Tax
2. Will the relevant law require any sales, value added or other taxes to be payable on an intra EU sale/purchase or transfer of title/interest of an aircraft?
Austria
In general, on an intra EU sale/purchase or transfer of title/interest of an aircraft no value added or other taxes will be payable in Austria.
Brazil
Not applicable.
Colombia
Colombia is not a member of the European Union, neither shares the EU´s customs nor the taxation. Therefore, under Colombian law there would be no tax effect on the sale or purchase of an aircraft, as well as on the transfer of its title or interest when such operation is carried out within the European Union. Thus, there would be no tax caused by such operations in Colombia.
Czech Republic
An Intra-Community sale or transfer of an aircraft located in the Czech Republic by a seller with its seat in the Czech Republic is exempt from VAT, provided that the seller is able to prove that the aircraft was physically transported outside the Czech Republic. On the other side, the purchase of an aircraft from a Czech seller may be subject to VAT in the EU member state where the buyer has its seat (reverse-charge) or in the state where the aircraft was physically transported to, unless an exemption applies.
The same principles as those for a local sale or transfer usually apply in the case of an Intra-Community purchase of an aircraft by a buyer whose seat is in the Czech Republic. If the buyer is an airline operating for reward chiefly on international routes, the purchase of such aircraft is exempt from VAT in the Czech Republic and therefore is not subject to reverse-charge. If the buyer does not meet the conditions for VAT exemption, then the purchase is subject to Czech VAT at the rate of 21%, whereas the buyer must self–assess the appropriate tax using the reverse-charge mechanism. The purchase may be, of course, subject to entitlement for a VAT deduction, provided that the general requirements are met.
If an aircraft located in the Czech Republic is subject to a sale or transfer between two persons whose seat is not in the Czech Republic, then such transaction is not subject to Czech VAT, provided that the aircraft will be used by an airline operating for reward chiefly on international routes. If this condition is not met, the transaction will be subject to Czech VAT and give rise to the obligation of the seller to register for VAT in the Czech Republic.
Germany
An intra EU sale/purchase or transfer of title/interest of an aircraft is considered to have taken place in that EU country in which the aircraft finally ends up. Thus, if the aircraft is delivered to a company from another EU member state (than Germany) who wants to use it for its enterprise and thereafter the aircraft is brought to such other EU member state, then the purchase of the aircraft is taxable in that other EU member state (but not in Germany), even if the aircraft was sold by a German company and at the time of actual transfer of title, the aircraft was located in Germany (Section 6a VAT Act).
However, it is important that the invoice shows the VAT identification number of the purchaser (from another EU member state) and that the sale is rated 0% VAT due to being an intra-EU sale. Further, the German seller must be able to prove, e.g. by a representation of the purchaser in the sale agreement or a new registration certificate, that the aircraft will be/has been brought to another EU member state after transfer of title.
If, on the other side, the actual delivery/supply of the aircraft took place in another EU member state, but ends, according to the terms of the respective contract, in Germany (i.e., the aircraft was bought by a German company and (after transfer of title) brought to Germany, then such delivery/supply will be subject to German VAT (Sections 1 (1) No. 5, 1a (1) and 3d VAT Act).
In such case, the tax burden rests with the purchaser (Section 13a (1) No.2 of the VAT Act).
However, if the purchaser is a German (commercial) airline that predominately operates on international routes, then the exemption mentioned in No. 1 above will apply.
Greece
According to article 29 par. 1 (a) of the Greek VAT Code an intra EU sale of goods, including sale or transfer of title/interest over an aircraft (i.e. from a seller based in Greece to a purchaser based in another EU country) is exempt from Greek VAT.
Israel
N/A (Israel is not a member of the EU). It should nonetheless be noted in this context, that the Euro-Mediterranean Aviation Agreement between the EU (including its member states) and the Government of Israel (known as the “Open Skies Agreement”) was signed between the parties in 2012 and ratified by the Israeli government in 2013. To the best of our knowledge, the State of Israel has generally been compliant with the provisions of such agreement, as well as with the provisions of any other international agreement(s) relevant to the air transport sector subsequently signed and ratified by the Israeli government. However, as at the date of preparing this response, we are unaware whether the Israeli Tax Authority (“the ITA”) is contemplating publishing, or intends to publish, any written directives, guidelines or other clarification or reference concerning the implementation of the Open Skies Agreement for Israeli tax purposes. From a practical perspective, it would appear that the relevant income tax and VAT assessors employed at the ITA are probably unaware of the provisions of the Open Skies Agreement and its effect on international aircraft operators. In any event, it should be noted that the tax exemptions currently included in the Open Skies Agreement are granted on the basis of reciprocity.
Italy
The transfer of title/interest of an aircraft may generally attract Italian taxes if: (i) the seller and/or the buyer are tax resident in Italy; and/or (ii) the aircraft is registered in the Italian Aircraft Registry; and/or (iii) the aircraft is located in Italy at the time of the transfer.
Kenya
No taxes will apply in Kenya in respect of an intra EU sale, purchase or transfer of aircraft.
Mexico
Not applicable in Mexico.
