Zeiner & Zeiner
Attorneys at Law
Do tax authorities assess taxes, duties, or other impositions in connection with any of the following events and, if so, at what rates and under what circumstances?
Sales Tax and VAT
Austria has no sales tax, but only VAT. The generally applicable VAT rate in Austria is 20%. However, pursuant to Sec. 6(1)(2) in conjunction with Sec. 9(2) of the Austrian VAT Act aircrafts, specific supplies and services in relation to aircraft are under certain conditions exempt from Austrian VAT. A prerequisite for such exemption is that the respective buyer/operator is engaged in commercial air transport business, whereby the majority of turnover out of air transportation is either tax free (cross-border flights) or non-taxable (flights outside of Austria).
Hence follows that if a purchaser or lessor of an aircraft is not an airline and not in the air transport business the purchase or lease of an aircraft will not be exempt from Austrian VAT based on the general exemption clause for commercial airlines.
However, there is another exemption from Austrian VAT provided that goods are delivered to a country outside of the European Union. Proof of export is required.
Furthermore, please note that purchase/sales contracts fall not under the list of transactions in Section 33 of the Austrian Stamp Duty Act. Thus, the signing of a purchase/sales agreement will not trigger Austrian stamp duty even if the original document or a certified copy thereof is brought into Austria.
Generally – No. However:
Air Travel Tax – Since April 1, 2011 airlines are charged an air travel tax per passenger. The Air Travel Tax is levied on the carriage, from an Austrian airport, of paying passengers on passenger aircraft. It becomes due at the end of the calendar month when the flight was performed and is payable by the operator of the aircraft. The amount due is dependent upon the final destination, e.g. for short-haul flights it amounts to € 8 per passenger; for medium-haul flights will amount to € 20 per passenger; and for long-haul flights will amount to € 35 per passenger.
The Air Travel Tax Act also provides for exemptions, e.g. for children under two years of age who do not have their own seat on the flight; and for cargo flights which carry no passengers.
Carbon Emissions Scheme – The EU Aviation Emissions Trading Scheme Directive provides that, from January 1, 2012, the EU Emissions Trading Scheme will apply to all aircraft flying to and from the EU. Under the scheme aircraft operators are allocated a limited right to emit carbon and are required to purchase additional rights if their emissions exceed the rights granted while those emitters within their limits can sell any unused allowances.
Finance (mortgage tax, promissory note tax, conditional sales tax, tax on loan payments, tax on interest)
Mortgage tax – No
Promissory note – No.
Conditional Sales tax – No.
Taxes of loan payments and taxes on interest – No.
For companies resident in Austria or with a permanent establishment in Austria, corporate tax will be levied on Austrian profits including interest on loans and profit on lease rentals. The corporate tax rate is 25%.
Lease (Tax on payments other than income)
Generally corporate lessors resident in Austria or trading in Austria through a branch or agency (permanent establishment) will be subject to Austrian corporate tax on profits. Non-resident lessors leasing to an Austrian operator (or sub-lessor) will normally not be liable to Austrian corporation tax (or income tax) on lease rentals.
Please note that a stamp duty in the amount of 1% of the total of all the lease payments during the term of the lease plus VAT could apply under certain circumstances. If the lease is for an indefinite period of time, the assessment basis is the total of payments plus VAT for three years. The Austrian stamp duty may be avoided if the contract is concluded abroad and neither the original nor certified copies of the contract are brought into Austria nor officially used before any Austrian authority and/or court.
In principle, income derived from Austrian service (e.g. lease payment) is subject to Austrian income tax and the tax will be withheld, unless Double Taxation Treaties should provide otherwise. Furthermore, several exemptions may apply, in particular for received interest payments and licence fees.
Not for Commercial Aircraft.
No, but if an aircraft is sold for export and is not otherwise exempt from VAT, the seller must obtain proof of export or he will be liable to pay VAT at the rate of 20%.
No. However, registration fees apply to the registration of an aircraft in the Aircraft Register at Austro Control Österreichische Gesellschaft für Zivilluftfahrt mbH.
FOR FURTHER INFORMATION: Please contact us and we would be pleased to assist.
DISCLAIMER: The above information should not be relied upon by the reader for legal advice as it is intended merely to serve as preliminary guide to the laws and regulations governing the taxation of aviation and aircraft in Austria. The information intends to provide summary-level information about certain tax issues affecting general aviation and aircraft finance. Since these materials are general in nature, readers are encouraged to obtain legal and tax advice from their own professional legal and tax counsel based on specific facts and circumstances regarding their acquisition and/or use of aviation and aircraft.