Flying to the EU VAT and duty, Full or Temporary Importation

PRESENTED BY:

Lasse Rungholm, CEO, OPMAS

International Operators Conference | Tampa, FL | March 17 – 20, 2014

Regional Review: Europe - Thursday, March 20th | 12.30 a.m. – 2:00 p.m.

Flying to the EU

• Introduction

• What is the EU?

• Directives and regulations

• The language barrier

• VAT and duty

• What to do about it?

• Corporate or managed aircraft – VAT registration

• 135 / 121 – the airline exemption

• Video recap + Q&A

VAT and duty, Full or Temporary Importation

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Operational Challenges in the North Atlantic from an Operator‟s Perspective

Wayne Williams, Director of Flight Operations for ALA Services

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Flying to the EU, VAT and duty, Full or Temporary Importation

Lasse Rungholm, CEO, OPMAS

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http://www.iaopa.eu/mediaServlet/storage/gamag/apr07/p26_p29.pdf

39 http://www.iaopa.eu/mediaServlet/storage/gamag/apr07/p26_p29.pdf

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Lasse Rungholm, CEO

Lawyer (L), ATP, MES MEL

DC3, ATR 42/72, DHC6

Associated with DELACOUR

Frank Hansen, COO

MBA, WNG LVLR

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Started the Danish route more than

20 years ago.

Imported more than 2.000 aircraft

Plenty of references

info@opmas.dk

www.opmas.dk

Flying to the EU

• Introduction

• What is the EU?

• Directives and regulations

• The language barrier

• VAT and duty

• What to do about it?

• Corporate or managed aircraft – VAT registration

• 135 / 121 – the airline exemption

• Video recap + Q&A

VAT and duty, Full or Temporary Importation

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• Why is this so complicated? Isn‟t EU supposed to be a union with

the same rules?

• EU is very, very complex

• 28 different member states

• 24 official languages

• Overall bureaucracy and disagreement

• EU Parliament example – how stupid is that?

What is the EU?

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• EU Parliament example – how stupid is that?

What is the EU?

http://www.spiegel.de/international/europe/meps-want-to-end-monthly-commute-between-brussels-and-strasbourg-a-934400.html

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• EU Parliament example – how stupid is that?

• Workers collect the containers and heave them onto eight large trucks, which then transport them to the second seat of the parliament 430 kilometers (267 miles) away. An army of 4,000 people, including MEPs, their staffs and lobbyists, pack their bags and follow. A week later, it's all schlepped back to Brussels.

• That monthly shuffle has been taking place 12 times a year for decades. Thousands of working days are lost in the move from Brussels, where committee meetings are held, to Strasbourg, where meetings of the whole parliament take place. Each year, it generates 15,000 metric tons of carbon dioxide and costs taxpayers some €180 million ($243 million).

• The hotels in an around Strasbourg charge exorbitant prices -- and the glass palace in Strasbourg, which cost hundreds of millions of euros to build, is empty for more than 300 days a year.

What is the EU?

http://www.spiegel.de/international/europe/meps-want-to-end-monthly-commute-between-brussels-and-strasbourg-a-934400.html

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• Why is this so complicated? Isn‟t EU supposed to be a union with

the same rules?

• EU is very, very complex

• 28 different member states

• 24 official languages

• Overall bureaucracy

• EU Parliament example – how stupid is that?

• An unruly class…

What is the EU?

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What is the EU?

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What is the EU?

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• Italy has Silvio Berlusconi – former Prime Minister

• On 1 August 2013 convicted of tax fraud

What is the EU?

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• The French clung to the

Paris meridian as a rival to

the Greenwich until 1911

for timekeeping purposes

and 1914 for navigation.

What is the EU?

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Flying to the EU

• Introduction

• What is the EU?

• Directives and regulations

• The language barrier

• VAT and duty

• What to do about it?

• Corporate or managed aircraft – VAT registration

• 135 / 121 – the airline exemption

• Video recap + Q&A

VAT and duty, Full or Temporary Importation

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Directives and regulations

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• Single market – free movement of goods and labour within

• EU‟s 1977 6th VAT directive – Numerous amendments

• Now consolidated into the 112th

• Just a legal framework for the member states

• Customs code – regulation of duty

• This is EU law – directly applicable – even so…

• Example: Temporary Importation – Istanbul convention

Flying to the EU

• Introduction

• What is the EU?

• Directives and regulations

• The language barrier

• VAT and duty

• What to do about it?

• Corporate or managed aircraft – VAT registration

• 135 / 121 – the airline exemption

• Video recap + Q&A

VAT and duty, Full or Temporary Importation

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The language barrier

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• How does the European Court of Justice work?

The language barrier

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:62011CJ0033:EN:HTML

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• The Finnish case

The language barrier

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:62011CJ0033:EN:HTML

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• The Finnish case

• 2 Falcons

The language barrier

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:62011CJ0033:EN:HTML

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• The Finnish case

• 2 Falcons

• Used by X

The language barrier

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:62011CJ0033:EN:HTML

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• The Finnish case

• 2 Falcons

• Used by X

• Owned by A

The language barrier

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:62011CC0033:EN:HTML

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• The Finnish case

• 2 Falcons

• Used by X

• Owned by A

• Operated by B

• Scheduled vs charter operator

• “Supplied to” – “Used by”

• Look through?

