Changes to vat laws-zero rated
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Changes to vat laws-zero rated
I wonder if people can help me shed some light on VAT laws for importing aircraft,now the exemption in the uk is stopping from January 2011,does this apply to the isle of man as the IOM parallels uk tax laws?
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The new VAT rules
It seems that with only weeks to go before the new VAT rules come in, nobody has woken up yet to the fact that with effect from 4 Jan 2011, the VAT rate on Biz Jets will be 20%
The Isle of Man's VAT system is a mirror of the UK's so the rules will apply equally there as they will in the UK.
The Isle of Man's VAT system is a mirror of the UK's so the rules will apply equally there as they will in the UK.
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protogenio,
You will need to get the aircraft imported before Jan 2011, or 20% tax as already declared. The only way to get around this is to have the aircraft on an AOC or similar for the purposes of Commercial Air Transport. Speak to an Aviation Specialist Accountant.
Regards
SKP
You will need to get the aircraft imported before Jan 2011, or 20% tax as already declared. The only way to get around this is to have the aircraft on an AOC or similar for the purposes of Commercial Air Transport. Speak to an Aviation Specialist Accountant.
Regards
SKP
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The registration has got nothing to do with the import/vat of the aircraft, if you intend to operate the aircraft in Europe, flying between EU states with EU residents on board the aircraft must be imported/vat payed in an EU state. So even if your aircraft is VP- or N registered you have to pay.
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you have to pay, IF the aircraft stays in europe more than 183 days within a year and/or 365 days within 3 years.
at last, the rule is europe wide...too many work arounds...
at last, the rule is europe wide...too many work arounds...
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IF you have your aircraft on an AOC - then the 20% EU import can be avoided. Whilst that is what is expected, no one will know the real rules until Jan 4th.
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There was recently a meeting held at Gates & Partners with various individuals who are well informed of the subject. Here is a briefing:-
You expressed an interest in notes from the recent seminar at our offices where we discussed VAT on aircraft.
Thank you sincerely to all members of the panel – Martyn Fiddler (Martyn Fiddler & Associates), Dean Carey (Constable VAT Consultancy LLP), Guy Lachlan and Marc Bailey (BBGA).
Please see short summary below – if anyone would like any further information, please let me know.
In a nutshell the rule change will mean that all aircraft (i.e. not just those over 8,000kgs) will be subjected to VAT and the VAT will apply depending on the end use of the aircraft. If the end use is by an airline operating chiefly on international routes then a 0% exemption will apply. In all other cases, the new rate of 20% will apply for UK imports.
We still have no clarity as to what customs will view as an “airline” in the business jet world although the general consensus is that business jet operators will qualify.
In summary:
1. Business jet operator buys aircraft and charters it out – 0% exemption
2. Purchaser buys aircraft for own personal use – 20% rate
3. Purchaser buys aircraft and charters it out – potentially 0% exemption or if not, the VAT can be reclaimed through a leasing and charge back structure. The business use must be a genuine business use and not as a way of disguising private use. The general consensus is that there would need to be some degree of serious marketing to third parties and records kept of genuine charters. Use will most likely be assessed in terms of mileage, passenger numbers and values charged over a decent period of time.
4. Purchaser buys aircraft and operates itself with own flight operations department etc – again, potentially will be regarded as an “airline” and may fall within the 0% exemption
The Banks have confirmed they will consider financing the VAT payment, particularly where there is clear indication that the VAT will be refunded.
All sellers of aircraft should insist on certification from the end buyer which confirms the intended use of the aircraft. If they are not satisfied that the intended use falls within the exemption, then VAT should be charged. We expect the guidance notes to give some insight on the wording this certificate should take.
It is open to buyers to import through countries with lower VAT rates (e.g. Luxembourg) – once an aircraft has been imported into free circulation in the EU, that certification should be valid in all EU countries. It is very important to check this as France in particular can be very fussy as to what it will accept. If they do not accept the aircraft was properly imported, they can seek to apply their own VAT charge.