Nigeria
No. CGT is only chargeable if the aircraft is sold by a Nigerian company. The income derived from the sale of an asset outside the Nigerian territory will usually not be subject to CGT. Pursuant to Section 4 of the CGT Act, where the sale of the aircraft is carried out by an individual who is in Nigeria for a temporary purpose only for a period which does not exceed 182 days or a by a Non-Nigerian company, CGT will be chargeable on any amount that is brought into or received in Nigeria in respect of the sale.
The sale of aircraft is zero rated for the purpose of VAT in Nigeria.
a. CGT is imposed at the rate of 10% on any amount that is brought into or received in Nigeria in respect of the such sale and is payable by the seller.
Norway
Norway is not a member of the European Union, thus the EU directives concerning income and VAT does not apply to Norwegian tax.
If delivery of the subject aircraft is made in Norway, Norwegian VAT regulations may apply even if parties to the sale and purchase agreement are EU residents.
Panama
Panama is not part of the EU. Panamanian tax laws are based on territoriality and accordingly any tax applicable to seller or buyer under EU rules must be dealt with in the relevant EU jurisdiction.
Peru
According to Peruvian law, the sale of goods in Peru is subject to the General Sales Tax (VAT). This tax is not levied on transfers of property outside Peruvian territory.
Portugal
The transfer of used aircraft should originate the payment of Portuguese VAT if the purchaser is a consumer or it does not have a valid EU VAT number. Otherwise, VAT will not be levied in Portugal, but it may be due in the country of the purchaser under the reverse charge mechanism.
The sale of new aircraft to another EU country is not subject to VAT in Portugal but VAT should in principle be levied in the country of destination.
Puerto Rico
Puerto Rico is part of the United States of America (USA) and not a member of the EU.
Romania
As mentioned above, Romania has no sales tax. With regard to VAT, shall be considered taxable an intra-community acquisition of new transportation means (including aircraft) with the exemption of aircraft used by companies who are mainly performing international transportation of persons and or goods against payment.
Under Romanian fiscal code [art. 293 para. 1 letter a)] is VAT exempt “the import and the intracommunity acquisition of goods whose delivery in Romania is exempt from value-added tax inside the country;” Thus, shall be VAT exempt the intra community acquisitions of aircraft made by aviation companies who are mainly performing international transportation of persons and/or goods against payment.
South Africa
- Where a gain is realized on the disposal of an asset of a capital nature, capital gains tax will be payable by the seller. Capital gains for non-residents are only taxable in SA when they are either:
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- attributable to a permanent establishment of the non-resident in SA; or
- in respect of immovable property situated in SA held by the non-resident or an interest or right to or in immovable property situated in SA.
- VAT may be levied by the seller on the sale of an aircraft. This is dependent on:
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- Whether the aircraft is being sold as a going concern;
- Whether the aircraft is to be exported from SA after the sale; and
- The VAT status of the seller and the buyer.
Spain
Aircraft acquisition or transfer of title made by an operator in Spain to another operator in an EU member State would be considered, from a Spanish VAT perspective, as an intra-community acquisition of goods. In this sense, to the extent that the aircraft is used in international air transport, it would be tax exempt. Should this not be the case, the tax would be assessed via the reverse charge mechanism.
Switzerland
Although located in the heart of Europe, Switzerland is not a member of the EU and neither part of the EU’s customs or VAT union. Thus, EU taxes must be dealt with separately from the ones applicable in Switzerland.
United States (Miami)
No, generally, depending upon the law of the State within the United States which may be applicable. Many states have “Fly Away Exemptions” available for nonresident purchasers who will remove an aircraft from the state within a certain amount of time after the purchase. However, these exemptions are narrowly construed, so the purchaser should consult with aviation counsel to determine the applicability of any existing exemption.
In Florida, for example, an aircraft sold by or through a registered dealer or broker to a purchaser who is a nonresident of Florida at the time of taking delivery of the aircraft in Florida is exempt from sales tax if the nonresident purchaser meets the following requirements:
(i) The nonresident purchaser signs an affidavit stating that he or she has read the law and rules regarding the specific exemption claims. When completing the affidavit, the nonresident purchaser must elect to:
a) Remove the aircraft from Florida within 10 days of the date of purchase;
b) Place the aircraft in a Florida registered repair facility; or
c) Allow the aircraft to remain in Florida exclusively for flight training, repairs, alterations refitting or modifications;
(ii) Within 5 days of the date of sale, the dealer or broker must provide the Florida Department of Revenue with a copy of the invoice, bill of sale, and/or closing statement, and the original, signed removal affidavit;
(iii) Within 10 days of removal of the aircraft from Florida, the nonresident purchaser must provide the Florida Department of Revenue with documentation evidencing the removal of the aircraft from Florida;
(iv) Within 30 days of removal of the aircraft from Florida, the non-resident purchaser must provide the Florida Department of Revenue with written documentation that the nonresident purchaser has submitted an application for registration to the Federal Aviation Administration.
*This exemption does not apply to a Florida resident, an entity where the controlling person is a Florida resident, or a corporation where any officers or directors are Florida residents.
Florida also has an exemption for aircraft being exported outside of the United States. Aircraft being exported under their own power to a destination outside the continental limits of the United States may be subject to tax, unless the purchaser furnishes the dealer a duly signed and validated United States Customs declaration, showing the departure of the aircraft from the continental United States and the canceled United States registry of said aircraft. The burden of obtaining the evidential matter to establish the exemption rests with the selling dealer, who must retain the proper documentation to support the exemption.