Introduction:

In most European union countries, VAT exemptions are provided for services and fuel related to commercial aircraft handling. However, the definition of 'commercial aircraft handling' can vary between countries.

For instance, in countries like France and the Netherlands, a 'commercial aircraft handling' is determined by the presence of a valid Air Operator's Certificate (AOC), which is issued by a government body.

On the other hand, in countries like the UK, operators can declare their status as a commercial operator by submitting a signed letter. This means that they can qualify for VAT exemption without necessarily possessing an AOC.

FBO One utilizes an 'AOC VAT calculator' for countries where the AOC-based definition applies. This tool helps determine the eligibility for VAT exemption on services and fuel related to commercial aircraft handling based on the presence of a valid AOC.

Calculator Logic:

To determine if VAT may be exempted, FBO One will follow the steps below for each service in the order: -

• First of all, the VAT settings of the debtor are checked. If the 'Charge VAT' setting of the debtor is set to 'Use AOC VAT calculator', FBO One will consider exempting the VAT based on the steps below. If the AOC calculator is not specified for the debtor, the regular VAT rate applies as configured in the product.

• If the product setting 'Is airside service' is unchecked, VAT will be charged as configured in the product. This will be the case for any products and services that are not related to air-side handling, such as crew transport to a hotel.

• If the aircraft registration is set to be 'excluded from AOC', VAT will be charged as configured in the product.

• Then the AOC of the operator is checked. If an AOC number is entered and the expiration date is valid, VAT will not be charged. Normally the debtor's AOC field is checked, but in case the debtor is a broker that provides credit on behalf of a commercial operator that holds an AOC, the 'Validate AOC from operator' flag may be selected for that broker.

• If none of the above rules apply, VAT will be charged as configured in the product.

If according to the steps above a non-zero VAT is charged, the EC reversed VAT logic is applied subsequently.

Note: In December 2020 VAT Calculator settings were created in order to allow VAT to apply if the arrival or departure flight type is "Private" thus ignoring the AOC settings. 

These settings are:

•  ForceChargeVatOnAirsideServicesForFlightTypes e.g "Private for VAT". This setting will look up the applied name in the flight type price category list
•  AocVatFlightTypeCheck with settings ArrivalOnly, DepartureOnly or Both