Thought leadership from our experts

Transfer tax and other issues: GREECE

1. Sales, value added or other taxes to be payable on a domestic sale/purchase or transfer of title/interest over an aircraft.

The Greek Value Added Tax Code (Law 2859/2000) imposes VAT (value added tax) on domestic sales of goods, including sale/purchase or transfer of title/interest over aircraft; the same would apply to an intra EU acquisition. However, article 27 of the VAT Code provides for exemptions as regards -among others- aircraft. According to par. 1 (b) of the said article exemption from VAT is provided with respect to «... the supply and the importation of aircraft, which are to be used by airlines operating for reward chiefly on international routes». To qualify as operating chiefly on international routes, an airline is required to derive more than 50% of its gross annual revenues from international flights; this is often referred to as the revenues' criterion.

2. Sales, value added or other taxes to be payable on an intra EU sale/purchase or transfer of title/interest over an aircraft.

According to article 29 par. 1 (a) of the Greek VAT Code an intra EU sale of goods, including sale or transfer of title/interest over an aircraft (i.e. from a seller based in Greece to a purchaser based in another EU country) is exempt from Greek VAT.

3. Sales, value added or other taxes to be payable on a sale/purchase or transfer of title/interest of an aircraft, if the purchaser is a foreign entity and will export the aircraft to another country.

According to article 24 par. 1 (b) of the Greek Value Added Tax Code (Law 2859/2000), export of goods to non EU countries, where the purchaser is a foreign entity not established in Greece and will export the aircraft to a non EU country, is exempt from Greek VAT.

4. Export tax and/or customs duties to be payable on the export of an aircraft in the relevant jurisdiction.

A. There are no export taxes. As regards VAT, in particular, under article 24 par. 1(a) of the VAT Code, delivery of goods, by a seller established and registered for VAT in Greece to a purchaser established in a non EU country, is exempt from Greek VAT.

B. As regards customs duties, those are only imposed on imported goods. There are no duties on exports.

5. Import (value added) tax and/or customs duties to be payable on the import of an aircraft.

As regards imports, VAT is on principle chargeable (as well as customs duties, where applicable) at the time of importation of goods (article 17 in conjunction with art. 60 of the VAT Code).

However, civil aircraft are exempt from customs duties, according to Section II, par. B (1) of EU Regulation 2018/1602 (directly applicable in Greece).

Furthermore, in relation to VAT, when goods are placed -upon importation- under a special customs suspension status, VAT becomes due at the time that the goods exit such status. Aircraft can be placed under a "designated end use" status, in case they are intended to be used by an aviation company satisfying the «revenues' criterion» mentioned under par. (1) above; this can be the case irrespective of whether ownership of the respective aircraft is transferred to the qualifying aviation company or the aircraft is delivered thereto pursuant to a lease arrangement; when the designated end use terminates (e.g. the respective aircraft lease is terminated) the aircraft has to be exported or the corresponding VAT be paid.

6. Stamp duties or fees and/or documentary taxes to be payable upon the execution of any aircraft transaction documents.

A. VAT would be relevant if the sale/purchase of the aircraft would involve a person registered for VAT in Greece; in such a case we refer to paragraphs 1-5 above; there

would be no VAT on the documentation itself, but rather on the respective «delivery of goods» (VAT is imposed on delivery of goods and/or rendering of services).

B. Stamp duty could be triggered in case of a domestic sale of aircraft (located on Greek soil at the time of transfer) between private individuals, pursuant to a written agreement; in such a case (which would, in practice, be a very rare occurrence), the documentation itself would be subject to stamp duty, which is on principle a local documentary tax.

