When VAT Exemption Fails: Key Triggers for Tax on Aircraft Leasing and International Transport

• VAT exemption for aviation supplies applies only if specific conditions are met (airline status, operation for reward, chiefly international transport, correct place of supply).
• If the recipient is not a certified airline, or the aircraft is used for private/recreational purposes, VAT is chargeable at the standard rate.
• The exemption does not apply if the airline operates mainly domestic routes or fails to meet the required percentage of international operations.
• Short-term aircraft leases (30 days or less) are taxed based on where the aircraft is made available, regardless of later international use.
• Each step in leasing chains must meet exemption criteria individually; otherwise, VAT applies, making careful structuring and documentation essential.

Source: grantthornton.com.mt

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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