1. travel
2. transports
3. air travel
4. airplanes

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EU
March 2015
Commercial and corporate
flying in the European Union
A quick overview over
aircraft importation
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Operating inside the European Union?
Figure 1: Flying in the European Union
A - Temporary Importation – not without problems
Private or commercial use in relation to Temporary Importation
Passenger and crew allowed on board in relation to Temporary Importation
B - Full importation is the safe option
Figure 2: VAT Handling
You do not have to pay anything!
About OPMAS
Operating inside the European Union?
If you operate inside the European Union (EU) with a non-EU registered aircraft you may have to import the aircraft into the
EU and manage your exposure to EU VAT (Value Added Tax) and Duty. You may already know this and you probably also
know that the previous aircraft importation regimes in the United Kingdom and Denmark offering VAT exemptions ceased
in January 2011 and 2010 respectively.
This has left many operators without a clear view of the current EU importation situation and without the necessary
knowledge to choose the most effective procedure for aircraft importation and unrestricted access to operate within the
EU. As VAT rates are between 15% and 27% and duty is between 2,7% and 7,7% this is an important aspect to consider
before commencing or continuing EU operations.
There are 2 options to avoid any of this: A) a restricted temporary importation or B) a permanent “full” importation into free
circulation allowing the aircraft to fly anywhere at anytime carrying anyone.
You do not have to import if you fly strictly for pleasure with no business related articles on board. You might have to import
if you fly a corporate aircraft for business purposes from point to point inside the EU or if you leave it in the EU. If you do
not do a full importation you are automatically considered as flying under the Temporary Importation regulation and will
have to adhere to these rules. See figure 1 on page 4.
UPDATED: september 2014
The 28 European Union member
states marked with red.
EU - special member state territories
Dots and areas marked with blue have
speciel rules regarding vat.
ICELAND
SWEDEN
The following territories are not a part of
the EU
• Greenland together with a series of British,
French and Dutch overseas territories, e.g.
New Caledonia, the Netherlands Antilles
and the British Virgin Islands
• Faroe Islands
• The Channel Islands, including Jersey,
Guernsey, Alderney and Sark
• Andorra, San Marino and the Vatican City
EU territories outside the VAT area
There are a number of territories within the
EU where the territory is not a part of the EU
VAT area.
• Finland: Åland Islands
• France: The overseas departments,
including the F
rench Guiana, Martinique,
Guadeloupe and Réunion
• Greece: Mount Athos
• Italy: Livigno, Campione d’Italia and The
Italian part of Lake Lugano
• Spain: Ceuta, Melilla, The Canary Islands,
including Gran Canaria, Tenerife,
Fuerteventura, Lanzarote and Gomo
• Germany: Helgoland and Büsingen
• The Great Britain: Gibraltar
• Cyprus: North Cyprus
Countries outside the EU
but within the VAT area
A series of countries and territories outside
the EU shall be considered a part of the EU
VAT area.
• Monaco
• Isle of Man
• Cyprus: The base areas of the United
Kingdom, including Akrotiri and Dhekelia
FINLAND
NORWAY
EST.
LAT.
DENMARK
LAT.
RUS.
IRELAND
UNITED
KINGDOM
BELARUS
NETH.
POLAND
GERMANY
BELGIUM
LUX.
CHANNEL ISLANDS
UKRAINE
CZECH REP.
SLOVAKIA
FRANCE
AUSTRIA
SWITZ.
MODOVA
HUNGARY
SLOVENIA
ROMANIA
CROATIA
ITALY
PORTUGAL
RUSSIA
BOS. &
HER.
SERBIA
MONT.
KOS.
ALB.
SPAIN
GREECE
TUNISIA
MOROCCO
BULGARIA
MAC.
