Tax
11. What are the tax implications for operation and use of corporate and/or private aircraft?
Austria
See Sections 1, 5 and 8 above.
Brazil
This depends on many factors such as whether the operator is an air taxi company or a private operator. Again, due to the number of variables that would affect tax treatment it is not possible to summarize the tax treatment of corporate and private jet operations.
Colombia
Aviation in Colombia is considered private even if it is an aircraft for corporate, private or commercial use. Aviation of the Colombian Armed Forces (FAC) shall be understood as public. Therefore, for questions 10 and 11 the answer will be the same.
Currently there is no tax implication for the use or operation of private aircraft in Colombia. There are no taxes, fees or contributions that charge such activity. What there are, are operating permits that must be processed with the Civil Aeronautics, but as such it is not a tax to be paid to the Colombian State for these concepts.
Czech Republic
In general, transactions with (and operation of) aircraft used for private (corporate) purposes usually have less beneficial tax treatment than commercial aircraft, especially those used by airlines operating for reward chiefly on international routes. For example, the sale and lease of aircraft used for private purposes (i.e. by individuals or corporations not qualifying as airlines operating for reward chiefly on international routes) are subject to VAT. If the aircrafts are used for pleasure flying, the fuel used for operation of such aircraft is subject to VAT as well as excise duties.
Germany
There is no distinction in the tax treatment in relation to the use of corporate and/or private aircraft as long as the aircraft is operated by (and on the AOC of) an airline operating for reward mainly on international routes (see the EU court judgement C-33/11 cited above). If, however, the aircraft is not intended for commercial use by an airline that chiefly operates on international routes, the exemption for VAT on supplies and in relation to import VAT cannot be invoked. Moreover, please see our answer to No. 15 below.
Greece
Using an aircraft privately would trigger the payment of luxury tax, as described in question 8 above. Moreover, in case of corporate aircraft, this tax burdens the members of the Board of Directors of the company that owns the aircraft.
Israel
The non-commercial operation and use of corporate and/or private aircraft will in all likelihood subject to regular taxation (income/corporate tax and VAT).
Italy
In case of use of corporate and/or private aircraft (both national and foreign registered) the tax on private aircraft could apply (see answer 8 above).
Kenya
Please refer to our responses to question 10 above.
Mexico
Depends on the specific circumstances of the Mexican taxpayer, but normally costs associated to the operation and use of a corporate/private aircraft may be partially or non–tax deductible.
Nigeria
There is no separate tax implication for the corporate and/or private use of an aircraft. The responses provided in question 10 above are applicable.
A 5% charter sales charge is payable to the NCAA. The charge is based on the total cost of travel paid by the client, inclusive of fuel surcharge or any other charge added to the total cost of travel.
Norway
None of the exemptions listed above in items 5 and 10 will apply for the operation and use of corporate and/or private aircraft. As a starting point, the main rule will apply, and there will be, among other things, an obligation to calculate output VAT on all sales of goods and services.
According to domestic tax law the threshold for becoming subject to corporate tax is rather low. The starting point is that any foreign enterprise will become subject to Norwegian corporate tax if it conducts business activities within Norway or if it hires out employees to work in Norway.
However, Norway has tax treaties with about 90 countries, which may provide exemption from Norwegian tax liability. An assessment of tax liability must therefore be made specifically for each foreign enterprise and based on the relevant tax treaty.
The basic rule in the tax treaty is that a foreign enterprise becomes subject to tax if it has a so called “permanent establishment” or “PE” in Norway.
Panama
Private and corporate aircraft operators are not subject to payment of income over their private operations.
Peru
When aircraft are intended for private use, they are not taxed.
When the aircraft belong to a company and are used for the purpose of producing income or maintaining the source of production of the business; the expenses incurred for its maintenance and operation are deducted from the gross income for the purpose of calculating the tax base of the third category income tax.
Portugal
No VAT or fuel tax exemption available.
Puerto Rico
One of the most important questions that must be addressed is when the use of private aircraft is considered an ordinary and necessary business expense. Once the ordinary and necessary requirement is met, the next question is to determine which costs are deductible and which are not. If the aircraft is owned by an entity, costs need to be apportioned to each passenger on each flight and then allocated between business and personal (which includes personal nonentertainment and personal entertainment).
If the aircraft is owned by an individual, there is a different allocation methodology to determine any expenses that may not be deductible.
Romania
In accordance with our tax law, the aircraft does not represent an asset subject to depreciation exempt for the case when it is used for economic activities. The expenses for the use of a corporate aircraft must be proved with documents in order to be considered as tax deductible.
South Africa
- Refer to question 10 above.
Spain
The use of corporate owned planes by individuals might generate income in kind taxable under the individual income tax.
VAT and registration tax would be levied upon the purchase of private aircraft.
Private airplanes should be disclosed in the net worth tax return of an individual owner.
Switzerland
See sections 1, 5 and 8 above.
United States (Miami)
In the United States, and in many states within the United States, taxes are imposed on taxable income. Finance lease payments and loan interest payments received by a taxpaying lessor or lender may be included as taxable income. By the same token, a borrower may deduct its interest payments and/or lease payments.
Different tax considerations may apply when there are non-US taxpayer involved.