Italy Cuts Taxes on Visiting Private Aircraft But Charter Ops Clobbered

 - August 2, 2012, 4:40 AM

The Italian government has approved an amendment to the contentious tax on business aircraft that it made law on April 29. Now, foreign-registered aircraft operated privately will incur the tax only if they stay for 45 consecutive days, rather than the 48-hour threshold in effect until now.

The amendment, which at press time was expected to be endorsed by the Italian parliament, also reduced the rate of the tax by 50 percent. Non-commercial operators will now be charged according to aircraft max takeoff weight, at a rate of €0.75 ($0.92) per kg for aircraft up to 1,000 kg (2,204 pounds), increasing to €7.55 ($9.87) per kg for aircraft weighing more than 10,000 kg (22,040 pounds). For example, the tax on a Learjet 60XR weighing 10,659 kg would be $105,204.

The change in the threshold for the tax from just 48 hours to 45 consecutive days is significant. It seems likely that foreign-registered, privately operated aircraft will easily find ways to avoid spending 45 consecutive days in Italy or will register the aircraft in Italy.

Responding to the move, the European Business Aviation Association (EBAA) commented, “In our opinion the Italian government has realized this tax was a mistake negatively affecting foreign investments and has decided to downgrade it to an almost irrelevant degree. According to our interpretation, to trigger the application of this tax, the stay in Italy has to be for more than 45 days in a row. We therefore believe that subsequent stays of less than 45 consecutive days cannot be cumulative.”

The tax will still apply to commercial charter operations, but on a different basis. In this case, a tax will apply at €100 ($123) per passenger for each leg under 1,500 km (809 nm), and €200 ($246) for each leg if more than 1,500 km. This means, for example, an €800 ($984) charge for two passengers flying a round trip from Chicago to Rome. Any additional domestic flights within Italy are counted as extra “legs.”

“The [EBAA] secretariat is doing its utmost to verify the legality of such tax and together with its partners IBAA and EHA [European Helicopter Association] it is considering all legal means at its disposal. Should there be a legal hiccup, we don’t preclude any possible legal recourse against the Italian government and the tax(es) the modalities of which remain, today, unheard of,” the association said in a July 11 statement.

The association also warned commercial operators that they would be responsible for paying the passenger tax for any flights to Italy made since April 29, even though those taxes only just became “collectible.” It added, “We strongly advise that you respect to the letter the requirements of the Italian collecting agency.”