So would one possible solution to this be to get an intermediary company to buy the aircraft, reclaim VAT in EU then I buy the aircraft from them and pay the VAT, but with the difference that the EU VAT has been reclaimed?
No. For a buyer to reclaim VAT, he needs a VAT invoice and only a VAT regd seller can issue one.
Try to find a plane from a VAT regd seller in the EU. Then you get no VAT added, you benefit from the plane being ~20% cheaper to start with, and you just pay the import VAT.
What Peter means is if a VAT registered company in the EU sells the plane, it can sell it to you for export, in which case no VAT applies.
Similar to the booths at airports where tourists can reclaim sales tax.
What companies/sellers might do for their own protection is they will initially charge you a price amount as if it were including VAT, without calling it VAT (a sort of „bail“) and once you provide them the customs/tax authority confirmation that the aircraft was exported, you get the VAT equivalent amount refunded by the seller.
What companies/sellers might do for their own protection is they will initially charge you a price amount as if it were including VAT, without calling it VAT (a sort of „bail“) and once you provide them the customs/tax authority confirmation that the aircraft was exported, you get the VAT equivalent amount refunded by the seller.
That makes sense although I have not heard of it actually happening.
There is always a problem with export out of the EU: the zero-VAT status of the transaction does depend on the item actually leaving the country, and it is the seller who bears the burden of proof on that. There is a certain amount of fraud there where e.g. a foreign customer approaches you saying “I am leaving the UK to Lebanon; can you sell X to me free of VAT” (actualy case I had in the 1970s; answer was NO 
). Same with intra-EU sales; pre-brexit, if the EU buyer supplied a bogus VAT number, the UK seller was liable for the VAT (happened to me a few times). But with a plane there must be a well established procedure for export to a non EU country, determining the actual point of sale. With normal goods it is a piece of paper from a shipper etc.
The other thing is that loads of upmarket planes were imported US → EU despite the import VAT. It’s a case of where the choice is.
Hence one is liable to check the VAT number is eligible.
https://ec.europa.eu/taxation_customs/vies/#/vat-validation
And also reverse charge was implemented.
https://en.m.wikipedia.org/wiki/Missing_trader_fraud
I read somewhere (https://taxation-customs.ec.europa.eu/special-schemes_en) that EU based sellers of second hand VAT rated products qualify for a margin VAT treatment so they would only pay VAT on the difference between the price they bought the aircraft at and the price they’re selling at to avoid double VAT taxation. So I guess if I could find an EU based company to purchase the aircraft. But would that actually work, ie would they invoice me for the full VAT that I could then reclaim? I guess they would just invoice me for the price they paid + their margin then when it gets to the border I’d pay VAT again in the UK. So I think even if you purchase from a VAT registered business in the EU, so long as it’s second hand goods, you’re being double taxed. You only pay regular VAT once if you purchase a previously commercially used aircraft by a VAT registered business.
Parthurnax wrote:
read somewhere (https://taxation-customs.ec.europa.eu/special-schemes_en) that EU based sellers of second hand VAT rated products qualify for a margin VAT treatment so they would only pay VAT on the difference between the price they bought the aircraft at and the price they’re selling at to avoid double VAT taxation.
Yes, but that’s only the case if the VAT company purchased an aircraft without VAT (e.g. from a private individual).
Example: AIRPLANE Ltd. buys a C172 from John P. Laneowner for 100k. John P. Laneowner can only provide a private invoice without VAT.
AIRPLANE Ltd. subsequently sells the C172 to P. Arthur Max for 115k. The price would then be 100k + (15k + 20% VAT) = 118K incl. VAT.
In your case it would actually be better to find a AIRPLANE Ltd. that purchased the plane B2B and reclaimed the VAT. If you purchase the plane from such a company, they can sell it to a private individual on the premise that the plane is exported out of EU.
AIUI, the VAT margin scheme is available only to trade sellers (basically used car dealers) but it is advantageous only if selling to a non VAT registered buyer – because the seller is able to charge less VAT.
However, every such seller will be VAT registered and is thus able to export with zero VAT added.
The above link doesn’t say that the UK allows an EU based trader to sell a vehicle to a UK based customer, with the UK import VAT based on the seller’s VAT margin scheme. That would be amazing – I can’t believe the EU is offering that to the UK. It just says the EU operates a VAT margin scheme. So if you go there and buy a plane from such a dealer, you will pay such reduced VAT. But then you still have to pay the full import VAT of 20% when you bring it home. So as I say you are better off just buying it as a UK buyer and with a zero VAT invoice, and pay just the UK import VAT.
If you purchase the plane from such a company, they can sell it to a private individual on the premise that the plane is exported out of EU.
From any VAT registered seller actually. It could be an aircraft “operating company” (you would be amazed how many IFR tourers are company owned, and I don’t mean syndicates) or it could be an aircraft dealer.
The other option is what thousands of people did in past decades: import it with “just a flight” and thus avoid the import VAT. In the UK, you are unlikely to get busted, because e.g. the UK CAA does not require a proof of import VAT paid before registering it to a G (not sure if this is current info). HMRC will find out if they bust you for some reason (called an “enquiry” – according to HMRC, most are triggered by an ex wife 
), and it will not be possible to sell it (no evidence of import VAT paid) except to a dumb buyer, so it will take an extra 24hrs to sell it
The VAT margin is a moot point anyway because a VAT registered company can sell the plane net of VAT to a private individual from the UK if the aircraft is to be exported.
So in OP’s case, it makes sense to buy a plane from a company in a country with the highest VAT rate. Negotiate a gross sale price. Then explain “By the way, please fly the plane to the UK and scratch the VAT % off the agreed amount”.
The VAT margin is a moot point anyway because a VAT registered company can sell the plane net of VAT to a private individual from the UK if the aircraft is to be exported.
Exactly.
So in OP’s case, it makes sense to buy a plane from a company in a country with the highest VAT rate. Negotiate a gross sale price. Then explain “By the way, please fly the plane to the UK and scratch the VAT % off the agreed amount”.
You lost me there
A VAT registered seller is also a VAT registered buyer, so the VAT just “passed through”. He doesn’t care what his country’s VAT rate is. That is what VAT is supposed to be – a tax on the end user only. And neither did anybody else who owned it before him.
