Do tax authorities assess taxes, duties, or other impositions in connection with any of the following events and, if so, at what rates and under what circumstances?
Generally speaking, the sale of an aircraft in Italy constitutes a transfer of an asset subject to Value Added Tax (at a rate of 22%).
VAT does not apply if the aircraft is supplied to a qualifying international airline for use in international air transport.
VAT does not apply if the aircraft sold in Italy is thereafter exported by the foreign purchaser within ninety (90) days from the purchase.
- Passenger boarding duty – Passenger boarding duty is a tax which is levied on the carriage, from any Italian airport, of chargeable passengers on chargeable aircraft in accordance with Law No. 324/76. It is payable by the operator of the aircraft, whilst the owner of the aircraft is kept jointly liable with the operator should the latter be in default.
- Landing and Take-off duties – Landing and Take-off duties are taxes applied by Italian airports in connection with each landing and take-off of chargeable aircraft in accordance with Law No. 324/76. The amount due is dependent on the final destination and weight of the aircraft. They are payable by the operator of the aircraft, whilst the owner of the aircraft is kept jointly liable with the operator should the latter be in default.
- Security charges – X-ray security controls carried out on luggage at the Italian airports are subject to government fees payable by the operator of the aircraft.
- Municipality taxes – Municipality taxes at a variable rate are applied on each flight departing from Italian airports, generally to compensate the stress caused by aircraft noise. The tax is payable by the operator of the aircraft.
- Regional Tax on Aircraft Noise – Some Italian Regions (i.e. Lazio, Lombardia, Emilia-Romagna, Marche, Campania and Calabria) have recently introduced a regional tax to collect amounts for the management of the social costs arising from aircraft noise, such as airport monitoring systems, anti-pollution measures and indemnification of communities affected by aircraft acoustic pollution. The tax is levied on the weight of aircraft, regardless of particular urban characteristics of each airport, the actual noise level of particular aircraft and the distinction between daytime and night-time flights. For such reasons, and others (e.g. distortive consequences for competition among sector operators, negative effects for passengers, etc.), the Regional Tax on Aircraft Noise is currently disputed and could be
- Carbon Emissions Scheme – The Aviation Emissions Directive came into force on 2 February 2009. It provides that, from 1 January 2012, the EU Emissions Trading Scheme will apply to all aircrafts flying to and from the EU. Under the scheme aircraft operators are allocated a limited right to emit carbon and are required to purchase additional rights if their emissions exceed the rights granted.
Finance (mortgage tax, promissory note tax, conditional sale tax, tax on loan payments, tax on interest)
A mortgage on aircraft registered in the Italian Aircraft Registry is effective subject to and upon its registration with both the Italian Public Office of Private Deeds and the said Italian Aircraft Registry.
Duties are payable to the Italian Civil Aviation Authority (ENAC) in connection with recording a mortgage over an aircraft registered with the Italian Aircraft Registry at a rate (currently) varying from Euro 107,36 to 1.266,29 depending on the actual secured amount.
Taxes are payable to the Italian Tax Authorities in connection with recording an aircraft mortgage with the Italian Public Office of Private Deeds at a rate to be assessed in the flat amount of Euro 168,00 or in proportion to the actual amount secured by the mortgage (0.50%). The flat amount is assessed if the mortgage is granted directly by the borrower to the lender as security of its own payment obligations under a credit facility.
The Italian instrument more similar to a “promissory note” is the “cambiale”. A stamp duty at a rate (currently) of 1,2% of the credit recognized under the promissory note is applied.
Conditional Sales tax
Conditional sales are generally subject to the tax regime applicable to the sale.
Taxes of loan payments and taxes on interest
For companies resident in Italy or with a permanent establishment in Italy corporation tax will be levied on Italian profits including interest on loans and profit on lease rentals. The corporation tax rate is currently 27,5%.
For companies resident outside Italy that make loans to Italian companies (other than through a branch or agency – permanent establishment) withholding taxes may apply. Rates of withholding vary depending on jurisdiction and may be disapplied subject to the provisions of an applicable double taxation treaty.
Lease (Tax on payments other than income)
Generally, lease rentals are subject, in addition to Italian corporation tax on profits payable by Lessor resident in Italy or trading in Italy through a branch or agency (permanent establishment), to VAT and withholding taxes. Exceptions to the application of VAT and withholding (further to the general cases described herein) do exceed the scope of this note
As for the lease payments to a foreign company, withholding taxes are generally due at a rate of 30% of the rent. The percentage can be reduced as set forth in Double Taxation Treaties entered into by the Republic of Italy with foreign countries (e.g. the bilateral agreement with Germany provides a withholding tax at a rate of 5%, the bilateral agreement with Ireland provides that no withholding is applicable).
The importation of an aircraft to Italy is generally subject to VAT (at the rate of 22%) and custom duties (approximately 4%). The aircraft can be imported at zero rate VAT if the importation is made by a qualifying international airline for use in international air transport.
No, although see above 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%.
The stamp duty payable in connection with the registration of an aircraft with the Italian Aircraft Registry is a flat rate fee (currently) of Euro 16,00.
In case of registration with the Italian Public Office of Private Deeds of any agreement and/or document relating to the aircraft a tax would be due at rates varying from a flat rate of Euro 168 to 3% on the relevant amount taxed, depending on whether the obligation(s) thereunder attract VAT and on the relevant contents thereunder. Stamping duties at a rate of Euro 16,00 every 4 standard pages are attracted as well.
In 2011 a State tax was established on private aircraft registered with the Italian Aircraft Registry (according to the Italian Navigation Code, military aircraft, aircraft owned by any public entity and operated by police, customs, firefighting departments or for rescue operations, as well as aircraft operated to provide public services, are deemed as State aircraft. Any other aircraft is deemed as private). This tax is yearly charged to the owner of the aircraft and relevant amount is based on the take-off weight of each specific aircraft.
Since 4 September 2013 the subject State tax is applied also on private aircraft registered in foreign registries, whose stay in the Italian territory exceeds six (6) months – either on a continuous basis or otherwise – within a timeframe of one (1) year.
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 Germany. 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.