is used solely for business purposes. When such an aircraft is sold again, the seller must charge VAT according to the below-mentioned principles.

How to ensure that an aircraft is correctly VAT paid?
The VAT paid status can only survive a sale and be valid for the next owner or operator if an EU VAT-registered entity has charged the EU VAT on a local invoice or used a valid EU VAT number as well as issued an invoice that has been documented in the EU VAT system as an intra-Community acquisition.

Export sale
If an EU-imported aircraft is sold or delivered outside the EU, such as in the UK, USA, or Switzerland, the EU VAT paid status is lost, and this is not dependent on whether the aircraft is officially exported via an EU customs procedure. An exported aircraft can be placed back into free circulation within the EU if it has never been outside the EU for more than three years straight, but the free circulation status only refers to the customs duty and not the VAT, which must be re-accounted somehow. Here, the new owner or operator can use either a full importation or a temporary admission if the aircraft shall be used within the EU again. The VAT imposed during the importation will never be reimbursed when an aircraft is exported, this is also a common misunderstanding.

How can we help?
If you have questions about the above, please do not hesitate to contact us. We offer a cost-free introduction and analysis of the owner, user, and operator scenario to find the best option for you when flying within the EU. Please, feel free to contact us at any time.


Follow OPMAS on LinkedIn
Get a continuously stream of news and hints about EU importation and admission issues.

Remember to click Follow on LinkedIn

Is a full importation needed in both the UK and the EU27?​

Short & Sweet no. 3
This Dual Importation Issue describes scenarios where an aircraft is brought into the EU27 and UK by an operator who uses the aircraft for corporate and business purposes (such as part 91).
View online version

Flying commercially within the EU

Short & Sweet no. 2
This Flying commercially within the EU issue describes scenarios where an aircraft brought into EU by a non-EU operator that uses the aircraft commercially for charter (such as part 135).
View online version

Flying with the CEO within the EU

Short & Sweet no. 1
The Flying with the CEO within the EU case describes a scenario where the aircraft is imported/admitted by a non-EU corporation that operates and uses the aircraft mainly for their own business, flying with the CEO and/or the management.
View online version

Subscribe to our newsletter

Join our mailing list and receive the latest news and updates from the OPMAS team.

If the confirmation email is not received immediately. Please check your SPAM filter.

You have Successfully Subscribed!