VAT treatment on services related to the management of an aircraft


Binding tax ruling V4182-16, issued by the Spanish General Tax Directorate of September 30 2016.

A company that owns an aircraft (hereinafter, the owner) performs an instrumental assignment with another company (hereinafter, the operator) that has air operator’s certificate and license to operate aircraft in order that includes the aircraft within their operator’s certificate, and may therefore be subject to commercial exploitation, receiving remuneration for such transfers. However, the owner manifest that continues having of the aircraft to its risk and fortune, by what the assignment does not imply the transmission of the right of use and enjoy of the aircraft.

Also, the owner is going to perform also a transfer of the right of marketing, sale and programming of the aircraft made in favour of the operator.

With respect to the operator, this will provide a management service which includes flight services as well as the maintenance of the aircraft to the owner of the aircraft.

Finally, this binding tax ruling also analyses the VAT treatment of the air transport services provided by the operator.

1. Firstly, we must determine whether the paid assignments carried out by the owner for the operator are two independent services or a single service made by the owner for the operator. At this point, based on the case-law of the European Court of Justice, this body understands that the services provided by the owner to the operator constitute a sole provision of services since its purpose is to allow the operator the rendering of independent air transport passenger services.

As regards the analysis of the possible exemption in VAT, that would operate if the acquirer of these services is a company that performs deliveries, transformations, repairs, maintenance, Charter total or lease of aircraft used exclusively by companies aimed essentially to the navigation air international in the exercise of commercial activities of transport paid of goods or passengers, such transaction would be exempt of VAT. This body understands that, due to that the owner of the aircraft says that in any case retains the layout of the aircraft to its risk and fortune, so the assignment does not imply the transmission of the right of use and enjoyment of the aircraft under the terms arising from a contract of lease or Charter in favour of the operator, although it has some similarities with them themselves. In these circumstances, it can be deduced that this unique service will be subject to and not exempt from VAT and would be taxed at the general tax rate of 21%.

2. Concerning the service of management of the aircraft rendered by the operator to the owner, this service, although includes several as the transport by air and the maintenance of the aircraft, is considered as a sole provision of services that would be subject and not exempt from VAT, applying the general tax rate of 21%.

Is important to mention that, in the due to the fact that the owner and the operator would perform benefits of services to please it an of it another part and, to his time, are going to receive benefits of services rendered by its own customer, although ones allow in its recipient it provision of a service of which is recipient the provider previous and is are intimately related, ones and others are independent services and not the price of the others may lower ones.

3. Finally, the air transport services provided by the operator to third parties would be subject to VAT applying the reduced tax rate of 10%, unless said transport have origin or destination out of the Spanish VAT Territory, in whose case would be exempt of VAT.

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