This business aviation blog post continues from our article last week, entitled: “Jet A-1 Fuel Uplifts in Europe – Part 1: Basic Considerations for Minimizing Costs, Taxes and Duties.“
There are options available for exempting Value Added Tax (VAT) and Mineral Oil Tax (MOT) on fuel uplifts in Europe. Applicable rules and requirements vary depending upon the country, airport and nature of your flight.
The following is an overview of what you need to know:
1. UK exemptions
In most of the EU, MOT is only exempt for airlines carrying revenue passengers. The UK, however, exempts most general aviation (GA) operators “flying for consideration.” For example, to exempt MOT (known as Excise Duties) in the UK you do not need to have an Air Operator’s Certificate (AOC) as long as you’re flying for consideration. This can mean that the flight department is simply assigning the charge of the flight to a different division of the company. In addition, the UK will exempt VAT at the pump so long as you’re operating for non-leisure purposes and are flying to an “eventual non-UK destination.” If, for example, you’re flying from London Stansted (EGSS) to Edinburgh (EGPH) to Paris Le Bourget (LFPB) your fuel uplift at EGSS is not subject to VAT as long as you do not uplift again at EGPH. Fuel taxes in the UK are only exempt at the pump if it’s your last fuel uplift prior to departing to a non-UK destination.
2. General exemptions for non-airline operators
Shannon (EINN) exempts all GA operators from VAT when flying to non-EU destinations. This is not the case, however, for other airports in Ireland such as Dublin (EIDW). In Spain if you’re operating for business purposes VAT will be exempted at the pump. Sweden, meanwhile, imposes no taxes or duties on aviation fuel for any GA operations. By contrast, Finland imposes 24% VAT on private non-revenue operations but no MOT charges are applicable.
3. MOT exemptions
The common perception in Europe is that if you present an AOC you’re exempt from MOT. But, if customs authorities audit your operation to verify your exemption status other qualifying criteria come into play. Although you must have an AOC to claim most MOT exemptions it’s technically not the AOC that qualifies you for exemption. To be exempt either your inbound or outbound leg must be operated for “commercial” purposes and your flight plan, on at least one of these legs, should be filed “IN.” In Switzerland, fuelers cross reference your fuel order with how you’ve filed your flight plan. If you present an AOC but have not filed your flight plan as IN, you’ll more than likely not get exemptions.
4. Private flights
In most of Europe, MOT and VAT exemptions are only available for operators considered as “airlines flying for reward.” Certain countries and locations, however, provide point of uplift exemptions for non-leisure operators. This includes the UK, EINN, Spain, Italy, and Sweden. Ireland has no MOT duties in place, and while GA operators pay VAT at all other Irish locations they are exempt from 13.5% VAT at EINN, if their next destination is outside the EU. Spain exempts all business flights from fuel taxes when a VAT or Tax ID number is presented. If you’re flying a business-related flight to a non-EU location, Italy will also exempt VAT at the pump. UK operators of non-leisure business flights may exempt taxes at the pump if they’re flying outside the UK, or have an eventual destination outside the UK. Keep in mind, however, that fuel is fully taxable in the UK if you’re flying domestic legs, with an eventual destination not outside the country, or if you’re flying international legs for leisure purposes.
5. VAT recovery after-the-fact
It’s always best to exempt VAT at the pump rather than claim VAT refunds after-the-fact. If you’re not registered with a point of sale European VAT exemption program it’s important to ensure your local fuel provider or reseller is VAT-registered in the country. This ensures all business operators will receive VAT-compliant invoicing and have the ability to reclaim VAT later. If you’re entitled to a VAT refund after the fact, be mindful that VAT reclaim companies usually charge fees of 30-40% of any VAT recovered.
6. International flights
To exempt VAT in most of Europe, flights must be for reward with the majority being international. “Majority” is considered over 50% in most of Europe, but this is not always the case. For example, France only exempts tax if the flight is for reward and at least 80% of flight legs international. To provide proof of this some operators carry an 80/20 certificate stating that at least 80% of flights are for reward and international. You can make your own declaration on company letterhead, but there’s specific wording that should be used. We recommend that operators carry copies of AOCs and 80/20 declarations to provide to fuelers when operating in France.
7. Signing fuel tickets – Potential Pitfall!
It’s important that fuel tickets be closely reviewed and verified prior to the pilot signing it. Look at the boxes that have been checked by the fueler, and any notes on the ticket, before signing. In the case of a fuel ticket error or miscommunication it’s difficult to reverse your position later if the ticket has already been signed. This is a common pitfall operators encounter.
8. Idiosyncrasies to consider
Germany has specific rules for tax exemptions for operators of aircraft with a maximum takeoff weight (MTOW) of 12 metric tons or less. To exempt taxes you’ll need to go into the customs office to have an exemption certificate stamped. While this is usually done on a trip by trip basis, it’s possible to obtain six or 12 month exemptions for aircraft with an MTOW under 12 metric tons. Be aware that if you are exempt from duties in Switzerland at the point of uplift but do not depart the country within 24 hours of fueling then these exempted charges become fully taxable.
To ensure you’re taking advantage of all qualifying fuel tax and duty exemptions at point of sale it’s important to research exemption options prior to day of operation. Joining a European VAT exemption program is beneficial to many GA operators in ensuring that they obtain all applicable fuel tax and duty exemptions at point of sale. Also, speak to your fuel provider regarding each stop you will be uplifting fuel from in order to ensure that you are able to gain insight to any regulatory items that must be met in order to exempt fuel taxes.
If you have any questions about this article or would like more information on how to minimize fuel costs in Europe, contact Christine Vamvakas at email@example.com.
Category : Best Practice
About Steve Woods
Steve Woods worked for Universal Weather and Aviation, Inc. through February 2016. At the time of his departure, Steve served as Director, Sales and Supply, Europe, Middle East & Africa, UVair. One of Steve’s specialties is his understanding of the complicated and varying differences by country of value-added taxes throughout Europe.
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