European Excise Duties on Jet A-1: Guidelines for Business Aircraft Operators
This business aviation blog post is part of a series on excise duties in Europe.
Europe excise duties are applied to aircraft fuel uplifts and can significantly impact cost of fuel at the time of uplift for general aviation operators. Excise duty exemptions are available depending on the status and nature of your flight, but exemption requirements vary from country to country. Work with your fuel supplier and ground handler pre-trip to determine excise duty exemptions you may qualify for when operating to, from, and within Europe.
The following is an overview of what you need to know:
1. What are excise duties?
Excise duties in Europe, and around the world, are government-regulated duties. They typically apply to petroleum products but may also be imposed on other products/services, including alcohol, tobacco, professional services, and even company revenues. Fuel-related excise duties go by different names. In Germany they are known as a "Mineral Oil Tax (MOT)"; in France they are referred to as "TIPP" ("Taxe Interieure sur les Produits Petroliers" [National Tax on Petroleum Products]) or "TICC" ("Taxe Interieure de Consummation sur les Charbons"); and Greek authorities call such taxes "excise duties."
2. When are excise taxes applied?
While there are general guidelines on how and when excise duties are applied, the amount of the duty and duty exemption rules vary by country. In France, for example, you’ll be exempt from fuel excise duty (TIPP) if you have an Air Operator Certificate (AOC), and at least 80% of your flights are for reward and are international in nature. In Austria, you may be exempt from excise duty if you hold an AOC, and at least 50% of flights are for reward and international in nature. To exempt excise duties in Switzerland, all uplifts must be connected to flights for reward and international (either inbound or outbound leg), with additional rules stating that uplifts must take place no more than a certain number of hours prior to uplift. On the other hand, Belgium, the UK, and Ireland do not currently charge excise duties.
3. How are excise charges calculated?
Each country determines the rate of duty it charges on fuel. Excise duties are flat fees based on volume – per liter or gallon – and not a percentage tax, like Value Added Tax (VAT).
4. How do these duties impact total cost of fuel uplift?
Excise duties within Europe can be over $3/gallon in some countries. Keep in mind that VAT, when applicable, is applied to both base price and excise duty. So, if your cost of fuel, including excise duty, is $8/gallon, you’ll pay VAT rates of up to 25% on the total cost or invoice amount. The ability to exempt excise duties and VAT – for qualifying operators – makes a significant impact on total fuel uplift cost.
5. How do fuelers and government authorities determine excise tax exemptions?
In some European countries you may be able to exempt excise duties by simply showing an AOC to the fuel provider. In other jurisdictions you may need to provide both an AOC and a statement/declaration – generated by the operator – stating that you’re flying 50% or 80% of your flights for reward and on international routes. In Germany if a charter aircraft is less than 12 metric tons maximum takeoff weight, the operator must visit the customs office to have an exemption certificate completed and signed in order to qualify for MOT exemption. This process must be done at every airport you operate to in Germany. It’s always best to confirm excise duty and VAT exemptions with your fuel supplier prior to the start of the trip.
6. How important is it to check fuel tickets before signing?
As long as your relevant documents and declarations are shown at time of fuel uplift, the fuel ticket is filled out correctly, and you meet exemption criteria at time of flight, excise duty exemptions should apply. Your fuel delivery ticket is the most important evidence you have pertaining to exemption of excise duty. It’s important to ensure that fuel tickets are correct before signing. If you’re unsure if an exemption has been applied, or if there are language/format issues you’re concerned about, clarify this with your fuel provider prior to signing the fuel ticket. Even though fuel ticket wording/format varies by country, there should always be a clear indication that taxes have or have not been applied.
7. Can excise duties paid in error be recovered later?
If you qualify for excise duty exemption but sign a fuel ticket indicating that tax is payable, it is very difficult to recover excise duty at a later date, especially as these reclaims would have to be made directly from the relevant customs authority. Operators only have the right to request a credit from the oil companies if the correct processes were followed at the time of uplift, including the delivery ticket being signed as correct, but this must be done in a timely manner. Specifically, if a request for credit relating to uplifts in certain countries is not submitted during the same month the fuel uplift takes place, an operator may have lost the opportunity for credit. This is because the fuel supplier will likely have already reported excise duty information to authorities. In such cases you may need to apply for credit directly with responsible customs authorities. These authorities differ depending on the country. You may be dealing with customs or the ministry of finance, and there may be specific documentation requirements. The takeaway here is to make sure your fuel ticket is correct and shows the appropriate exemptions at the time of signing.
8. What are some other practical tips?
Work with an experienced fuel supplier/reseller with in-depth knowledge of excise duty rules/exemptions so that he or she can assist with issues that might arise. Your aviation fuel card provider should have a tax exemption program (such as our UVair VAT Exemption Program), or similar, in place to help you maximize your savings. In addition, best practice is to plan international fuel uplifts based not just on fuel price, but on status of your flight and tax implications at each destination. Excise duties can, at times, double base fuel price. Your ability, or inability, to exempt excise duty should impact your decision on fuel uplift locations.
Rules and procedures for excise duty exemption range from straightforward to complex, depending on where you operate. Step one is to determine if your operation qualifies for excise duty exemption, step two is to have all required documentation available for fuel supplier/local authorities, and step three is to confirm duty exemption status prior to signing any fuel ticket.
If you have any questions about this blog article or fueling in Europe, contact Christine Vamvakas at firstname.lastname@example.org.
Stay tuned for Part 2, which covers more excise duty examples in specific countries in the EU.