VAT - Aircraft Leasing Initiative - VAT Mitigation And Simplification Measure

The VAT Department in Malta has issued guidelines relating to aircraft leasing. The guidelines which are based on the current yacht leasing measures, seek to mitigate the VAT impact on the purchase of an aircraft and its engines.

The guidelines would apply to aircrafts used privately which are not registered under a local operator Air Operator Certificate and which would be automatically entitled to a VAT exemption upon importation into Malta.

The mitigation measure applies by virtue of the adoption of a leasing arrangement which is entered into by the owner of an aircraft and its lessee. Both the owner and the lessee would need to be Maltese registered entities. VAT at the standard Maltese rate is levied on the deemed usage of the aircraft in the European Union. This deemed usage is determined pursuant to an automatically generated calculation of such usage based on MTOM and range amongst others. At the end of the lease period, the aircraft should be transferred