Eligibility: Who Qualifies for Fuel VAT Exemptions?

The European Union Value Added Tax (EU VAT) Directive, outlined in Article 148, includes an exemption for supplying fuel to aircraft "used by airlines primarily operating international routes for compensation." It's crucial to understand that a company possessing an Air Operator Certificate (AOC) could be classified as an airline and thus be eligible for this exemption.

‘Operating for reward’ suggests that the airline is engaged in commercial activities and often allows for internal charging between divisions of your corporation. This means that services provided within the company related to airline operations can be subject to VAT exemptions.

The ‘chiefly on international routes’ requirement varies by country, typically ranging from 51% to 80%. This percentage signifies the proportion of the airline's operations that must involve international routes for it to be eligible for the VAT exemption on aircraft fuel.

Benefits of Fuel VAT Exemptions

Fuel VAT exemptions, where airlines are not charged a value-added tax on the fuel they purchase, are a contentious topic within the aviation industry. Here are the benefits of fuel VAT exemptions:

• Reduced operating costs for airlines: This can lead to lower ticket prices for passengers, potentially making air travel more accessible and stimulating demand.
• Increased competitiveness of the industry: By lowering costs, airlines can compete more effectively with other forms of transportation, such as trains and buses.
• Economic growth: A thriving aviation industry can contribute to economic growth by creating jobs and supporting related businesses, such as tourism and logistics.

There are multiple ways to secure VAT exemptions. Below, we discuss the possibilities and ways in which you can acquire these benefits.

Securing VAT Exemptions & VAT Recovery

HADID customers within our fuel network with pre-arranged fuelling may be eligible for VAT exemptions or zero-rating if they meet the criteria.

For non-HADID locations, communicate with the fuel provider before they begin and ensure your flight has a "commercial" designation.

If no exemption applies, and VAT is paid on business-use aviation fuel, you may be eligible for a refund. HADID provides VAT-compliant invoices and assists with your refund application.

HADID's VAT Exemption and Reclamation Program offers support across numerous European countries. Pre-arranging fuel through HADID may allow direct VAT exemption. Otherwise, we assist with the VAT reclamation process after fuelling.

Find out more: fuel@hadid.aero