Tax: Italy

The sale/purchase of an aircraft in Italy is generally subject to VAT (at a rate of 22%). 

VAT does not apply if the aircraft is supplied to an airline operating for reward chiefly on international routes, as per the implementation of the general VAT exemption provided for the aviation sector under the EU Directive 2006/112 (on the common system of value added tax).  

VAT does not apply also if the aircraft is sold in Italy and thereafter exported by the foreign purchaser within  ninety (90) days from the purchase. 

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. 

As mentioned, VAT does not apply if the aircraft is sold in Italy and thereafter exported by the foreign purchaser within ninety (90) days from the date of purchase. 

No, it will not. However, if an aircraft is sold for export and is not otherwise exempted from VAT the seller must obtain proof of export or it will be liable to pay VAT at the rate of 22%. 

Generally speaking, the importation of an aircraft in Italy is subject to VAT (at a rate of 22%). 

VAT does not apply if the aircraft is imported by an airline operating for reward chiefly on international routes, as per the implementation of the general VAT exemption provided for the aviation sector under the EU Directive 2006/112 (on the common system of value added tax).  

Besides, under certain conditions (such as if the aircraft is registered, owned and based outside the EU) and time limitation (maximum 6 months per entry) the “temporary importation” regime does exempt the aircraft owner to pay VAT. 

Generally speaking, if an aircraft transaction (e.g. sale/purchase, lease) is subject to VAT regime (i.e. business to business) then the registration tax levied by the Italian Tax Authority is equal to Euro 200, otherwise it is 3% of the purchase price. 

Aircraft mortgage transactions are subject to Italian CAA fees (ranging from Euro 168 to Euro 1.392 depending on the secured amount), plus a registration tax levied by the Italian Tax Authority that is equal to Euro 200 if: (i) the mortgage is granted directly by the borrower to the lender; and (ii) no drawdown/utilization of the loan has occurred yet at the time when the mortgage is granted; otherwise a proportional registration tax could be applied.   

Aircraft registration is subject to Italian CAA fees of Euro 136 (for aircraft with maximum take-off weight below 5.700 Kg) or Euro 238 (for aircraft with maximum take-off weight equal to, or above, 5.700 kg).  

Yes, in Italy there are two (2) different “luxury” taxes involving the aviation sector. Namely: 

– Tax on aerotaxi passengers 

This tax is due by passengers of aerotaxi flights for each single route departing from, or arriving to, any Italian airport. The tax is calculated as follows: Euro 10 per passenger for flights within 100 km; Euro 100 per passenger for flights over 100 Km and within 1.500 km; Euro 200 per passenger for flights over 1.500 km. 

For calculation purposes, the flight distance between departure and arrival points shall not consider any technical stop-over. 

The tax is expressed to be due on “aerotaxi flights”, which under an implementing directive of the Italian Tax Authority are defined as those flights operated for the transport of passengers pursuant to a charter agreement entered into for the entire capacity of the aircraft.  

– Tax on private aircraft 

This tax is due by aircraft owners, owners under title reservation agreement, financial lessees and usufructuaries, provided that a tax exemption is granted to aircraft owned by – or under the operational control of – licensed carriers of scheduled or non-scheduled flights. 

The yearly tax amount is calculated on the basis of the aircraft maximum take-off weight, ranging from Euro 0,75 per Kg for aircraft of 1.000 kg (or less) to Euro 7,60 per kg for aircraft over 10.000 Kg. 

For foreign registered aircraft, the tax becomes due if the aircraft remains in the Italian territory for more than six (6) months (consecutive or not) over a period of twelve (12) months. 

Income taxes are subject to the tax rules of the state of tax residency of the lessor. In case of an Italian lessor, currently the national income tax is equal to 24% of the corporate profits. 

As far as the lease payments to a foreign lessor, withholding taxes are generally due at a rate of 30% of the rent. The tax can be reduced (or exempted) pursuant to double taxation agreements (DTA) entered into between Italy and the foreign lessor’s country. For instance, the DTA with Germany provides a withholding tax at a rate of 5%, the DTA with Ireland provides that no withholding is applicable, in any case subject to certain conditions (such as the actual tax residency of the lessor). 

The use of commercial aircraft is subject to the following charges (among the others): 

– tax on aerotaxi passengers (see answer 8 above); 

– passenger boarding duties – they are levied on the carriage of passengers from any Italian airport in accordance with Law No. 324/76. These duties are payable by the aircraft operator, but the aircraft owner is jointly liable with the operator if the latter is in default.  

– landing and take-off duties – they are applied by Italian airports in connection with each landing and take-off of aircraft in accordance with Law No. 324/76. The amount due is dependent on the final destination and maximum take-off weight of the aircraft. These duties are payable by the aircraft operator, but the aircraft owner is jointly liable with the operator if the latter is in default. 

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). 

Interest payments under a loan are generally subject to a withholding tax of 30%. The tax can be reduced (or exempted) pursuant to double taxation agreements (DTA) entered into between Italy and the foreign lender’s country. 

Some Italian Regions have introduced an environmental tax on aircraft noise (so called IRESA), to collect funds for the management of social costs arising therefrom, such as airport monitoring systems, anti-pollution measures and indemnification of people affected by aircraft acoustic pollution. The tax is based on the aircraft maximum take-off weight, regardless of specific urban characteristics of each airport, the actual noise level of aircraft and the distinction between daytime and night-time flights.  

The IRESA tax must be paid by the aircraft operator, for both private and commercial flights.  

As a Member State of the ICAO, Italy takes part to the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) aimed to address CO2 emissions generated by the international air transport sector. 

The supply of air services is generally subject to a significant number of taxes/charges, including:  

– embarkation tax (IT code); 

– passenger service charge departure – for assistance to disabled persons and persons with reduced mobility (MJ code); 

– security charge in relation to passengers and hand baggage (VT code);  

– council city tax (HB code); 

– VAT on airport charges (FN code); 

– carrier-imposed surcharge for safety, insurance and fuel (YQ code); 

– carried-imposed surcharge for ticket sale services (YR code); 

– checked baggage control charges (EX code). 

Aircraft operators can generally benefit of a VAT exemption on the purchase of fuel at Italian airports, to the extent that they operate aircraft for reward chiefly on international routes (pursuant to the national implementing rules of the EU Directive 2006/112 on the common system of value added tax). 

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