In recent years, Cyprus has emerged as a prime destination for
High-Net-Worth Individuals (HNWIs) acquiring or leasing aircraft.
This is due to the highly attractive leasing structure available as
a result of the officially named VAT Aircraft Leasing Scheme
(VALS), which offers substantial VAT incentives.
Key Features and Benefits of the Structure:
Ownership and Leasing: The private aircraft must be
owned by a Cyprus-registered VAT company (the Lessor) and leased to
either a physical or legal person established or residing in
Cyprus, provided they are not engaged in business activities (the
Lessee).
Reduced VAT Rate: Under VALS, the VAT rate can be
significantly reduced. The VAT is calculated based on the assumed
percentage of time the aircraft flies within EU airspace, and this
is determined by two factors: the type of aircraft and secondly,
its maximum take-off weight.