7. Taxes or duties on registering the aircraft.

According to article 17 of Law 1815/1988 and the respective (latest) Ministerial Decision Nr. Δ11/Γ/20074/1.7.2019 (Government Gazette, Issue B' 2658/2019), registration fees are payable to the Hellenic Civil Aviation Authority (HCAA), in its capacity as Registrar, as follows:

1. Registration of aircraft of MTOW (Maximum Takeoff Weight) up to 5.700 kgs €150

2. Registration of aircraft of MTOW from 5.701- 22.000 kgs€300

3. Registration of aircraft of MTOW from 22.001- 50.000 kgs€500

4. Registration of aircraft of MTOW which exceeds 50.000 kgs€1.000

8. Luxury taxes payable in relation to aircraft.

Pursuant to article 44 par. 1 (a) of Law 4111/2013, a special annual tax, referred to as "luxurious living tax", is imposed on natural persons who are subject to income tax in Greece, calculated on the amount of the (annual) "objective income" deemed to arise on the basis of ownership or possession (among others) of aircraft; such objective income, as regards aircraft, is (by law) calculated on the basis of their technical characteristics (mainly horse power). Currently the rate of luxurious living tax is 13% on the respective deemed/objective income.

Persons subject to income tax in Greece (and thus subject to the above "luxurious living tax") are (a) tax residents of Greece, as well as (b) persons that (without being resident in Greece) are nonetheless subject to Greek tax on their income earned from Greek sources (mainly income from real property).

9. Income, withholding or other taxes payable in respect of payments made by an aircraft lessee to a lessor.

Rent and other payments, made by an aircraft lessee to the respective lessor are -pursuant to local law- subject to withholding tax at the rate of 20% on their gross amount. If the lessor is tax resident in another country, and there is a Treaty for the Avoidance of Double Taxation between Greece and such other country, then any provisions in this respect of the respective treaty will prevail over local law; in many cases, a bilateral treaty would provide for zero withholding.

10. Tax implications for operation and use of commercial aircraft.

A company that operates commercial aircraft is subject to corporate income tax, pursuant to the Greek Income Tax Code (Law 4172/2013), as would be the case with any other company; there is no special taxation on the aviation business. As regards VAT, according to article 27 par. 1 (i) of the VAT Code, international air transport of persons, as well as the provision of related ancillary services, are exempt from VAT.

11. Tax implications for operation and use of corporate and/or private aircraft.

Using an aircraft privately would trigger the payment of luxury tax, as described in par. 8 above. Moreover, in case of corporate aircraft, this tax burdens the members of the Board of Directors of the company that owns the aircraft.

12. Taxes payable on aircraft loan repayments (income tax on interest).

Lender's income from interest received is on principle subject to income tax; moreover interest payments are subject to tax withholding at 15%. Where the lender is not a resident in Greece for tax purposes and there is a bilateral treaty in place, between Greece and the country of tax residence of the recipient of the income, the applicable provisions of the treaty will prevail over local law.

13. Environmental or carbon emission taxes or schemes.

The matter is regulated by Directive (EU) 2003/87, establishing a scheme for greenhouse gas emission allowance trading (ETS) within the EU, as amended and in force (Chapter II, art. 3a et seq.). Greece accepts the provisions of the said EU directive as fully applicable in Greece. The Ministry of Environment, Energy and Climate Change is responsible for monitoring compliance of aviation companies with their obligations under the said Directive.

There are no local carbon emission taxes in Greece.

14. Aviation fuel taxes.

Pursuant to art. 78 par. 1 (a) of Law 2960/2001, energy products intended to be used for air transport are exempt from fuel tax (with the exception of private recreational flights, which are not exempt from fuel tax).

15. Other taxes.

No other taxes specific to aircraft exist.

Disclaimer: The above information should not be relied upon by the reader as it is intended merely to serve as preliminary guide to the laws and regulations governing the taxation of aviation and aircraft in Greece. The information intends to provide summary-level information about certain tax issues affecting general aviation and aircraft finance. Readers, therefore, are encouraged to seek legal and tax advice from their own professional legal and tax counsel based on specific facts and circumstances regarding their acquisition and/or use of aircraft.