VAT: Opinion of the Advocate General’s Import by airlines

An interpretation of the VAT regulations relating to the definition of a “qualifying aircraft” as provided by Aoife O’ Sullivan, partner at Kennedy’s Aviation.

The Korkein hallinto-oikeus (Supreme Administrative Court of Finland) has referred to the European Court of Justice for a preliminary ruling on three questions concerning the interpretation of the VAT exemption applicable to the supply of aircraft to be ‘used by airlines operating for reward chiefly on international routes’.

An opinion given by the Advocate General yesterday in the European Court of Justice supports work we have been doing with BBGA and EBAA on the interpretation of the VAT regulations relating to the definition of a “qualifying aircraft”.  In very simple terms, qualifying aircraft can be imported at 0% VAT by an “airline”.

The opinion states that:

1 – The term “airline” is not limited to scheduled airlines and will include business and private jet operators (contrary to the opinion of HMRC!). The consistent approach has been that those with an air operators certificate should be recognised as an airline and this opinion supports that view.

2 – The fact that an owner is transported by the airline does not affect the VAT status, provided the airline is using the aircraft in its business (i.e. the aircraft is not used exclusively for the private use of the owner and is available for charter).

The opinion of the Advocate General has been sent to the European Court of Justice and it is hoped the ECJ will follow the essence of his opinion when they make their ruling.