Structuring Area

Ownership and Use Alignment for Aircraft

Ensuring that legal ownership, operational control, and actual use are consistent — for VAT, regulatory, and audit purposes.

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Why Alignment Matters

In aircraft ownership, control, and actual use

VAT treatment and regulatory classification in EU aviation are not determined by legal structure alone.

Under Directive 2006/112/EC (Articles 148 and 56) and Regulation (EU) 2018/1139, authorities assess whether ownership, operational control, and actual use are aligned in practice.

For aircraft valued at €20M–€60M, misalignment between declared and actual use may trigger VAT exposure of €4M–€15M, typically identified through flight logs, passenger data, and operational records.

The Decisive Factor

In EU aviation, the decisive factor for VAT treatment and regulatory classification is not the legal form of ownership, but the consistency between ownership, control, and actual use. This principle underpins the application of Directive 2006/112/EC (in particular Articles 148 and 56) and is increasingly enforced through operational evidence rather than contractual documentation.

In practice, misalignment arises where the aircraft is formally positioned for commercial use, but operational data indicates otherwise. Typical audit reviews now include flight logs, airport movement records, passenger identification, and revenue attribution. Where these elements do not support the claimed VAT position, authorities disregard the intended qualification under Article 148 and reassess based on actual use. For aircraft in the €20M–€60M range, this routinely translates into VAT exposure of €4M–€15M, excluding interest and penalties.

The issue is not limited to VAT. Under Regulation (EU) 2018/1139, allocation of operational control is a substantive requirement, particularly where an AOC operator is involved. Where contractual arrangements suggest delegation of control, but operational decisions, routing, and usage remain effectively with the owner, both tax and aviation authorities may challenge the structure. This creates parallel exposure: denial of VAT exemption and regulatory scrutiny of the operating model.

Operational Reality

Alignment is therefore established not through documentation alone, but through a coherent operational profile. This includes consistency between declared use (commercial vs private), actual flight activity, and financial flows linked to the aircraft. Leasing arrangements must reflect real operational relationships; AOC-based operations must demonstrate effective control; and the jurisdictional footprint must correspond to where the aircraft is actually based over time.

In cross-border scenarios, this alignment becomes more complex. Aircraft operating between jurisdictions such as France, Italy, and Switzerland are assessed based on effective place of use, not formal ownership location. Authorities increasingly coordinate across borders, relying on shared data and operational records. As a result, discrepancies that previously remained isolated are now evaluated within a broader enforcement framework.

Our work focuses on establishing and maintaining this alignment at the operational level. This involves analysing expected flight activity, verifying consistency between usage and contractual positioning, and adjusting ownership and operational arrangements where required.

Alignment Test: Ownership, Control, and Use

The Dutch corporate tax system is widely used in European holding and investment structures due to the participation exemption and predictable treatment of cross-border income.

Ownership (SPV)

Jurisdiction of incorporation and legal title

Link between SPV and aircraft operations; management location; economic purpose

Structure disregarded; VAT reassessed based on actual use

Operational Control (AOC)

Aircraft operated under AOC or leasing structure

Who makes operational decisions; control over crew, routing, scheduling (EASA 2018/1139)

Reclassification of activity; denial of commercial status

Use (Flight Activity)

Commercial vs private use declared

Flight logs, routes, passenger identity, revenue share

VAT exemption under Art. 148 denied

Base of Operations

Stated base or operational jurisdiction

Actual airport usage (e.g. LFMN, LSGG), frequency of departures/returns

VAT exposure in jurisdiction of effective use

Leasing Structure

Dry/wet lease agreements

Whether leasing reflects real operational relationship (Art. 56 place of supply)

Place of supply reassessed; VAT applied

Import Positioning

Import via specific jurisdiction (e.g. NL deferral)

Where aircraft is effectively used after import

Import VAT reassessed (€5M–€10M+)

Typical Failure Thresholds (Article 148 VAT Directive)

The Dutch corporate tax system is widely used in European holding and investment structures due to the participation exemption and predictable treatment of cross-border income.

Commercial Use Ratio

Aircraft positioned as “available for charter”

<50–70% genuine third-party commercial use

Denial of VAT exemption under Art. 148

Revenue Source

Charter contracts in place

Majority of flights linked to beneficial owner or related parties

Reclassification as private use

Flight Pattern

Mixed international and private routing

Repetitive routing linked to owner’s travel patterns

Failure of “chiefly international transport” test

Passenger Profile

Third-party clients

Predominantly owner, affiliates, or group entities

Lack of genuine commercial activity

AOC Structure

Aircraft placed under AOC operator

Operator lacks effective control over scheduling and use

AOC disregarded for VAT purposes

Leasing Arrangement

Dry/wet lease supporting commercial use

Leasing exists formally but not reflected in operations

Place of supply reassessed (Art. 56)

Operational Base

No fixed base declared

Aircraft consistently operates from same EU airport (e.g. LFMN, LSGG)

VAT exposure in jurisdiction of use

Charter Activity

Charter availability declared

<15–25% actual charter activity

Exemption challenged or denied

What We Do

We structure aircraft ownership and import scenarios by aligning VAT treatment with operational reality, regulatory requirements, and cross-border exposure.

Ownership Structuring

We structure aircraft ownership and import scenarios by aligning VAT treatment with operational reality, regulatory requirements, and cross-border exposure.
VAT & Leasing Structures

Structuring leasing arrangements and AOC relationships to support VAT positioning under Directive 2006/112/EC, including commercial qualification and mixed-use scenarios.
Import & Entry into the EU

Coordinating aircraft import strategies with actual base of operations, including VAT deferral mechanisms, customs positioning, and long-term operational footprint.
Review & Risk Assessment

Assessing existing structures against current EU VAT practice, operational data, and audit trends — identifying exposure before it materialises.

Where We Add Value

VAT outcomes in aircraft ownership are determined by the interaction of Directive 2006/112/EC (Articles 148 and 56), import VAT rules, and actual operational use. In practice, exposure arises where structures designed for exemption do not meet the threshold of “genuine commercial activity” or fail the test of effective use within a specific jurisdiction. With EU VAT rates typically between 19% and 25%, misalignment on a €30M–€50M aircraft results in exposure of €6M–€12M, often reassessed retrospectively with penalties.

We structure transactions by aligning VAT treatment with flight activity, base of operations, and AOC-based operational control under Regulation (EU) 2018/1139. This includes coordinating import via deferral regimes (e.g. Article 23 NL), designing leasing arrangements consistent with place-of-supply rules (Art. 56), and ensuring that qualification under Article 148 is supported by real third-party revenue and usage patterns. The objective is not optimisation in isolation, but a structure that remains defensible under audit based on operational data — including flight logs, routing, and passenger profiles.

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Our Approach

We align ownership structures with operational reality by:

Structuring SPV and AOC relationships
Designing compliant leasing and operational agreements
Coordinating with operators and aviation advisors
Ensuring consistency between legal structure and flight activity

Discuss Your Aircraft Structuring Project

Tell us about your aircraft, operational model, and jurisdictions — we will propose a structuring approach aligned with EU VAT and EASA requirements.

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