What are the VAT rules for private jets and charters? How are jet charters taxed in Europe? When should you appoint a fiscal representative or tax advisor?
A summary by the experts
Operators are obliged to pay VAT when they carry out passenger transport or aircraft rental services within the European Union:
- Transport operators must register for and pay VAT on domestic flights and declare any international flights in the country of departure.
- For rentals and charters, you must register for and pay VAT in the country where the aircraft is made available.
Vat & transporting passengers in private jets in Europe (EU)
Passenger air transport, in private and commercial aviation, is governed by different rules depending on the nature of the flights within, from, or to the European Union. There are two types of flights:
- Domestic flights are subject to VAT at the rate provided by each Member State, either the standard rate or a reduced rate for certain States – see VAT rates in Europe.
This rule applies to transporting passengers in an aircraft, airplane or private jet, when the point of departure and the point of arrival are located in the same Member State of the European Union.
- Flights that are from or to foreign countries are exempt from VAT in the country of departure and arrival.
This rule applies to transporting passengers in an aircraft, plane or private jet:
- from a European Union Member State with arrival in another European Union Member State or a third country,
- on departure from a European Union Member State or a third country with arrival in another European Union Member State.
However, you must delcare your flight in the departure country in order to benefit from this exemption.
A private jet operator running domestic passenger flights must register for VAT in the Member States where flights are undertaken, and pay the required VAT. International flights are exempt from VAT, but must be declared in the departure country.
VAT & private jet rental
According to the rules of Intra-Community VAT, jet or private aircraft rental is taxable in the place where the aircraft is made available. Companies may be the owners of the aircraft or may buy/resell charters. These services are subject to VAT at the rate provided for by the Member State where they are made available, generally at the standard rate – see VAT rates in Europe.
This is particularly true with so-called “ACMI” (Aircraft, Crew, Maintenance and Insurance) services.
A manager or a broker who rents aircraft or private jets must register for VAT in the Member State(s) where the aircraft are made available, and pay any applicable VAT there.
The two types of services above are very often performed by air brokers – so-called “opaque” intermediaries – who buy and resell the services. Business aircraft are, by definition, ultra-mobile, their services are worldwide.
Private chartering & VAT: in practice
Private aviation brokers, managers and operators are often confronted with complex VAT situations, as their suppliers may be established in the European Union as well as in other countries.
Example: where is a private aviation broker liable for VAT?
A private aviation broker established in Switzerland has a request from one of their clients, a company established in Luxembourg, for a domestic flight in France. The broker finds an available private jet in France with a private aircraft manager based in Germany.
This private aircraft broker will have to appoint a fiscal representative in France to obtain a French VAT number.
Registering for VAT in France will allow this broker to declare VAT in France, but also:
- They will be able to collect French VAT on their sale to the customer established in Luxembourg at the reduced rate of 10%.
- They will also be able to reverse-charge the French VAT on the purchase from the supplier established in Germany.
How to avoid a tax adjustment on a jet charter or private flight?
Tax audits are becoming increasingly common in the private aviation industry. Aircraft have very specific obligations related to their Air Operator’s Certificate (AOC), as well their flight plan reporting.
If an operator does not act in line with their obligations they can be subjected to particularly painful ground controls, or have their VAT declarations questioned by the tax authorities.
It’s not worth taking risks in this complex area: EASYTAX can help you ensure your compliance at a European and global level.
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A tax agent or a fiscal representative will be able to register you for VAT and help you fulfill your obligations in each departure state for your private aircraft.
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European regulatory references
“The place of supply of passenger transport shall be the place where the transport takes place, proportionate to the distances covered.”
Source: Article 48 of Directive 2006/112/EC.
“The place of short-term hiring of a means of transport shall be the place where the means of transport is actually put at the disposal of the customer.”
Source: Article 56 of Directive 2006/112/EC
For all European Union countries and some third countries.
For all European Union countries and some third countries. For all your VAT, Intrastat & ESL obligations, and your VAT recovery requests.