TURKEY
MALTA
S
CYPRUS
ISRAEL
ALGERIA
LIBYA
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EGYPT
JO
Figure 1: Flying in the European Union
Importation status versus privileges and restrictions for flying within the EU
Importation status
of aircraft
Entity responsible
for aircraft
Imported into the EU
Not imported into the EU
Domiciled in the EU
Flying not restricted
Aircraft is in free circulation
Flying not allowed in the EU
Not domiciled in the EU
Flying not restricted
Aircraft is in free circulation
Flying limited and regulated
by the Temporary Importation
(TI) regulation
A - Temporary Importation – not without problems
To qualify for temporary importation (“TI”), and be eligible for conditional relief of duties and taxes, the aircraft must be
owned outside of the EU, registered outside the EU and not made available for use within its boundaries for EU residents
and must not be used commercially. The aircraft cannot remain in the EU for more than six months.
The primary intention of the relief is to grant the private user free access to fly around Europe. Go shopping in Paris or
London or go skiing in Austria. Corporate aircraft with no EU passengers on board usually qualifies also however carrying
marketing material might be an issue. If the conditions are met TI is a paperless routine and admission is granted automatically. Operators must ensure that they have other documentation available to evidence entry and departure dates etc.
NBAA notes the following: While the process is voluntary, operators should request that customs officials stamp a European Community Temporary Admission form upon arrival. Operators must remember to have the form stamped again
upon their departure from the EU. If the form is not stamped on departure, it could appear that the aircraft was in the EU
continuously, which would violate the temporary admission conditions.
Particularly with respect to passengers, the majority of member states within the EU have rigid limitations and restrictions
for who may be carried within their borders and how. Please note that the TI is also often referred to as Temporary
Admission.
Private or commercial use in relation to Temporary Importation
The definitions for “private and commercial use” are specific definitions used by EU Customs authorities in relation to TI
and must not be compared to similar definitions used by aviation regulators as these definitions are used in a different
context.
The usual “safe” private use definition is an aircraft owned directly by a private individual where the usage of the aircraft is
solely private; like flying with the family and friends for visits and holidays and where the purpose of any flight is never
business oriented.
Many Part 91 operators or similar corporate flyers will claim that they are private operators which is correct according to
the FAA and other aviation regulators, but measured against the definitions in the Customs Code, their corporate flying
might be considered commercial use of the aircraft in the EU especially if marketing material is carried on board.
We have received a clear statement from the German Customs authorities regarding the commercial use definition: “the
German customs authorities assume commercial transport if order forms, brochure material, catalogues, tools, laptops or
similar company material (i.e. goods) are carried by employees onboard a corporate aircraft”.
The only solid exception we have seen to the above commercial definition is in the United Kingdom where corporate flying
under TI is now specifically categorized as “private use”. The change was made in connection with the implementation of
the regulation change of the “old” VAT exemption in December 2010. A TI under these conditions in the UK might only be
valid in the UK - not in mainland Europe - and a subsequent flight from the UK to Germany for example may be “overruled”
in Germany.
NOTE: A TI does not mean that an aircraft is in “free circulation”. On the contrary. Free circulation is ONLY when the
aircraft has been fully imported.
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In circumstances where a management company uses an aircraft, and when manufacturers and dealers are demonstrating an aircraft to prospective buyers the usage might be categorized as commercial usage in any EU member state even
in the United Kingdom.
IBAC has asked the EU Customs Code Committee to have a look at the TI regulation and a “working paper” has been
published. For a thorough review of this “working paper” please check our DOWNLOAD page.
Passenger and crew allowed on board in relation to Temporary Importation
The rule of thumb is still that aircraft on an internal EU flight are not allowed to carry EU residents on board as passenger
and/or crew except for the exemptions described below.
EU residents are definitely allowed on board if they are employed and the use of the aircraft is mentioned in the contract of
employment. This is a situation with a lot of pitfalls, as most corporate aircraft are owned by subsidiaries, SPVs, trusts or
finance companies, which typically do not employ any of the passengers.
The reason for allowing EU nationals onboard was to allow the crew to be EU nationals. That is the reason why employees
of the owner entity are allowed on board and why the relationship must be documented through a contract of employment.