The language barrier

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:62011CJ0033:EN:HTML

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• The Finnish case

• 2 Falcons

• Used by X

• Owned by A

• Operated by B

• Scheduled vs charter operator

• “Supplied to” – “Used by”

• Look through? 0% VAT?

The language barrier

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:62011CJ0033:EN:HTML

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• The Finnish case

• 2 Falcons

• Used by X

• Owned by A

• Operated by B

• Scheduled vs charter operator

• “Supplied to” – “Used by”

• Look through? 0% VAT? YES!

The language barrier

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:62011CJ0033:EN:HTML

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• The Finnish case

• 23 The referring court’s doubts on this point appear to relate

to there being certain divergences between the different

language versions of that provision. In its observations, A

observes that some of the language versions, such as the

English and Swedish versions, refer to ‘international routes’

rather than ‘international traffic’, an expression which may

seem more generic and is used in most of the other language

versions of that provision, including the Finnish version.

The language barrier

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:62011CJ0033:EN:HTML

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• The Finnish case

• 37 It should be observed, first, that the Finnish language

version of Article 15(6) refers to the ‘supply’ of aircraft ‘to’ an

airline operating for reward chiefly on international routes.

• 38 However, most of the other language versions of that

same provision refer to supplies of aircraft ‘used by’ such an

undertaking.

The language barrier

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:62011CJ0033:EN:HTML

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• The Finnish case

• If you want to read more

download the in-depth

analysis of the judgement

from the OPMAS website

• Link below, ECJ

The language barrier

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Most aviators know the joke

about the old American captain

of a Pan Am 747 lost on the

taxiways in Berlin in the „70s…

Another example…

The German Coast Guard

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Flying to the EU

• Introduction

• What is the EU?

• Directives and regulations

• The language barrier

• VAT and duty

• What to do about it?

• Corporate or managed aircraft – VAT registration

• 135 / 121 – the airline exemption

• Video recap + Q&A

VAT and duty, Full or Temporary Importation

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• Key points

• All aircraft flying within the EU need to handle VAT and Duty

• The rules for VAT and Duty are not the same

• The state of registry of an aircraft does not affect tax status

• Aircraft must account for taxes at their first landing in the EU

• Full Importation vs Temporary Importation

VAT and duty

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• VAT 15-25 % when importing or selling

• VAT directive

• National VAT laws

• Place of supply

• Connection to duty regulation re TI

• Duty 2,7-7,7%

• EU regulation

• End Use exemption

VAT and duty

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Flying to the EU

• Introduction

• What is the EU?

• Directives and regulations

• The language barrier

• VAT and duty

• What to do about it?

• Corporate or managed aircraft – VAT registration

• 135 / 121 – the airline exemption

• Video recap + Q&A

VAT and duty, Full or Temporary Importation

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• Prior procedure for importing through UK and Denmark at zero

rated VAT for free circulation in EU eliminated

• Temporary importation good for infrequent visitors, but you must

follow the rules

• Full importation is recommended for frequent visitors or where TI

is not compatible

• Every situation is different so there is not a one size fits all

solution

What to do about it?

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• Temporary Importation

• It IS a paperless routine!

• Strict restrictions

• Private PERSONAL operations only or in/out only – NO

CORPORATE FLYING INSIDE EU (except inside the UK)

• Full Importation

• 100% as any EU company – same same but different…

• FREE CIRCULATION – IM A (C88) import form

What to do about it?

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What to do about it?

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• Introduction

• What is the EU?

• Directives and regulations

• The language barrier

• VAT and duty

• What to do about it?

• Corporate or managed aircraft – VAT registration

• 135 / 121 – the airline exemption

• Video recap + Q&A

VAT and duty, Full or Temporary Importation

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Flying to the EU

• VAT registration in Denmark, VAT is set off and nothing is paid.

• For commercial aircraft, corporate aircraft and aircraft under

management

• No need for a new entity – the existing company will work

• Owner, lessor, lessee, management company

• Economical activity required

• Written approval by Danish Customs ”SKAT”

• Physical importation overnight

• Aarhus international airport, EKAH, AAR, Denmark - DCT (T1)

• Turn key process

Corporate or managed aircraft – VAT registration

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• Introduction

• What is the EU?

• Directives and regulations

• The language barrier

• VAT and duty

• What to do about it?

• Corporate or managed aircraft – VAT registration

• 135 / 121 – the airline exemption

• Video recap + Q&A

VAT and duty, Full or Temporary Importation

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Flying to the EU

• AOC ”airline” exemption in Denmark, VAT exempt, 0%.

• The ”airline exemption”. For AOC holders only, includes charter

operators ref Finnish case

• Aircraft only under management OK if imported by AOC holder!

• NOT valid for other socalled ”airlines”

• No need for a new entity – existing company will work

• Written approval by Danish Customs ”SKAT”

• Physical importation overnight

• Aarhus international airport, EKAH, AAR, Denmark - DCT (T1)

• Turn Key Process

135 / 121 – the airline exemption

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Flying to the EU

• Introduction

• What is the EU?

• Directives and regulations

• The language barrier

• VAT and duty

• What to do about it?

• Corporate or managed aircraft – VAT registration

• 135 / 121 – the airline exemption

• Video recap + Q&A

VAT and duty, Full or Temporary Importation

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A video recap!

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Flying to the EU

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Flying to the EU

• Q&A

• Thank you

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