Denmark’s Aircraft Tax Loophole Closing

 - September 18, 2007, 12:04 PM

The Danish government is preparing to impose a 25-percent VAT sales tax on imported aircraft to close a loophole that has allowed owners to bypass taxes due in other European Union countries. Aircraft imported for “personal transportation” are currently zero-rated for VAT purposes in Denmark, and this has exempted just about all aircraft applications apart from gliders and other forms of recreational flying. A spokeswoman for Denmark’s taxation ministry confirmed that it is conducting a consultation process and that new legislation should be drafted by the end of November and take effect on January 1. Denmark has been obliged to introduce VAT on aircraft imports after the European Union court found the country to be in breach of EU tax rules. The Danish aircraft sales and support industry is concerned that it stands to lose substantial business from the rule change because their services are currently competitively priced for customers from surrounding EU states such as Germany and other Scandinavian countries.