It does make me giggle, that it's Germany doing this... I'll explain why in a sec, but as Dublinpilot said, if the EU agreement is once VAT is paid in one member state there is free circulation throughout the EU, then surely payment of 0% VAT in Denmark means you have paid the VAT and have free circulation.
Why do I find it funny Germany is doing this... for much the same reason about immigration policy within Schengen. They are getting strict over lumps of metal but will award German passports to anyone with even a tenuous link to a German Ancestor. So it's ok to have unknown non-EU nationals run around the schengen area unchecked, but if you haven't paid a few quid on a lump of metal then you are in the wrong.
Just another example I feel where the whole global system is about to fall apart, because things just do not make sense anymore. Either that or is it that the world is much less pragmatic and everyone is becoming a jobsworth!
But this supports my point. How are you going to "come up with evidence"? You can't.
For transactions at a certain size, the authorities expect a sale contract and payment via banks. If you can't produce this, you have a problem because the authorities assume there is something fraudulent behind it and they will take list prices and charge tax based on that and you will have to proof that the amount is incorrect. This shifting of the burden of proof usually comes from the anti money laundering legislation which is a powerful tool nowadays.
For example, if I bought a new iPad while on holidays in the US, and returned to Europe, but instead of coming home first to Ireland, I went to Paris and went to meet a client. Then it's customs in France that would seek to collect the VAT and duties from me on it.
Absolutely but imagine Paris was known to not perform custom checks for personal travellers (because they are on an extended strike or generally don't do it) and you did that trip once every week with 50 iPads. At this point they could prosecute you in Dublin and refute your argument of having already passed EU customs, saying that it was an abusive setup designed to avoid taxes and the actual business case (bringing iPads from the US to Dublin) was only performed via Paris because of that loophole.
The ECJ could then rule that even though the Dublin IRS was right about your motivation, doing so was still with your freedom rights guaranteed by the EU. Maybe it rules that France was violating the EU treaty by letting you do this and then Dublin got you.
Just another example I feel where the whole global system is about to fall apart, because things just do not make sense anymore. Either that or is it that the world is much less pragmatic and everyone is becoming a jobsworth!
I wouldn't think the world is going to fall apart because of 0% VAT in Denmark but I believe in thorough prosecution of suspected tax evasion. The only reason I can pay the (in my view) significant tax bills is because I get the impression that I get something in return and I have the feelings that the vast majority of the population does the same. Let's give the courts the chance to come to a conclusion on this case. Everybody that participated in the model knew it was fishy and there is a reason why the lawyers charged outrageous fees for something as simple and refused to make any kind of warranties.
Peter if I read the original post correctly, this isn't about landing in another country and getting confronted by the customs officer. Instead this is about the tax authorities in the home country taking an interest in it. They will seek to negociate a settlement, and failing that will raise an assessment and seek to collect it. At that point the taxpayer can challenge it in the courts.
Yes; very true and I agree 100% that's how it would work, but I had shifted the topic to the ramp inspections 
I'd like to know how the MV was assessed on those.
In this thread, Germany was going after based pilots, but the latest Italian business was ramp-based, and the well known historical (sporadic, and hitting N-regs) French business was also ramp-based.
Taking one extreme case which can't be uncommon, a C172 bought in the 1960s for $5k. Not only is the VAT on $5k peanuts (and you will surely get a Cert of Free Circ having paid it) but you prob99 won't have the original bill of sale anymore. And the real MV will be of the order of $30k, for a good specimen.
FWIW, I covered my backside on this by obtaining a Cert of FC in the final days of the Southend VAT Office still doing them, in 2005. Today, I don't think there is any way to get one in the UK (for a plane of any reg) other than by voluntarily declaring a MV to the VAT people and giving them 20% of it. There is a consultant who does this and related work.
I believe in thorough prosecution of suspected tax evasion
The Denmark route cannot be tax evasion, which is by defition criminal. Tax avoidance, maybe.
The Danish route was legit because you did pay VAT. It just happened to be at 0%. You got a legit Cert of FC. It was IAW the law. In the UK, they would not be doing this because tax changes are almost never retrospective. Such retrospective changes are almost always objectively unjust, because people have a right to arrange their affairs IAW the law as it stands at the time. Germany evidently takes a different view.
I wouldn't think the world is going to fall apart because of 0% VAT in Denmark but I believe in thorough prosecution of suspected tax evasion.
Lol - having re-read what I wrote (and forgive me it is Xmas and there is a few sherries down my neck) I can see I did not put it over correctly.
What I meant was how can you have a system at EU level that says member states can award free circulation of goods and that the member states can individually set what that VAT rate is. Then have one member state take objection when another set that rate to 0%.
There is no evasion of tax, and the people who went through Denmark have legally minimised their tax bill.
