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Spain - October 31 Pamplona LEPP 2015

would you let the ramp refueller, operating his mobile credit card machine, decide whether the customer was quoting a valid EU VAT registration number? I know I wouldn’t – the risk of getting it wrong and having to pay over the missing VAT is just too high.

Quite, but I don’t think the UK airport(s) in question even asks for a VAT number. They just do it for an overseas destination.

Administrator
Shoreham EGKA, United Kingdom

Well … All I can say is that in my business I write a lot of zero VAT invoices to EU customers for services provided at their doorstep. That’s been thoroughly checked by my accountant in direct talks with the tax authorities here in Germany. So the zero VAT rule in a B2B transaction does not require physical goods to move. See it like a shortcut. Instead of charging the VAT applicable at the destination and then let the other side reclaim it both sides with VAT ID can simply not charge and reclaim it. Easier and 100% correct.

Regarding the fuel purchase. With an Air BP card my contracting party is the Air BP subsidiary that made the contract with my business. The invoice comes from them and it shows where the refueling happened. From the AIr BP station in the field I only get a receipt about the merchandise – it’s not an invoice. So whatever rules have to be applied is completely up to Air BP. If I get asked for VAT ID and destination and then certain taxes are taken off the invoice, I as the customer have to assume it’s correct. Before sending me the invoice Air BP Germany will have to make sure all rules have been complied with. I have no relationship with the fuel station operators at the airports as for me they are just acting on behalf of Air BP Germany.

Frequent travels around Europe

All I can say is that in my business I write a lot of zero VAT invoices to EU customers for services provided at their doorstep. That’s been thoroughly checked by my accountant in direct talks with the tax authorities here in Germany.

That’s 100% correct. You just need

  • to be yourself based outside their country (i.e. the invoice address is outside their country), and
  • have the customer’s valid VAT number.

I think there is some concession for airports, involving a “reasonable presumption” that if a plane has filed a flight plan to another EU country (and supplied a VAT number) OR filed a flight plan to a non-EU country, they can have the fuel VAT free. It would make sense. In my business, we can despatch a package based on the same rules, and I guess the chances of that package being misdirected is the same as the chances of the said flight being diverted. In neither case the supplier needs to verify it actually got there. It gets a little more complicated if the delivery address is a UK based freight forwarding company

Regarding the fuel VAT, AFAIK, taking the UK rules, the customer is not liable if the supplier didn’t charge the (correct, or any) VAT. So if a pump gives you VAT free (or even duty free) fuel, they are liable for the VAT or duty they are deemed to have charged you. Provided of course you didn’t achieve it with something like a fake AOC

Administrator
Shoreham EGKA, United Kingdom

Stephan_Schwab wrote:

All I can say is that in my business I write a lot of zero VAT invoices to EU customers for services provided at their doorstep. That’s been thoroughly checked by my accountant in direct talks with the tax authorities here in Germany. So the zero VAT rule in a B2B transaction does not require physical goods to move.

That is correct. The law was changed in 2010 with the so call “VAT package”. Until then, there were very specific rules depending on what services you actually performed and it was generally hairy. Now there are general provisions for “B2B” where you verify the “B” by checking your client’s VAT ID through a web site. In your case the VAT becomes then your customer’s obligation (reverse charge). If your client in Spain was not a B but a C (end customer), you would have to charge German VAT.

VAT audits in my companies were always the most stressful of all. Now it’s become a lot easier and clearer.

If your client in Spain was not a B but a C (end customer), you would have to charge German VAT.

Even if the customer supplied you with a valid Spanish VAT number?

Surely there is no obligation to check if the customer is a reseller or an end user? The world’s second oldest profession is to pretend you are a “reseller” so you get a reseller discount

Administrator
Shoreham EGKA, United Kingdom

Peter wrote:

Even if the customer supplied you with a valid Spanish VAT number?

Well, that is a complex subject and will depend on your country and how it enforces the law. In all EU members you are obliged to verify the VAT ID, i.e. look it up on the official web site and make sure it matches the company name of your customer. On your invoice you also have to refer to the “reverse charge” provision, i.e. you always have to document the reason for the VAT exemption. If you have a VAT ID and it matches the recipient, then you have pretty much done your due diligence.

Of course you can create a cheap Ltd and request a VAT ID and then do cross border ordering at 0% VAT and most likely don’t get caught. Until you do get caught because there is data exchange between the member states.

