The European Union has 28 diverse countries, cultures, languages and wholly different legal systems. In aviation there is one European Aviation Safety Agency (EASA) although the local member state aviation authorities retain some oversight powers. EASA, albeit an EU agency, also applies to non EU countries, such as Lichtenstein, Norway and Iceland. In the past number of years the EU has introduced both regulatory and tax regimes, which apply to aircraft whether or not they are registered or in some cases even based in Europe. In all, it’s fair to say we certainly don’t make it easy to own or operate aircraft within Europe.
The responsibility for compliance with these regimes rests heavily on the shoulders of the aircraft owner. This can be a private individual, a corporate or, in many cases, a financier of aircraft who owns and then leases aircraft. Lack of familiarity with the rules is not an option, as the consequences can be particularly harsh.
Value Added Tax
European Directive 2006/112/EC (the “VAT Directive”) deals with the applicability of VAT to aircraft. In general, all aircraft must now be considered for EU VAT if they intend to carry EU residents point to point within Europe or if the aircraft is owned by a European resident.
When an aircraft has been properly accounted for VAT within Europe, it is considered to be in “free circulation”, usually evidenced by a form C88 or SAD, which is kept on board the aircraft. The applicability of VAT depends on the end use of the aircraft – the tax authorities will look at who the user is and how the aircraft is being used. An inordinate amount of confusion arose in the industry due to the differing member states interpretation of the VAT Directive. Over the past few years, a common understanding has slowly been reached in the importation and sale of aircraft, and supply of services to aircraft.
Flying privately and Part-NCC
Regulation (EC) No 216/2008 (the Basic Regulation) entered into force on 8 April 2008. Operators and personnel involved in the operation of certain aircraft have to comply with the relevant essential requirements set out in Annex IV to this EASA Air Operations Regulation. The rule applies to non-commercial operators of complex aircraft with a principal place of business or residence in a member state of the EASA. Therefore, it applies to EASA and non-EASA registered aircraft.
Member states were granted the flexibility to postpone the applicability of the rule by up to 2 or 3 years. For those states, which decided to opt out, the final cut-off date is 25 August 2016, by which time the non-commercial operation of business jets and other complex motor-powered aircraft will have to comply with a new regulation called “Part-NCC”.
Most professional operators will have been aware of the impending rules for some time and will have already adapted their systems, procedures and manuals accordingly. In the case of aircraft, which are not managed by a professional operator or indeed managed by an operator who is not up to date on the new changes, the owners and financiers of such aircraft are at risk.
For assistance with any of the issues in this article please contact Aoife O’ Sullivan at: Aoife.firstname.lastname@example.org