February 2012 the UK changed their view on TI or Temporary Admission as it is referred to in the UK. They limited the use
of “fly-along” permissions for EU residents. In Notice 308 it is now directly mentioned that it is only allowed if there is no
corporate use and thus in line with the private use/entertainment use approach in mainland Europe. The changes also
exclude the possibility of inviting EU resident passengers along on business trips. In the notice they have deleted the word
“authorized” meaning that only real and directly employees of the owner are allowed on board and that this must be
mentioned in the employment contract.
In February 2015 the Implementing Regulation, article 561 has been changed along these lines to avoid misuse. It is no
longer possible to be authorized. Only EU resident employees may use a non-imported aircraft.
The authorization rule was meant to support the function of operating the aircraft - not the passengers. In the French
guidelines it is directly written that you can only authorize an EU resident if the person is the pilot of the aircraft and that
any other use of this type of authorization is only allowed after written acceptance by French Customs.
This is the new text:
Total relief from import duties shall be granted where means of transport are used commercially or privately by a natural
person resident in the customs territory of the Union and employed by the owner, hirer or lessee of the means of transport
established outside that territory.
Private use of the means of transport is allowed for journeys between the place of work and the place of residence of the
employee or with the purpose of performing a professional task of the employee as stipulated in the contract of employment.
At the request of the customs authorities, the person using the means of transport shall present a copy of the contract of
employment.
The regulation regarding passengers and crew on board are the same for private and commercial use; the difference is
the period the aircraft is allowed to stay in the EU for the aircraft. Private aircraft are allowed 6 months whereas commercial
aircraft basically must leave immediately.
See figure 2 on page 7 for the connection between the two types of operation and the VAT handling.
Watch a short presentation on how we can assist you...
If you want to know how to fly inside the European
Union (EU) without problems please have a look at
this new short video we have produced.
Scan and view the video on your smartphone/tablet
or go to our website: www.opmas.dk
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B - Full importation is the safe option
Most operators will prefer to make a full importation of the aircraft in one of the EU member states and settle VAT and duty
in order to be able to fly unrestricted in the EU. This deals effectively with any VAT cabotage issues that may exist and
eliminates all uncertainty and risk of violation of customs regulations in all EU member states. The aircraft will have the
necessary importation documentation and be in “free circulation” like any aircraft operated by an EU resident company.
Once imported, the aircraft can move freely within the EU.
This does not mean having to pay the VAT and duty. Either the import VAT can be 1) set off or the import is 2) VAT
exempted - at zero rate.
1. The first procedure setting off the VAT is available for aircraft operated by or for companies as a corporate aircraft, for
aircraft leasing companies and for aircraft under management.
There is no need to establish an EU domiciled leasing company or other such EU company. It is perfectly possible to
import a corporate aircraft flying under Part 91 in the name of the non EU owner company, the lessor, the lessee or a
management company without a Part 135 certificate (in the EU and hereinafter referred to as an AOC) - as long as that
company is a real business engaged in “economic activity”.
As a rule of thumb - if it is a company generating a turnover at arms length prices and it will make a profit in the long term,
the VAT on the aircraft due may be set off upon importation. No payment of VAT or duty takes place.
It does not require creating a company in the EU and there are no other fiscal implications nor income tax reporting or any
such thing of any sort. The procedure is the same as for any EU based company in any member state where they would
do business. It is all based on standard national legislation however the procedure does require some paperwork, which
differs from member state to member state. Written approvals by local Customs or legal opinions are available in most
cases.
2. The second procedure with VAT exemption is available for aircraft used by companies with an international AOC or
charter certificate. Some aircraft can be imported using either one of the procedures.
All EU or non EU charter companies or management companies with an AOC can import at 0% VAT just like the
scheduled carriers.
Some providers also offer a procedure where one company is established to act as lessor and another company to act as
lessee creating lessee “airlines” without an AOC however that solution is not in line with the EU regulations. In the latest
decision by the European Court of Justice in a case referred to it by the Finnish courts a charter operator with an AOC was
approved for 0% VAT. An AOC is generally a requirement to be recognized as an airline in Europe. Non AOC holders
cannot be airlines.
