01

The purchase price is only the beginning

A €120,000, €200,000 or €350,000 aircraft may look attractive on paper, but the purchase price is only the first part of the financial picture.

Hangarage, insurance, annual inspections, maintenance reserves, subscriptions, registration and eventual engine, propeller or avionics work continue even when the aircraft flies very little.

A maintenance reserve is money set aside for defined future maintenance rather than a general indication that costs will be covered. Ownership structure, actual use, documentation and jurisdiction can materially affect the tax and cash cost of the same aircraft.

02

VAT: often the largest hidden cost

In Europe, VAT can be one of the largest cost components. If a €200,000 aircraft is sold plus VAT at 21%, the VAT alone is €42,000 and the cash price becomes €242,000.

The 21% figure is an illustrative calculation, not a uniform EU VAT rate. The applicable rate and treatment depend on the relevant jurisdiction and transaction.

VAT recovery or deduction means reducing VAT payable or reclaiming eligible input VAT under the applicable rules. Genuine economic activity means real, documented activity meeting the applicable local requirements, not merely placing the aircraft in a company or obtaining a VAT number. Any deduction depends on actual taxable use, appropriate documentation, ownership structure and jurisdiction.

03

Why VAT planning matters for resale

VAT history means the records showing how VAT was treated on acquisition, import, use and later transactions. A clear, properly documented history can be relevant to a future buyer’s due diligence.

Unclear treatment raises questions about whether VAT was paid, whether it can be reclaimed and whether a resale creates another issue. Tax clarity can become part of the aircraft’s commercial value.

04

Using company funds instead of personal income

Many private buyers must first extract funds from a company, potentially triggering salary, dividend or other personal taxation before the aircraft is purchased.

Company ownership may be considered in the right circumstances, but it does not automatically create a tax advantage. Private and business use must be distinguished, and ownership, economic activity, capital flow, documentation and local tax rules must be aligned from the beginning.

05

Tax issues in co-ownership

Cost-sharing payments are contributions by members toward aircraft expenses; their label does not determine their tax treatment. Member payments, maintenance reserves, monthly contributions and reimbursements can be treated differently depending on the ownership structure, actual use, documentation and jurisdiction.

  • One person legally owns the aircraft and others simply pay them
  • There is no written agreement
  • Reserves are collected without defining who owns them
  • The arrangement resembles a commercial lease
  • VAT, invoicing, private and business use are unclear
06

Consider tax before the aircraft is bought

Once an acquisition is complete, some options may be more expensive, complicated or impossible. The structure should answer who owns and pays for the aircraft, where the money comes from, how private and business use, VAT and reserves are treated, and how the aircraft may later be sold.

Importation, export, aircraft location, seller and buyer status, prior VAT history and movement between jurisdictions can create separate import or cross-border VAT questions. These should be checked for the actual transaction rather than inferred from a general EU rule.

This article is a general briefing, not jurisdiction-specific tax advice. Local professional advice should be taken before a transaction.

Note

This briefing provides general information and is not legal, tax or transaction-specific advice. The appropriate structure depends on the aircraft, participants and relevant jurisdiction.