Re-reading your original post, I’m not clear wether you refer to
a) USE of a private aircraft or
b) OWNERSHIP of a private aircraft
I think there would be a very significant distinction between the two WRT tax allowances.
The topics I would like to discuss are broader than just the use/ownership of an aircraft. It is more about the alignment of personal life and business. I subscribe to the idea that instead a of the “work/life balance”, leading to shut down email services outside business hours, “alignment” is smarter and more sustainable.
I just learned that my current German accountant is not up to date. There used to be a rule that prohibits to claim some portion of an expense as business related. In 2009 a high court ruled that this interpretation was not the intention of the law and thus allowed a conference speaker to deduct parts of the cost of a trip to the US. Before they wanted to reject 100% because he staid 7 days in the US, including a weekend before the conference, and so the motive for the trip was deemed to be pleasure and not business. The guy simple wanted to arrive a bit earlier to be able to provide a good talk at the conference, which makes sense.
To find out how the topic is seen in different parts of the EU I have been thinking about compiling a list of examples and present it to different accounts. I am willing to pay for their opinion and may even consider to write a blog post about it later on.
the difficult point would be to locate one who can compare between countries. I have no idea where or how to get such a service.
One company I know is OCRA Aerospace. The OCRA group has been in the tax planning business for decades, so they probably know what they are doing.
To find out how the topic is seen in different parts of the EU I have been thinking about compiling a list of examples and present it to different accounts.
You may have to go to one of the bigger firms such as Grant Thornton for that, as these people have the bigger picture. Be prepared for $$$, though!
The Isle of Man would be perfect for what you have in mind Stephen even though Peter thinks it’s an acquired taste probably because he gets told off for going the wrong way at the airport 
Firstly, the Isle of Man is not part of the EU but can trade freely with the EU. It has the oldest continuous parliament in the world (stable). It is part of the UK common purse for VAT so VAT is easily managed.
Set up a company to own and run your plane. Set up a company to run your business. Charge the use of your plane from one to the other including VAT. You will not be questioned as to whether a flight is private or corporate just don’t go mad.
Corporation tax is zero. Personal tax is zero for the firt £10k ish,10% for the next £35k ish, thereafter 20% up to a max payable of £125k per annum. No inheritance tax either or any capital taxes for that matter.
The island has NO DEBT in fact it has over £1 billion in the bank for 80,000 people and it has new schools, hospital, sewerage system, airport, marinas etc.
DO NOT ASK any accountant group based in main stream EU about what is possible in the Isle of Man. They will charge you plenty and in my and others experience they only know a bit. Make a trip to the island and ask the them here, I can give you contacts.
You have to ask why the island has a very successful yacht register, aircraft register, aerospace industry and now is the biggest owner and operator of satellites anywhere outside the US.
If you like motor sports then the island is world class. There are currently two world champions here, Mark Cavendish (cycling) and David Knight (motorcycle enduro’s). Aviation started here over 100 years ago, a local man called Howard Pixton winning the Schneider Trophy exactly100 years ago this year in an AVRO. All the local pilots were invited to Government House last week for a reception to mark Pixton’s victory.
2 new marinas have been built recently in Douglas and Peel, both are full.The downside is it’s becoming a badly kept secret so the population has grown from 72 to <80,000 in the last decade. Property prices are relatively high as a consequence.
If you want to come and see and talk to the authorities just let me know. And finally, from a pilots standpoint, you don’t need to have an EASA IR after next April to fly in the EU IFR. The perfect solution is an N reg aircraft and FAA IR and do what you want.
Stilman, you paint a nice picture! If only my business wasn’t a local one!
There are many arrangements which involve a company but which are not trading in the sense of selling a product or a service to numerous arms-length customers (what some people would think is a requirement of a “business” but actually they would be quite wrong). And even if you have such a business, the question still arises as to what is an allowable business expense concerning the use of an aircraft. For example what if you want to carry a family member on the business trip. Some countries allow this, some don’t.
Yes Peter but anyone can put an aircraft in a company. Nothing stops you. The problems only arise when you seek to get an advantage from so doing. Typically the only advantage you can get is VAT being able to be deducted or repaid. If there is no external customer or revenue then what is the point of putting expenses into the company?
Stephan, it may be easier if you describe an actual business and what you want to do.
The problems only arise when you seek to get an advantage from so doing
Negative – BIK arises on limited company ownership of the asset, alone. There are various defences, e.g. all flyers being shareholders. But the Ltd Co ownership alone triggers BIK. Been there, done that, done the settlement with HMRC.
Typically the only advantage you can get is VAT being able to be deducted or repaid.
Liability limitation is another one, especially if multiple people fly the aircraft. Piercing the corporate veil is not easily done and the Ltd Co does not even have to be trading.
If there is no external customer or revenue then what is the point of putting expenses into the company?
The customer can be the guy’s main business (not related to aviation).
I would agree that a Ltd Co ownership of the aircraft is usually more hassle than it is worth if the aircraft is always flown by the same person (the owner). Mine is personally owned now. But there certainly are situations where a company is worth doing.
VAT reclaim on the aircraft requires a business plan to be presented. I used to run a zero equity group and never had any trouble with this aspect. I would advise against doing this nowadays however because owning the aircraft in a VAT registered structure means you have to invoice VAT on all outputs which makes it 20% more expensive for the private element of the flying. It would still be worth doing if there was little or no private use.
The biggest difficulty by far was with the pilots, who were causing more trouble than a wagon load of monkeys. This in turn caused problems with HMRC because I had to be selective as to who flew it, which reduced the number of customers.
@JasonC To answer your question about an actual business: http://www.caimito.net and http://www.stephan-schwab.com/category/aviation.html has an account about a business trip that may be questionable depending on how strict the revenue service wants to see it. It is the trip to ALE2013. If I would have traveled alone, nobody would question the business relationship of the expense. The issue arises because I took the family on the trip. Obviously, with private aircraft there is no extra cost for carrying two other people.
ALE2013 is a conference where family members are explicitly invited. Many participants share the mindset of private/business life alignment. Some participants are also very frequent travelers and, similar to myself, spend more than 200 days on the road. The client is never close to where one lives.
My accountants are advisers to H.M Revenue, they are not massive but large enough and also deal with over seas investments.
Contact David Finn at Newman & Partners (44) (0)20-8357-2727.
Ben