Using the AOC procedure no VAT is calculated, as the rate is 0%. The aircraft must be “used” by the charter operator - not
necessarily listed in the OS or on the charter certificate - just “used” and accordingly non commercial aircraft can also be
imported by a management company with an AOC under the 0% VAT exemption. Some member states do require the
aircraft to be used for charter. The UK does. Denmark does not. Since the Finnish judgement, A Oy, see our review of the
case, it has been widely accepted that a leasing company leasing an aircraft to an airline may also benefit from the VAT
exemption as a supplier. The exemption is not limited to the immediate supplier. The entire chain of lessors/lessees etc
qualifies if the end user is an international airline/AOC holder.
Aircraft using either procedure may be used partly for recreation or pleasure - if the aircraft is leased in which case the
leasing company could undertake the import as per option 1 above - or if the usage is fully compensated for. Most
privately owned aircraft can be temporarily imported instead though.
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Figure 2: VAT Handling
The safe type of operation versus type of importation
Type of importation
used
A: Full importation
B: Temporary importation
Procedure 1:
Operated as a corporate
aircraft
VAT calculated at local rate
and set off without any
cash payment
No VAT if all flights starts or
ends outside the EU
Procedure 2:
Operated by an international
AOC or charter certificate holder
VAT exempt = 0% VAT
No VAT if all flights starts or
ends outside the EU
Type of operation
You do not have to pay anything!
Obviously the above is just a brief presentation of the options. For a thorough review please download our other reviews
on our website. Feel free to enquire about the solutions available and/or if you need any further information.
The bottom line is that aircraft can still be imported into the EU without paying VAT and duty!
If you have any questions or comments please do email me directly: [email protected]
Best regards
OPMAS
Lasse Rungholm
CEO, Attorney at Law (L)
ATP MEL & MES
[email protected]
Want to know more?
All PDF’s can be downloaded from www.opmas.dk
Commercial and corporate
flying in the European Union
Commercial and corporate
flying in the European Union
Temporary Importation
- the “working paper”
EU and the “airline”
VAT exemption
A thorough review of the
“working paper made by the
EU Customs Code Committee, CCC and IBAC.
Commercial and corporate
flying in the European Union
Review for non-EU operators on
aircraft importation and VAT
A brief introduction to VAT in
the European Union
Fully understand the Temporary
Importation scheme
Analysis of the IBAC/Customs
Code Committee’s “working
paper”
Analysis of the IBAC/
Customs Code Committee’s “working
paper”
Commercial and corporate
flying in the European Union
About the “airline”
VAT exemption
About Temporary
Importation
About
EU VAT
Our interpretation of the
judgement from the European Court of Justice which
allows 0% VAT full importation for international charter
operators.
In-depth description of the
practical use of temporary
importation for commercial
and corporate flying in the
European Union.
Read this brief if you want to
get a quick overview over
the European Union VAT
system.
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About OPMAS
Our team has more than 20 years of cumulative experience. We developed the
original 0% VAT “Danish Route” and have processed more than 2,000 aircraft over
the years. We are dedicated to aviation with extensive legal and aviation experience, specializing in minimizing VAT exposure for aircraft owners and operators
flying into and within the EU.
CONTACT INFO
OPMAS ApS
Lasse Rungholm, CEO, Attorney at Law (L) - [email protected]
Frank Hansen, Director - [email protected]
Sonderborggade 9
DK-8000 Aarhus C
Denmark
Phone: +45 70 20 00 51
www.opmas.dk
COPYRIGHT
The copyright belongs to OPMAS and all rights are reserved. Referencing this
document is allowed naming OPMAS as the source.
DISCLAIMER
The information and opinions contained in this document are for general
information purposes, are not intended to constitute legal or other professional advice,
and should not be relied on or treated as a
substitute for specific advice relevant
to particular circumstances.
The information contained in this document is
intended solely to provide general guidance for the personal use of the reader,
who accepts full responsibility for its use.
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member of