Cyprus Aircraft Leasing VAT Scheme

A. INTRODUCTION

Following the successful implementation of the Yacht Leasing Scheme, the Cyprus VAT Department has recently introduced an Aircraft Leasing VAT Scheme.

Similar to the Yacht Leasing scheme, this new incentive refers to individuals who would like to buy a pleasure aircraft for flying within EU airspace and its aim is the reduction in the VAT rate which can be as low as 4.37% instead of 19%. This reduced effective vat rate is calculated as a percentage of the time that the aircraft is deemed to fly within EU airspace.

B. INTERPRETATION OF TERMS

According to the guidelines, aircraft leasing 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.