Finally, as much care should be taken on exporting the aircraft out of the EU as on import.
Hope the above helps.
M_W
You expressed an interest in notes from the recent seminar at our offices where we discussed VAT on aircraft.
Thank you sincerely to all members of the panel – Martyn Fiddler (Martyn Fiddler & Associates), Dean Carey (Constable VAT Consultancy LLP), Guy Lachlan and Marc Bailey (BBGA).
Please see short summary below – if anyone would like any further information, please let me know.
In a nutshell the rule change will mean that all aircraft (i.e. not just those over 8,000kgs) will be subjected to VAT and the VAT will apply depending on the end use of the aircraft. If the end use is by an airline operating chiefly on international routes then a 0% exemption will apply. In all other cases, the new rate of 20% will apply for UK imports.
We still have no clarity as to what customs will view as an “airline” in the business jet world although the general consensus is that business jet operators will qualify.
In summary:
1. Business jet operator buys aircraft and charters it out – 0% exemption
2. Purchaser buys aircraft for own personal use – 20% rate
3. Purchaser buys aircraft and charters it out – potentially 0% exemption or if not, the VAT can be reclaimed through a leasing and charge back structure. The business use must be a genuine business use and not as a way of disguising private use. The general consensus is that there would need to be some degree of serious marketing to third parties and records kept of genuine charters. Use will most likely be assessed in terms of mileage, passenger numbers and values charged over a decent period of time.
4. Purchaser buys aircraft and operates itself with own flight operations department etc – again, potentially will be regarded as an “airline” and may fall within the 0% exemption
The Banks have confirmed they will consider financing the VAT payment, particularly where there is clear indication that the VAT will be refunded.
All sellers of aircraft should insist on certification from the end buyer which confirms the intended use of the aircraft. If they are not satisfied that the intended use falls within the exemption, then VAT should be charged. We expect the guidance notes to give some insight on the wording this certificate should take.
It is open to buyers to import through countries with lower VAT rates (e.g. Luxembourg) – once an aircraft has been imported into free circulation in the EU, that certification should be valid in all EU countries. It is very important to check this as France in particular can be very fussy as to what it will accept. If they do not accept the aircraft was properly imported, they can seek to apply their own VAT charge.
Finally, as much care should be taken on exporting the aircraft out of the EU as on import.
Hope the above helps.
M_W
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Sellers beware!
Quote:
All sellers of aircraft should insist on certification from the end buyer which confirms the intended use of the aircraft.
Surely it is only HM Revenue and Customs that can confirm that, at the time of sale or importation, the intended use falls within the exemption. A confirmation from the end buyer could be worthless. The Seller is responsible for collecting the tax on behalf of HMRC and the liability for collection remains with the Seller.
Quote:
All sellers of aircraft should insist on certification from the end buyer which confirms the intended use of the aircraft.
Surely it is only HM Revenue and Customs that can confirm that, at the time of sale or importation, the intended use falls within the exemption. A confirmation from the end buyer could be worthless. The Seller is responsible for collecting the tax on behalf of HMRC and the liability for collection remains with the Seller.
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Spares Parts For Foreign Owned Corporate Aircraft
Hello All
Heres a question, what about the import charges for spares brought into the UK for eventual supply (but held in UK for a unknown perid) to foreign owned/ foreign Registered corpoate Aircraft which visit UK or France or spain occassionally but are invoiced outside of the EC..
Can we delcare these as Airlines and therefore exempt, when these aircraft have signed the Zero Rated Declaration, even though the operators are outside of the EU.. ??
Thanks Andrew
Heres a question, what about the import charges for spares brought into the UK for eventual supply (but held in UK for a unknown perid) to foreign owned/ foreign Registered corpoate Aircraft which visit UK or France or spain occassionally but are invoiced outside of the EC..
Can we delcare these as Airlines and therefore exempt, when these aircraft have signed the Zero Rated Declaration, even though the operators are outside of the EU.. ??
Thanks Andrew
