Managing VAT for foreign airlines operating in Germany involves understanding the nuances of both aircraft and ticket VAT regulations. Here’s a comprehensive guide on how these are treated under German law as of 2024.
VAT on Aircraft
1. Zero-Rating for International Air Transport:
- Eligibility: International air transport services are generally zero-rated for VAT purposes under the German VAT Act (UStG). This means that foreign airlines operating international flights to and from Germany do not charge VAT on their ticket sales. This exemption applies when more than 50% of the airline’s operations involve international flights.
- Applicable Law: The exemption is outlined in § 4 No. 2 UStG and is in line with the EU VAT Directive 2006/112/EC, specifically Articles 148 and 151, which provide for zero-rating of international transport services to avoid double taxation and support international trade.
2. Aircraft Supplies and Services:
- Qualifying Aircraft: Supplies of aircraft, as well as related services and parts, can also be zero-rated if the aircraft is used by an airline predominantly engaged in international air transport. The supplier must maintain documentation proving that the aircraft qualifies for this treatment, such as operating licenses and evidence of the airline’s operations.
- Documentation Requirements: Suppliers should retain contracts, work orders, or buyer declarations to validate the zero-rating. This is essential for audits and to ensure compliance with VAT regulations.
VAT on Flight Tickets
1. Domestic Flights:
- Standard Rate: For domestic flights within Germany, VAT is applied at the standard rate of 19%. This VAT must be included in the ticket price and collected from passengers at the point of sale.
2. International Flights:
- Zero-Rated: International flights departing from or arriving in Germany are zero-rated. This means passengers are not charged VAT on these tickets. This policy helps maintain competitive pricing and aligns with international standards to prevent double taxation.
Compliance and Registration
1. VAT Registration:
- Requirement: Foreign airlines conducting taxable activities in Germany must register for VAT. This includes filing regular VAT returns and maintaining accurate records of all transactions. Registration is mandatory if the airline exceeds the VAT registration threshold or opts for VAT registration voluntarily.
- One-Stop Shop (OSS): For convenience, airlines can use the OSS system to simplify their VAT reporting across the EU, reducing the need for multiple VAT registrations in different member states.
2. Fiscal Representatives:
- Non-EU Airlines: Non-EU airlines may need to appoint a fiscal representative in Germany to handle their VAT obligations, including registration, filing, and payments. This ensures that they meet all compliance requirements efficiently.
How WW+KN Can Assist
Navigating VAT regulations for foreign airlines can be complex. WW+KN, a Baker Tilly Company, offers extensive support to ensure compliance with German VAT laws. Our services include:
- VAT Registration and Reporting: Assistance with VAT registration and filing accurate returns on time.
- Advisory Services: Guidance on maintaining compliance with VAT exemptions and documentation requirements.
Contact Us
For more information on managing VAT for your airline operations in Germany, contact WW+KN at info@vat-germany.com. Our team of experts is ready to assist you with comprehensive solutions tailored to your needs.
Conclusion
Understanding and complying with VAT regulations is crucial for foreign airlines operating in Germany. With the right support, airlines can navigate these complexities, avoid common pitfalls, and ensure compliance with all applicable laws and regulations.
Feel free to reach out to WW+KN, a Baker Tilly Company, today to learn more about how we can support your VAT management needs.
