Peter wrote:
ou lost me thereA 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.
True, but high VAT rates are a disadvantage because of overall higher gross prices, that sometimes lead to reduced net prices to be competitive. The buyer can use this to his advantage.
True; manufacturers generally adjust prices to counteract local taxation. Hence a lot of Brits used to buy cars in Denmark (many years ago).
But who makes new planes today? Cirrus and Diamond, in this context.
Thanks guys, very useful discussion and lots of great points raised. Unfortunately, although I had a glimmer of hope that it might not be the case, it doesn’t sound like there’s any practical way to avoid being double taxed on a purchase of an aircraft from the EU from an individual who had already paid VAT. Sad reality, but it is what it is.
Buy the plane as a company?
This idea of buying the plane with a VAT registered company and claiming back the VAT does work but is not easy. I know because I did it, 20 years ago… The company (it was a rental “adventure”, soon aborted due to problems with finding enough quality customers) is long ago closed. I have written about it long ago, too.
The tax authority will not allow you to just do this, in any country with a sophisticated tax system. So, yeah, no doubt easy in most of southern Europe 
I know of such a “tax dodge” right now; not going to post details but the guy did something which is dead easy down there and is now definitely regretting it because they finally caught up with it. Anyway, anywhere, you can set up the company and VAT register it easily, but the taxman will not authorise the VAT repayment unless you have submitted a “viable” business plan. Then you have to run this company and invoice all “customers” as “x plus VAT” for ever. You can read the rest if you read the links under “Threads possibly related to this one” below; it’s all been said there 
Peter wrote:
This same debate can be had in the opposite direction: for UK planes imported into the EU. People say that post-brexit a UK plane costs more for a mainland buyer but I don’t get it – because “VAT paid” planes (which could be bought and sold without a VAT element) are already inflated by the VAT which somebody lost. Brexit does not change this but most people fall for the illusion.
Just like you recognise it in the other direction (but weirdly not in this one), buying a “VAT paid” aircraft from UK and importing it into the EU, one will have to pay an EU member state import VAT (and deduct it if one is entitled to deduction, that is insofar and to the prorata that one uses the plane for a VAT-taxable or export business). So buying a “VAT paid” aircraft from the UK, post-brexit, for a non-business EU resident raises the price by one’s national VAT rate, and one still pays the UK (or other) VAT already paid by the seller or one of the previous owners, which is, as you mention, “baked in” into a higher price.
Peter wrote:
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)
The system is to check the VAT number on https://ec.europa.eu/taxation_customs/vies/
Peter wrote:
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.
If the UK would want to implement that, it could do so without direct intervention of the EU, nor the EU trader, by putting that rule in its import VAT. The EU doesn’t have to “offer” it to the UK. The EU trader would just have to cooperate with the customer to provide him proof of what is margin is, in the shape that the UK would have decided it would want to see.
I have never thought of the following for getting out of the EU, but what is the current VAT status of ‘returning household items’ with regards to post-Brexit UK regulations?
When we moved into the EU, all goods in our possession for at least a given period, I guess it was ‘over 6 month’, were treated as items being part of a returning household and not subjected to VAT (EUST actually). I know a couple of friends using that procedure, but a very long time ago, for their US cars when moving from the US to Europe. We did not do that when moving because the cost to bring our abroad car to EU standards to get it on the road was outrages, but it would have worked out.
So, if somebody purchases an aircraft in the EU, is resident for years and moves to UK, may be able to claim VAT-free relocation of items, or am I missing something? Maybe moving into the EU for work, stay here and buy an aircraft to take it back later, could be an option for certain aircraft?
There are two things:
An item that was EU “VAT paid” (in other words, “in free circulation”) but is exported from the EU, looses its “VAT paid” status after two years IIRC. Before the expiry of that period, it can be reimported into the EU without import VAT.
Hmmm 🤔
Aren’t all G-reg planes EU VAT paid then until 2 years post brexit?
Aren’t all G-reg planes EU VAT paid then until 2 years post brexit?
G-reg is irrelevant but let’s call that “UK aircraft” with Certificat of Free Circulation (say G-reg with VAT/C88)
The devil in details, if it was parked in Belgium as of 31 Dec 2020
Obviously, “UK aircraft” that was parked in UK on 31 Dec 2020 were treated as exported from EU: they simply lost “EU VAT”
The rules on “goods split” never clarified how UK/EU aircraft parked in say US gets their EU vs UK VAT earmarking?
I recall lot of “EU aircraft” have visited UK and parked in Biggin as of 31 Dec 2020, it will be daft that they have lost their “EU VAT”?
