Vakaru, C-151/16 (13 July 2017). A newly built commercial cargo ship used marine fuel traveling from its construction site to its first cargo-carrying pickup point. Lithuania denied refunding the excise tax on such fuel, arguing that the ship had not yet conducted services for compensation and that the ship’s builder, which had purchased the fuel and incurred the excise tax, did not have a Lithuanian license to supply fuel to ships., C-151/16 (13 July 2017). A newly built commercial cargo ship used marine fuel traveling from its construction site to its first cargo-carrying pickup point. Lithuania denied refunding the excise tax on such fuel, arguing that the ship had not yet conducted services for compensation and that the ship’s builder, which had purchased the fuel and incurred the excise tax, did not have a Lithuanian license to supply fuel to ships.

The Court dismissed both arguments quickly, ruling that the purpose of the marine fuel exemption from excise tax, based on the actual fuel use, could not be overridden by local rules inconsistent with the purpose and framework of the Energy Tax Directive’s provisions.

A Oy, C-33/11 (19 July 2012). European Court of Justice (ECJ) delivers a roadmap allowing an individual to purchase and use an aircraft for personal purposes to achieve VAT-exempt status as an “airline operating for reward chiefly on international routes” under Article 148(e) of the Principal VAT Directive.

Cimber Air A/S, C-382/02 (16 September 2004). ECJ rules the “airline” VAT exemption covers all purchasing by an airline of goods and services used for operating its aircraft, not merely those purchases supporting its international flights. Notwithstanding Cimber Air, many fuel suppliers and intermediaries continue to grant VAT exemption only for charter flights regardless of the purchaser’s overall status as an “airline”. Most tax authorities, except the UK HMR&C, have not formally adopted the ECJ’s opinion in Cimber Air.

Fast Bunkering Klaipeda UAB, C-526/13 (5 March 2015). ECJ holds that the VAT exemption for supplies of marine fuel to commercial ships applies, notwithstanding the interposition of intermediaries between the supplier and the ship, when the supplier has transferred the right to dispose of the fuel directly to the ship operator. The ship and airline VAT exemptions being nearly identical, this decision could upset the general aviation sector’s reliance on “flash title” to sever the VAT link between the physical supplier and the aircraft operator. Italy appears to be the first, in January 2017, to acknowledge Fast Bunkering for supplies of marine fuel formally.

Reemtsma Cigarettenfabriken GmbH, C-35/05 (15 March 2007). The well-reasoned case holds that the VAT Refund Directives should not be used to recover incorrectly charged VAT when the supplier is solvent and subject to civil liability for VAT overcharged to the customer. Instead, the customer must seek relief from the supplier. In close cases, this requirement often means that the supplier refunding the “incorrect” VAT may be exposed on audit without prior ruling or guidance from the local tax authority.

Systeme Helmholz GmbH, C-79/10 (1 December 2011). Germany persuades the ECJ to add a “commercial” requirement to the EU Energy Directive term granting excise tax exemptions on jet fuel used “in air navigation,” thus restricting German MOT relief away from business operators. Coupled with Germany’s refusal to grant VAT refunds on jet fuel to non-EU corporate operators, non-refundable VAT and MOT in Germany adds approximately €3.10, or about US$ 3.30, per USG to the after-tax cost of jet fuel in Germany for all corporate operators as well as most aircraft management company and other operators. EU operators can avoid or recover the VAT component.