Do tax authorities assess taxes, duties, or other impositions in connection with any of the foregoing events and, if so, at what rates and under what circumstances?
i. Sale of aircraft while registered on the Greek Register. VAT exemption on transfer of ownership over aircraft while registered on the Greek Register and delivered either in Greece or abroad.
An aircraft registered on the Greek Register and leased, or subleased, to a Greek airline generating income in excess of 50% from international flights is not subject to VAT/transfer tax effective November 24, 2014. A major development occurred in November 2014 leading to exemption from transfer tax/VAT on sale of aircraft while registered on the Greek Register, subject to certain provisions; in particular, pursuant to the relevant guidelines provided by the Ministry of Finance in its recent Circular Pol.1246/November 24, 2014 (the “Circular”), acquisition of an aircraft by a legal entity incorporated in the EU or outside the EU, which occurs while the aircraft is registered on the Greek Register, pursuant to a lease or sublease with a Greek operator, and is delivered in Greece, or outside Greece pursuant to the delivery place tax provisions, is exempt from VAT on the grounds that the Greek airline operating the aircraft for reward chiefly on international routes, i.e. more than 50% of its annual revenues derive from operation of flights on international routes. The above factor is evidenced by the Revenues Certificate issued by the competent tax office of the local operator issued at the beginning of each year covering income generated during the previous fiscal year.
Consequently, under the laws of the Hellenic Republic, no value added, turnover, transfer or other taxes or duties are payable either by the new owner or by any other person, in respect of the transfer of ownership over aircraft to the owner. Furthermore, registration of the new owner on the Hellenic Civil Aviation Authority (HCAA) Register shall not create any obligation to the owner or to any other person for the payment of any such value added, turnover, transfer or other taxes or duties.
Prior to release of the Circular on November 24, 2014, VAT at 23% had to be paid burdening transfer of ownership and calculated on the market value of aircraft, which made transactions of this nature not commercially viable.
ii. Sale of aircraft to a Greek airline generating income in excess of 50% from international flights.
In case an aircraft is sold to a Greek airline generating income in excess of 50% of its overall income from international flights, then VAT on sale is not imposed.
iii.Sale of aircraft for export outside the EU
In case an aircraft is sold to a non EU entity while registered on the Greek Register but for export purposes, then VAT is not imposed, provided that the purchaser-following acquisition of the aircraft- does not resell or otherwise dispose of the aircraft within Greece, but exports same out of Greece to a third country i.e. to a country which is not a member state of the EU.
Withholding tax at 20% on aircraft rentals is to be retained in Greece, effective January 1, 2014 (previously, it was 25%) unless a double tax treaty provides for zero or lesser withholding. The relevant Treaties, indicatively with USA, U.K, Germany, Cyprus provide for zero withholding.
Import customs duties
Import customs duties are not imposed on aircraft reaching Greece from an EU member state or a third country pursuant to a lease structure with a Greek airline meeting the exempt criterion i.e if the Greek operator’s income results in excess of 50% from international routes; in fact, this represents a temporary import for a qualifying end-use with full suspension of duties, under the provisions of EU Regulations 2913/1992 (art.21 & 8) and 2454/1993 (art.291-300).
VAT on rentals –see exempt below
Under article 14 of L.2859/2000 (Greek Code on VAT), rentals payable by a Greek operator fall under the scope of Greek VAT [responsibility for payment of Greek VAT, if any, lies with the Greek operator/lessee]. However, article 27 of the Greek Code on VAT (corresponding to article 15 of Directive 77/388/EEC, as amended) stipulates that aircraft rentals paid by a Greek lessee are exempt from VAT, provided the aircraft in question is operated by a Greek aviation company, which is engaged mainly i.e in excess of 50% in international routes.
Generally – No.
Finance (mortgage tax, promissory note tax, conditional sale tax, tax on loan payments, tax on interest).
Mortgage tax – An aircraft mortgage agreement granted in the form of a private agreement is not subject to tax, VAT or stamp duty.
Promissory note – No.
Taxes of loan payments and taxes on interest
Corporate tax rate imposed on tax residents/legal entities in Greece or having a permanent establishment currently amounts to 29%, pursuant to the new tax law nr 4334 published in the Official Gazette nr 80/A/July 16, 2015. (previously, it was 26%). Loan payments are not subject to taxation; interest paid by a Greek individual or legal entity out of Greece is subject to 20% withholding tax, unless a treaty provides for zero or lesser rate.
Registration taxes – No
Luxury taxes – Yes, for those individuals owning aircraft or helicopters, pursuant to the above new tax law nr 4334/2015.
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 Switzerland. 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.