Czech Republic

Generally, only value added tax (hereinafter “VAT”) is levied on domestic taxable supplies.  The sale, transfer of title/interest or lease of an aircraft with its place of taxable supply in the Czech Republic is therefore subject to Czech VAT unless an exemption applies. 

The sale, transfer of title/interest or lease of an aircraft is subject to VAT at the standard rate of 21% and the tax is payable by the seller/lessor. However, if the aircraft is transferred to airlines operating for reward chiefly on international routes, the transfer/lease is exempt from VAT in the 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. 

N/A

The sale or transfer of an aircraft is exempt from VAT in the Czech Republic provided that it is subject to export to third countries (non-EU) and the transport of the aircraft is organized by the seller, the buyer or a person empowered by either the seller or the buyer to transport the aircraft. Of course, the seller must prove, in cooperation with the buyer, that the aircraft has actually been exported, i.e. usually by customs export clearance and other evidence supporting the transport of the aircraft from the territory of the Czech Republic. Please note that the physical export of the aircraft must be realized within 60 days after the actual sale or transfer of the aircraft to the buyer. 

N/A

Exporting an aircraft from the Czech Republic does not usually trigger export taxes or customs duties; however, this always depends on the type and use of aircraft and the destination country to which the aircraft is being exported. However, as mentioned above the seller must be able to prove that the aircraft has actually been exported out of the Czech Republic; otherwise, it will be liable to Czech VAT at the current rate of 21%. 

N/A

Importing an aircraft to the Czech Republic is subject to customs duties pursuant to the European Union Customs Code, whereas aircraft for civilian use usually enjoy the benefit of 0% customs duties. As concerns VAT, importing an aircraft to be operated by an airline for reward chiefly on international routes is exempt from VAT in the Czech Republic. However, should the importer not meet the condition for exemption, it needs to declare (self-assess) and pay VAT at the rate of 21% of the purchase price in the case of a purchase or from the lease payments in the case of a lease. This is without prejudice that the VAT may be subject to entitlement for a VAT deduction, provided that the general requirements are met. 

N/A

The Czech Republic does not levy any stamp duties, fees or any other taxes on aircraft transaction documents, apart from negligible administrative fees for registering the aircraft in the Czech Aircraft Registry, should such registration be part of the transaction. 

N/A

The Czech Republic does not levy any taxes or duties on registering the aircraft, apart from negligible administrative fees for registering the aircraft in the Czech Aircraft Registry. 

No luxury taxes are payable in the Czech Republic at the moment.

Leasing an aircraft to an airline operating for reward chiefly on international routes is exempt from VAT. In cases where the lessee does not qualify as such an airline, then the lease will be subject to VAT at the standard rate of 21%. The Czech VAT Act distinguishes between a finance lease, where the conditions of the respective leasing contract are set in a way that the lessee under regular circumstances buys the aircraft after the leasing contract is terminated, and an operating lease. If the lease of an aircraft is not exempt from VAT and qualifies as a finance lease, VAT from the whole value of the leasing contract must be declared and paid by the lessor upon hand-over of the aircraft. VAT in the case of an operating lease is payable only upon respective lease payments. 

If the lessee in the case of a finance lease is a person whose registered office is outside the Czech Republic, the lease of the aircraft is usually exempt from VAT, provided that the lessor is able to prove that the aircraft was transported outside the Czech Republic upon its hand-over. In the case of an operating lease of an aircraft to a person whose registered office is outside the Czech Republic, the lease is not subject to Czech VAT unless the lessee operates the aircraft through a permanent establishment for VAT purposes in the Czech Republic; in the latter case, VAT would be chargeable, unless an exemption applies (for example, when being operated by an airline for reward chiefly on international routes).  

Lease payments made with regard to an aircraft for its leasing to a lessor who is a Czech tax resident are not subject to any taxes in the Czech Republic other than potential VAT as stated above. However, should a lessee who is a Czech tax resident pay leasing payments to a lessor who is not a Czech tax resident, the following scenarios may occur: 

• If the lessor is a tax resident of a state which has concluded a double tax treaty with the Czech Republic or the treaty on exchange of information in tax matters, withholding tax at the rate of 15% applies;  
• If the lessor is able to prove that it is a beneficial owner of the lease payments and that it is a tax resident of a state which has concluded a double tax treaty with the Czech Republic, the withholding tax rate is usually even lower than 15% based on the relevant tax treaty;  
• If the lessor is a tax resident of a state which has not concluded any of the agreements above, the leasing payments would be subject to withholding tax of 35%. 

N/A

In general, transactions with (and operation of) commercial aircraft usually have more beneficial tax treatment than aircraft operated and used for private (corporate) purposes only. For example, the sale and lease of aircraft to airlines operating for reward chiefly on international routes as well as necessary services provided in connection with such aircraft are exempt from VAT. Moreover, fuel used for the operation of commercial aircraft is exempt from VAT and excise duties. 

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.  

Interest paid by a debtor who is a Czech tax resident to a creditor who is not a Czech tax resident is subject to withholding tax of 35%. However, if the creditor is a tax resident of a state which has concluded a double tax treaty with the Czech Republic or a treaty on exchange of information in tax matters the withholding tax is reduced to 15%. Of course, if the recipient of the interest is able to prove that it is a beneficial owner of the interest and that it is a tax resident of a state which has concluded a double tax treaty with the Czech Republic, the withholding tax rate is usually even lower than 15% based on the relevant treaty. Interest paid to a Czech resident creditor is not subject to any withholding tax. 

Please note that if the creditor is a Czech tax resident, the interest income is subject to Czech income tax at the rate of 19% (corporate income tax) or 15% (personal income tax). 

N/A

The civil aviation sector was included in the European Emission Trading Scheme (EU ETS) by Directive 2008/101/EC of the European Parliament and of the Council amending Directive 2003/87/EC as of January 2012. The Directive has been properly implemented into the Czech legal system. Pursuant to this legislation, aircraft operators are required to monitor and report greenhouse gas emissions, which which involves drawing up a monitoring plan for annual emissions; such plan is subject to approval by the Czech Ministry of the Environment. Please note that operators of non-commercial aviation transport with total production of greenhouse gas emissions lower than 1,000 tons are excluded from the EU ETS. In addition, until 31 December 2023 the EU ETS will apply only to flights between airports located in the European Economic Area (EEA), whereas flights coming from outside the EEA or made from the EEA to third countries are exempt.  

Moreover, in 2016 the International Civil Aviation Organization (ICAO) adopted a global market-based measure and agreed on the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), which would come into operation in 2021. Under CORSIA, aircraft operators of all ICAO member states (including the Czech Republic) must monitor, report and offset any annual CO2 emissions from international civil aviation that are above 2020 levels. This will only apply to international flights, not domestic ones. Participation in CORSIA will be voluntary during the pilot and first phase (2021-2026) and will become mandatory for all states in the second phase, as of 2027. 

There are no cargo, airport or passenger taxes levied by the government in the Czech Republic.  However, airport charges charged by airport operators may include components derived from passenger incoming/outgoing or dependent on the noise generated by the aircraft; as concerns the latter, aircraft are broken down into noise classes. 

In general, aviation fuel is subject to excise duties in the Czech Republic. However, aviation fuel (under Combined Nomenclature No. 2710 12 31 or 2710 12 70) and jet fuel (under Combined Nomenclature No. 2710 19 21) used as fuel for aviation, testing, repair or maintenance of aircraft, except for mineral oils used for private pleasure flying, are exempt from excise duties. 

There are no such taxes in the Czech Republic which would be aircraft–specific other than those mentioned above.