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German AOPA happy with energy tax clarification

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Germany’s finance ministry confirmed in an e-mail to AOPA Germany on 26 January that, as of 1 February, operators of certain flights previously categorized from a tax perspective as for leisure can request exemption from energy tax for certain flights where they involve private business flights, but restricted “for internal company purposes.” As this decision is based on the EU energy taxation directive, it does also have an impact for the rest of Europe.

Corporate operators need to find a legal construction which is not considered as a commercial activity as defined in Article 3(i) of the Basic Regulation EU 216/2008, but as a commercial activity from a tax-perspective. This can be achieved because the Basic Regulation does consider flights for remuneration or other valuable consideration as non-commercial as long as they are performed under a contract between an operator and a customer, where the latter has control over the operator.

So aircraft owners should contact their tax-advisors to find a construction, in which the operator is controlled by the customer, and the customer receives invoices for the flights. Energy tax where it does apply is (per 1000 litres) €721 for Avgas and €654.50 for Jet A1, so for a typical King Air Corporate Turboprop we talk about savings of 200 € per flight-hour.

AOPA Germany stated that it was particularly pleased with the outcome, which was based on a number of court judgments which helped to clarify the position after the negative decisions of the European Court of Justice in the past years, which declared Corporate Aviation as private pleasure flying because no invoices go to third parties. The energy tax exemption is also applicable to flight crew training flights, demonstration flights (for example at trade shows and air shows), and test flights (provided they are not carried out by manufacturing or maintenance organisations, i.e. commercial entities).

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