How To Avoid Taxes On Aviation Fuel Products

How To Avoid Taxes On Aviation Fuel Products
(updated Jan. 02, 2004 due to new Council Directive 2003/96/EC)

-- For the AOPA countries joining the European Union in 2004 --

Dear Friends,
One of the most important aspects of promoting growth in general aviation is to keep the costs of flying as low as possible.

Many of you that are joining European Union will wake up with a shock because your country might mistakenly have accepted aviation fuel taxes.

Let me explain what happened when Sweden joined the EU in 1995.

In the years before 1995 our government negotiated with the EU about the implementation of EU directives and orders in our national legislations and government codes. Sweden was given certain exceptions, for example we were allowed to continue to sell snuff in spite of the fact this is forbidden in the EU. Such an exception was written into our agreement to join the EU.

On the other hand our negotiators neglected the protection of our tax-free aviation fuels for "private pleasure flying". The latter a common EU misunderstanding of what general aviation is.
Sweden has for all the years before joining the EU been supplying avgas and jet fuel for the entire aviation market without either taxes or value-added tax (VAT).

Some months before Sweden joined the EU, our government sent out the proposed changes to our national laws that were to be implemented when we joined. Your country probably has the same system - i.e. procedures to inform the public about coming new legislation.

It was after an inquiry to the Ministry of Finance that AOPA Sweden found out that we would have to pay taxes and VAT on our fuels.

However, in talking to our government no one was aware of this proposed change and there were no politician who wished to put this burden on general aviation. On the contrary, the Swedish government wanted to protect GA mainly because of the importance it has as a means of transportation to and from remote places, islands, etc. in our very long country and the importance for business-transportation.
AOPA Sweden
Svenska Allmanflygforeningen
AOPA Sweden then initiated an inquiry as to how Sweden could avoid taxes and VAT on aviation fuels.
An inquiry in Brussels revealed processes permitted within Europe.
These included acts to maximize national interests, allowed by the EU.

With this procedure available and when researching the legislation of the EU we found a council decision which in fact allowed certain countries to maintain the tax-free status for aviation fuel products for GA.
We found that the countries surrounding us, such as Denmark and Finland, were allowed by the EU to have untaxed aviation fuels. Also the non-EU country, Norway, was also selling untaxed aviation fuels.
With these facts in hand our government "got the courage" simply to inform the European Commission that our country would maintain its tax-free and VAT-free status for aviation fuels for as long as our neighbors did, especially the EU-countries Denmark and Finland. The commission of course was not very happy - but at a council meeting the Swedish decision was accepted and no other EU-country objected.

Lessons Learned

If your country currently has no taxes or no VAT on aviation fuel products for "private pleasure flying" and your country has not yet received an acceptance of keeping it in this way (as stated in your country-agreement to join the EU) there is still a chance that you can keep these products untaxed.

So, number one, check now and without delay with your Ministry of Finance what the forthcoming tax status of aviation fuel products will be when you join the EU.

If your country has negotiated and been allowed to maintain untaxed aviation fuel products you will probably have received this favor to be valid