Taking one extreme case which can't be uncommon, a C172 bought in the 1960s for $5k. Not only is the VAT on $5k peanuts (and you will surely get a Cert of Free Circ having paid it) but you prob99 won't have the original bill of sale anymore
That's why everything but murder has a defined lapse of time. For tax related documentation (such as bills of sale) you are legally required to keep records for 10 years in Germany and if you don't it can be to your disadvantage. Companies usually shred documents after 10 years + 1 day because everything that could result from keeping such old documentation would be to the disadvantage of the company...
The Danish route was legit because you did pay VAT. It just happened to be at 0%. You got a legit Cert of FC. ... Germany evidently takes a different view.
That is your point of view, the tax authorities in at least Italy and Germany are taking another point of view. If the administration issues a certificate and it made a mistake, usually that renders the certificate invalid. Courts will decide on that matter. The tax police over here tends to employ qualified people and on subjects like this they create a focus group. If it was such a clear legal situation, they wouldn't spend their time on it because they actually are measured by how much they bring in per staff.
Whenever there is a way to setup a deal to avoid taxes and you would not do it that way if it wasn't for the tax savings, you are taking a risk. It used to be tolerated in the past but nowadays countries are taking a much stricter approach. Look at Starbucks/Amazon/Dell in the UK. Corporate lawyers used to be 10x smarter than government lawyers but it's only 2x nowadays.
If it was such a clear legal situation, they wouldn't spend their time on it because they actually are measured by how much they bring in per staff.
It's not that simple, because only poor people or people with loads of time on their hands are really keen on justice. Those with money and those who are busy making money will normally write a cheque to buy themselves peace - even if it's obviously wrong.
The UK tax people use that principle effectively, by targeting certain groups and opening an enquiry and running it for say a year, by which time most of the targets will be sick of the worry and will write a cheque for say £10k-£20k, because it will cost some £10k to get a competent tax barrister on the job (and you might lose).
At that level of "business" a tax collector can easily make many times his own salary, without running a single case where tax is actually due. And sure enough he will dig up some where tax was actually due, which is a bonus
So, just because people pay up doesn't mean the action was right, just, or whatever.
What I meant was how can you have a system at EU level that says member states can award free circulation of goods and that the member states can individually set what that VAT rate is. Then have one member state take objection when another set that rate to 0%.
Exactly.
IMHO the current financial "chicken coming home to roost" means we are seeing a lot of perversion of justice in the EU.
Greece went about it in an "interesting" way, by assigning an "income equivalent" to a plane, and if you declare less income, you pay a tax on the difference. Of course this is grossly unjust to those who have little income and either saved for a long time or got a gift to buy the plane. Or somebody gave them the plane, or sold it to them cheaply. Workarounds include a re-reg on a non-SX registry (so if you go N-reg you have to pay an A&P/IA to sign off your Annual... such hardship for these poor IAs to travel all expenses paid to some Greek island; they must really hate it 
) or syndicating the plane in which case the combined income figure is used.
Yes this is indeed what happens in Greece. For a 250hp single engine for example you must have a declared annual income of 120~130k Euro to own it and not get taxed for it. If you don't declare that much but less then they tax you on the difference (can't remember the % now). With shared ownership only the share % goes on this requirement.
Off course the equivalent number of 2nd or 3rd car or a yacht or a swimming pool etc. adds to the above and you get taxed on the difference of income if you don't declare less than accumulated total of all these belongings.
If you declare the income derived by the goods you own you don't pay extra taxes due to them.
Yes this is indeed what happens in Greece.
Most tax systems have the concept of appraisal in cases where there is no other data to determine income or expenses. It is considered to be a last resort and is rarely used in well functioning tax systems because it is inherently unjust. Greece is a great example where a lack of data combined with a strong desire to increase tax revenue short term led to the government applying appraisal everywhere. When you are subject to such appraisal, you have to prove that it is wrong, that's an uphill battle. In average, owning a boat or an airplane is a strong hint for economical power but not always which is why this method is so frustrating.
The UK has a similar option. I think it's called a "lifestyle audit". But they don't tax you every year on a slice of your assets, for ever. You get hit just once, plus possibly penalties.
The Greek system appears incredibly aggressive because it would eventually strip the owner (if he no longer has the income to fund the annual tax hits) into the gutter, forcing him to sell off the stuff, or give it away to a friend who has loads of income and declares it, but lets the original owner to use it.
Actually that must create a business opportunity in Greece, for trustees. Anybody who has a high income and pays tax on it, and has a "spare" income left over, could own assets on trust, for those who use them but don't have the income
Thankfully, Greece has not yet done something stupid that would deter visitors (unlike Italy's 45-day-plus tax hit).
I paid (US) state sales tax when I bought my aircraft - $450 for one, $1800 for the other.
In relation to my 'import an N-registered aircraft to the EU for two summers, then ship it home' fantasy... Assuming I'm not a European resident, would anybody chase me down for VAT on something I bought in 2002 and paid the above mentioned local sales tax on?
Thanks and happy holidays