I once had a wrong VAT ID for a company (accidentally using another valid one from another company) and kept ordering things with 0% VAT. It took quite some time until a supplier came back and said the VAT ID was incorrect because it did not match our company name. Also I managed to order without VAT using our ID from country X but having it shipped to country Y. That is not allowed by EU law. In both cases the supplier would be f*cked.

Stephan_Schwab wrote:

Well … All I can say is that in my business I write a lot of zero VAT invoices to EU customers for services provided at their doorstep.

The key here is what you’re selling. The position for sales of goods is as I described it. But the rules for sales of services are completely different. From a VAT standpoint, sales of international services can be extremely complex.

TJ
Cambridge EGSC

Stephan_Schwab wrote:

EU VAT knows the rule of reverse charge. That means if the other party has a VAT ID and is in a different EU country the invoice is without VAT. Common practice and not related to aviation or fuel.

Be EXTREMELY careful about doing this if your flight was for private purposes. I’m not suggesting that your flight was, nor do I want to know. I just pass on the caution in case it’s relevant to your other others reading.

VAT can’t be reclaimed for a non-business flight obviously. Of course it could be tempting to think that what goes on in another country remains in another country but that isn’t the case.

Technically you’re not getting the supply VAT free. Instead you self account for the VAT. You are supposed to charge yourself VAT at the domestic rates by including this VAT in the Sales VAT box on your VAT return, and then claim the relevant amount in the purchase box. In most cases this is the exact same amount so has little effect, but if some of it was for private purpose then you shouldn’t be claiming that element in the purchases. So now the problem has happened in your own country because your own VAT returns are wrong.

Now of course it’s very easy to think “I’ll pay this from my personal account and not put it anywhere near my business nor near the VAT returns and nobody will know anything.” That might have worked in the past, and it might still in some countries, but I can tell you from experince of managing numerious tax inspections that the tax man already knows a great deal about what you’ve purchased at 0% VAT abroad, through Intrastat & VIES returns.

You might think that they won’t put that info together, but they can. At any inspections I’ve had in recent times, where the client buys in goods or services from another EU state, one of the inital questions my clients gets is “What do you buy from X supplier, what do you use it for, and how much do you spend there annually?”. Then during the inspection they attempt to verify those purchases. So if they aren’t in your records, you could be quickly in trouble.

As I said, I’m not suggesting that your flights weren’t 100% business. Just passing on my experience in case it’s useful to anyone reading. I probably see more tax inspections in a year than any of you hopefully see in a lifetime and it could perhaps save someone from the missery of making a terrible mistake.

Colm

EIWT Weston, Ireland

dublinpilot wrote:

As I said, I’m not suggesting that your flights weren’t 100% business. Just passing on my experience in case it’s useful to anyone reading. I probably see more tax inspections in a year than any of you hopefully see in a lifetime and it could perhaps save someone from the missery of making a terrible mistake.

I think it is good to point this out.

… and yes, everything in my case is 100% business. After all my job is 100% travel. Can be a blessing but also a curse.

Frequent travels around Europe

Just recovered the plane from Biggin Hill.

It’s a really nice airport; everything works, nice people. Fuel was done before I arrived. Costs £10/day to park and £26 to land.

The wx was the worst I have ever flown it. Water everywhere; everything including me was wet. The ASI was showing 50kt at the start of the takeoff run. Loads of turbulence, GS 60kt so a headwind of about 80kt, which at ~2000ft makes a very rough flight. Initially I flew by hand (so busy I forgot to raise the gear) and then later the KFC225 held it fine all the way. No leaks in the plane; not a single drop.

By Shoreham it cleared up for a short while

Landing was very smooth – 20kt straight down the runway

EGKA 070950Z 20020KT 9999 -DZ FEW010 SCT032 16/15 Q1017
EGHI 070950Z 20017G32KT 160V250 6000 -RA FEW014 BKN022 15/13 Q1016
EGKK 070950Z 20013G24KT 170V240 9999 -RA BKN012 BKN017 16/14 Q1017
EGKB 070950Z 21023G34KT 9999 BKN012 16/13 Q1016
EGMD 070950Z 21020KT 9999 FEW005 16/15 Q1019

Administrator
Shoreham EGKA, United Kingdom
100 Posts
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