United Kingdom vat: UK VAT exemption for transactions related to aircraft

United Kingdom – On 25 June 2009, the European Commission formally requested the U.K. to amend its legislation governing the VAT exemption for transactions related to aircraft, since it is based on criteria different from, and inconsistent with, criteria in the VAT Directive.

The U.K. currently treats the supply, repair and maintenance of "qualifying aircraft" (broadly, those weighing 8000 kg or more) as zero-rated. The corresponding EU legislation focuses on aircraft "used by airlines operating for reward chiefly on international route." The U.K. has now agreed to amend the U.K. legislation and the tax authorities will be consulting on the changes in the coming months.