Program Guides
For Aircraft Management Companies
European VAT Refunding and Exemptions on Jet Fuel
Are you confident that your European Tax Recovery Program recovers or eliminates VAT for your aircraft management company on jet fuel and other aircraft operating costs?
“Airline” VAT Exemption
Fuel supplied within the European Union may be subject to total exemption under the “airline” VAT exemption contained in Article 148 of the Principal VAT Directive. This section exempts jet fuel from local VAT when purchased and then used by an “airline operating for reward chiefly on international routes”.
This language has caused confusion, in part because the VAT Directive contains no further definition of the terms used in Article 148 and there is very little European case law on the subject.
The good news is that many suppliers of jet fuel to aircraft management companies (“ACMs”) now treat ACMs holding air operator certificates (air carrier certificates for US companies) as “airlines”. Further, current industry practice is to treat all flights occurring outside a particular country’s borders as “international”, notwithstanding that a majority of the purchaser’s flights do not cross an international border.
The major fuel suppliers and most intermediary suppliers generally use their “tax declaration” of similar statements by their customers to “document” their “airline” status.
UK VAT Exemption
While the UK is no longer a member of the EU, UK law does grant a VAT exemption for fuel used in “aircraft stores” including fuel for flights that “eventually” (within there months of uplift) depart the UK. Thus, for an AMC trip from, say, KTEB Teterboro to EGGW Luton, continuing to EGPH Edinburgh then back to KTEB, fuel taken at EGGW is subject to this special VAT exemption.
“Incorrect” VAT charges can usually be documented by copies of the trip itineraries indicating eventual departure from the UK and resolved through the credit/rebill process with most suppliers.
VAT Refunding
In theory, the European VAT refund mechanisms generally allow refunds to management companies based in or outside of Europe for VAT incurred in several countries, such as :
Belgium
Denmark
Finland
France
Ireland
Luxembourg
Netherlands
Norway
Switzerland
However, presenting such refund applications requires the AMC to demonstrate that it is NOT an “airline operating for reward chiefly on international routes”, and thus not entitled to the “airline” VAT exemption. Such a position would in most cases be directly contrary to the current practice among fuel suppliers described above. Accordingly, VATAmerica policy is generally not to submit such VAT charges in VAT refund applications.
Electronic Invoice Delivery
VATAmerica maintains strong working relationships with many direct and intermediary fuel suppliers, FBO’s and other GA industry vendors. Electronic invoice data and images for our clients are delivered automatically to us daily or monthly.
Our clients benefit significantly from these relationships:
We constantly monitor each client’s “inventory” of refundable VAT by country
We routinely request vendor credits for incorrectly charged VAT
Our systems capture all VAT invoicing from participating vendors, assuring maximum VAT refunding and exemptions.
And these vendors benefit from enhanced customer savings too.
VATAmerica's European Tax Recovery and Exemption programs have helped hundreds of general aviation and other operators to minimize their European indirect tax costs.
Special VAT Refund Reporting
For all tax refunds, VATAmerica sends Notices of Refund including specialized reports detailing the cash distribution subtotaled by the tail number of the aircraft that incurred the tax. These reports facilitate customer account credits in appropriate cases, promoting customer awareness of the management company’s attention to cost management.
VATAmerica’s European Tax Recovery and Exemption programs help hundreds of general aviation and other operators to minimize their European indirect tax costs.
