Co-ownership and shared jets: splitting an aircraft without splitting the structure

Few owners use a business jet anywhere near its capacity. An aircraft that flies three hundred hours a year carries the same fixed costs — crew, hangarage, insurance, maintenance programmes, depreciation — as one that flies six hundred. Sharing it with another family or business partners can halve those costs without halving anyone’s access, and many shared arrangements work smoothly for years.

The difficulties arise not in the economics but in the classification. A shared aircraft raises three questions that a solely owned one does not: whether the co-owners’ flights are private or commercial under aviation-safety rules; how the money moving between co-owners is treated for VAT; and, where the co-owners live in different places, which customs position the aircraft can actually hold. This article sets out how to answer each, and what the co-ownership agreement needs to say so that the answers stay true.

Why share

The case for sharing is straightforward. Fixed costs dominate the economics of a business jet, and they do not fall when the aircraft sits in a hangar. Two co-owners flying 250 hours each can run one aircraft at roughly the cost each would have borne for a far less used aircraft of their own. Sharing also gives access to a larger aircraft than either party might justify alone, and spreads residual-value risk.

The case against is equally clear: scheduling conflicts, disagreements over standards and spending, and the difficulty of exit when one partner’s needs change. Those are commercial questions that a good agreement resolves. The regulatory and tax questions are less visible, which is precisely why they cause more trouble.

The ownership models

Shared arrangements take a few recognisable forms, and the form shapes the analysis.

A jointly owned company. The co-owners hold shares in a single owning company — often an SPV — which owns the aircraft and arranges its operation. Each co-owner’s use is governed by a shareholders’ agreement or a co-ownership agreement, and costs are recharged to them. This is the most common model for families and partners who know each other well.

Undivided co-ownership. The co-owners hold the aircraft directly in fractions. It is simple on paper but awkward for registration, financing and insurance, and it leaves the question of who is the operator to be settled separately.

Fractional programmes. A provider sells fractions of an aircraft in a fleet, manages it, and operates it under its own certificate; owners buy a share and a block of hours. Here the provider is clearly the operator, and the arrangement is a commercial product with its own established regulatory and tax treatment.

Interchange and dry-lease swaps. Two owners of similar aircraft lend them to each other in exchange for equivalent hours. Useful, but each exchange is a transaction that needs its own analysis.

Private or commercial?

The aviation-safety question is the one that most often surprises co-owners. European rules distinguish between commercial and non-commercial operations, and the difference matters enormously: commercial air transport requires an air operator certificate, with all the organisational and compliance obligations that implies, while non-commercial operations of complex aircraft are conducted under the less demanding non-commercial regime.

The definition that decides it is in Article 2 of Regulation (EU) No 965/2012. A commercial operation is an operation of an aircraft in return for remuneration or other valuable consideration which is either available to the public or, when not available to the public, performed under a contract between an operator and a customer where the customer has no control over the operator. That final phrase is the key for co-owners. Where the people flying are the same people who own and control the operating entity, and they pay that entity for the costs of their own flights, the operation can be non-commercial: they are not customers buying a service from an operator they do not control; they are the operator, through their company.

The test is substantive, not formal. Control means genuine control — a real say in how the operator is run — and EASA has published guidance on what that means. A co-owner who holds a token share and simply buys hours from an entity run by others looks much more like a customer, and that arrangement can be commercial. The structure has to make control real for every co-owner who flies.

The cost-sharing rule — and why it does not cover jets

Co-owners often hear that the EU allows “cost-sharing” flights without an AOC, and assume that covers them. It covers a much narrower case. Under Article 6(4a) of Regulation (EU) No 965/2012, cost-shared flights by private individuals may be conducted under the non-commercial rules where the direct costs are shared by all occupants, including the pilot, and the number of persons sharing is limited to six — but only with other-than-complex motor-powered aircraft.

Business jets are, almost without exception, complex motor-powered aircraft. The cost-sharing exemption therefore does not apply to them. A shared jet’s flights are not made non-commercial by dividing the costs among the passengers; they are non-commercial, if at all, because the co-owners genuinely control the operator under the definition above. Relying on the cost-sharing rule for a jet is relying on a rule written for light aircraft.

VAT between co-owners

Money moves between co-owners and their shared company constantly: fixed-cost contributions, hourly charges, maintenance reserves, extraordinary items. For VAT, the key point is that a jointly owned company that recharges its members for the use of the aircraft is generally making supplies to them. If it is a taxable person carrying on an economic activity — which a company that systematically provides aircraft use to its members for consideration often is — those recharges are taxable services, and it can in turn deduct VAT on the aircraft’s costs.

