Why VAT matters more in aviation than most markets
For a €200,000 aircraft, the difference between a VAT-inclusive and VAT-exclusive price is €40,000 at a 20% VAT rate. This makes VAT status one of the most financially significant variables in any aircraft transaction, yet it's frequently misunderstood or left ambiguous until the deal is nearly done.
Getting clarity on VAT early — ideally in the first written exchange with the seller — prevents deals falling through and avoids unexpected tax liabilities for both parties.
Private seller (individual) — almost always no VAT
If a private individual (not a business) sells their personally owned aircraft, the sale is outside the scope of VAT. The seller doesn't charge VAT, and the buyer doesn't pay VAT on the purchase price. This is the simplest scenario and covers most private aircraft sales.
Note: the aircraft may have been purchased with VAT already paid when new (VAT-inclusive price from a dealer). That historic VAT does not affect the private resale — it's a done cost that has passed through the chain.
Business seller — VAT-registered and charging VAT
If the seller is a VAT-registered business (flying school, charter company, dealer), the sale is subject to VAT in their country. The seller charges VAT on the sale price. If you are also a VAT-registered business in the same country, you can generally reclaim input VAT.
This is where the "price includes VAT" vs. "price excludes VAT" distinction matters critically. Always confirm in writing which applies before making an offer.
VAT rates on aircraft vary across EU member states: most are at the standard rate (between 19% and 27% depending on country). Some states apply reduced rates to specific aviation assets — check with a local tax adviser.
Cross-border EU sales — reverse charge and zero-rating
When a VAT-registered business in one EU country sells to a VAT-registered business in another EU country, the reverse charge mechanism typically applies. The seller invoices without VAT; the buyer reports and reclaims VAT in their own country's VAT return.
This is beneficial: no cash VAT changes hands at the time of sale, reducing the upfront capital requirement for the buyer.
For the reverse charge to apply, you need: both parties VAT-registered in different EU member states, a valid VAT number on the invoice, and the aircraft physically moving to the buyer's member state. Keep all evidence of these conditions — tax authorities scrutinise large asset transfers.
Sales outside the EU — export zero-rating
Aircraft exported outside the EU (to Switzerland, UK, US, etc.) can generally be zero-rated for VAT purposes by the EU seller. The seller must retain evidence that the aircraft physically left the EU within agreed timeframes (typically 90 days from sale).
If you are buying from an EU seller and taking the aircraft outside the EU, discuss export zero-rating with the seller and their tax adviser before the contract is signed.
Dealer margin scheme — second-hand aircraft dealers
Some aviation dealers operate under the EU margin scheme for second-hand goods. Under this scheme, VAT is only charged on the dealer's profit margin, not the full sale price. The buyer cannot reclaim input VAT under this scheme.
Margin scheme deals are often priced '€X no VAT' or 'margin scheme' in the listing. It can be attractive for private buyers who cannot reclaim VAT anyway. Business buyers who can reclaim VAT may prefer a standard-rated transaction from a dealer who can provide a full VAT invoice.
What to put in the purchase contract
The contract must explicitly state: the price, whether it is VAT inclusive or exclusive, the VAT treatment (private sale / standard-rated / reverse charge / zero-rated export / margin scheme), and the VAT number of any VAT-registered parties.
If there is any ambiguity about VAT status, get written confirmation from the seller before signing, not after. Post-contract disputes about VAT are painful, expensive, and sometimes only resolvable in court.