VAT Aircraft Leasing

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Malta provides for a private aircraft leasing set-up, by means of which a lower effective VAT rate can be availed of. In fact, the Maltese VAT Department issued a set of official guidelines relating to the VAT treatment of leasing of privately operated aircraft which are meant to simplify the VAT treatment and establish liability to VAT of the lease at attractive rates on the use of such aircraft within the EU airspace.

 

What is a leasing agreement of an aircraft?

A leasing agreement of an aircraft is an agreement whereby the lessor (the owner of the aircraft) contracts the use of the aircraft to a lessee (the person who leases the aircraft) for a consideration.  In addition, after the end of the lease period, the lessee may opt to purchase the aircraft at a percentage of the original cost.  The final purchase is strictly an option which may be exercised by the lessee for a separate consideration.

 

Leasing in terms of Maltese VAT law

The Maltese VAT Act provides that the a lease of an aircraft for private purposes, is deemed to be a supply of services which is considered to take place where the aircraft is put at the disposal of the customer if the lease is for a continuous period of not more than 30 days. For leases exceeding 30 days, the place of supply is deemed to be where the customer of such service is established.

 

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