That has advantages. It can make the structure a genuine business for VAT, with deduction on acquisition and operation, and it gives a coherent basis for the money flows. But it also means VAT on every recharge, at the rate and place of supply that apply to the service, and it requires the recharges to be real: priced on a consistent basis, invoiced, and paid. Recharges set below cost to suit one partner, or not invoiced at all, undermine both the VAT position and the commercial fairness of the arrangement. Where co-owners are themselves businesses, they may be able to deduct the VAT on their recharges; where they are private individuals, it is a real cost.

The Article 148 exemption does not generally help a private co-ownership: the co-owners are not an airline operating for reward on international routes. And a company with no activity beyond holding the aircraft, with costs settled informally, faces the same problem as any passive holding vehicle: no economic activity, no deduction. Our article on the corporate jet and private use covers the deduction side in more detail.

Customs with mixed residences

Co-owners frequently live in different countries, and for an aircraft flying in Europe that can be decisive. A non-EU-registered aircraft can use EU temporary admission only if, among other conditions, it is used by persons established outside the Union (Article 212 of Delegated Regulation (EU) 2015/2446). If two co-owners live in Dubai and Geneva and a third lives in Paris, the third co-owner’s use of the aircraft in the Union is EU-established use — and the relief is not available for it.

This creates a structural choice. Either the aircraft is imported into the EU, so that all co-owners can use it within the Union on a settled basis — with the import VAT that implies — or the arrangement is designed so that EU-established co-owners’ use is genuinely limited and properly handled, which is fragile and usually unsatisfactory for a true co-owner. In practice, where any co-owner is EU-resident and expects regular use in Europe, an EU-imported aircraft is usually the cleaner answer. The register matters too: an aircraft on an EU register cannot use temporary admission at all, which may suit a group whose members are predominantly EU-based. See our article on temporary admission for the full conditions.

The co-ownership agreement

Most of these questions are answered, or made unanswerable, by the co-ownership agreement. A good one does more than allocate hours. It establishes governance — how the operating entity is controlled, so that each flying co-owner genuinely shares control. It sets cost allocation: fixed costs, variable costs per hour, reserves and extraordinary items, on a documented basis that also works for VAT. It sets scheduling and priority, standards for crew and maintenance, and what happens when the aircraft is unavailable.

It also addresses the regulatory and tax facts directly: who the operator is; that flights are conducted for the co-owners, not sold to third parties; what happens if a co-owner changes residence; and how guests are carried. And it provides for exit — buy-out mechanisms, valuation, and what happens on death, insolvency or a partner’s sale — because the most stressful moment in a shared aircraft is usually the end of the sharing, and an agreement that has not planned for it leaves the regulatory and tax questions to be solved in a dispute.

A worked example

Consider — generically, with no client detail — three business partners who buy a super-midsize jet together through a jointly owned company, two of them resident in Switzerland and one in France. They split costs by hours flown, settle up informally once a year, and assume their flights are private because they own the aircraft. The aircraft is on an offshore register and flown into the EU under temporary admission.

Three problems sit beneath the surface. The recharges are informal, so the company’s VAT position — whether it is making supplies and can deduct — is undefined. One partner holds operational decisions in practice, leaving the others closer to customers than co-controllers. And the French-resident partner’s flights into the EU fail the temporary-admission user condition.

The structured version gives all three partners genuine governance rights over the operating entity, sets recharges on a documented cost basis and invoices them with VAT, and — because one partner is EU-resident and flies in Europe regularly — imports the aircraft into the EU, with the import VAT handled through the company’s deduction where its activity supports it. The partners fly as before; the aircraft now has one coherent operational, VAT and customs position instead of three contradictory ones.

Mistakes we see

The co-ownership mistakes are predictable. The first is assuming that owning the aircraft makes every flight private, without checking that each flying co-owner genuinely controls the operator. The second is relying on the cost-sharing exemption for a jet, when it applies only to other-than-complex aircraft. The third is informal money flows: costs settled by transfer once a year, with no invoices, no VAT analysis and no consistent basis. The fourth is ignoring the residence of each co-owner, so that one EU-resident partner undermines the customs position of the whole aircraft. And the fifth is an agreement without an exit, so that the hardest questions arise at the worst moment.

All five are avoided by designing the arrangement around the questions the rules ask — control, consideration, residence — rather than around the split of the bills.

Key terms

Frequently asked

Last reviewed 19 October 2026. This article is general information, not tax, aviation or legal advice; every arrangement turns on its own facts.