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Advocate General’s opinion: VAT on supplies of aircraft to leasing companies

Wednesday, May 16, 2012

by Nick Ryan

The Advocate General has issued its opinion in the Finnish case A Oy which concerns the VAT treatment applicable where aircraft are sold to leasing companies for onward lease to third parties where they be airline operators or corporate businesses.

The opinion contradicts the current Finnish governments position that the sale of the aircraft could not be zero rated even when the leasing company could evidence its purchase for onward lease to an airline operating for reward chiefly on international routes. The AG’s opinion confirms that zero rating should apply in this instance. This opinion that supports the VAT treatment applied by a number of EU Member States and applies the “look through” approach applied by these Member States when determining the VAT treatment to be applied .

We have to wait for the final judgement in this case though the court is guided by the AG’s opinion though not bound to follow it. We suspect in this case the court will follow the opinion.