When discussing VAT, travel expenses are no exception. Travel and hospitality are two major sectors that have suffered greatly in recent years because of COVID-19. Consequently, the policies related to VAT on flights have been revised over the years.
Whether on a personal tour, a business, or a honeymoon trip, your travel expenses might always be subjected to VAT. So, in case you were wondering, "Is there VAT on flights?" or "Do you pay VAT on flights?" you are at the right place. Like every VAT scheme, VAT on air travel also has a few specifications and limitations you need to know about. You can explore this VAT Calculator to better understand the impact of VAT on your travel expenses.
This blog briefly covers all aspects of VAT on air flights and its impact on your business or travel expenses. So continue scrolling down and fasten your seat belts as we dive into more details.
Aviation taxation or VAT on air travel may get more complex than it sounds. There are various factors governing it. It may depend on the country of departure or the country of arrival. It may also depend on the type of flight, which can be a direct flight, a transit one, or a very long flight
When talking about the European Union (EU), the standard VAT on flights in most countries is around 20 percent. Consider Hungary, the VAT there is 27 percent. However, some countries like Sweden, Belgium, Portugal, and Luxembourg apply reduced rates of around 3 to 6 percent instead of their standard rates, which is around 20 to 23 percent.
On the other hand, Ireland, along with a few other countries, does not charge any VAT on flights or aviation services. However, the policies are ever-changing, like consider the Irish Air Travel Tax (ATT) enforced between 2009 and 2014. This Irish Air Travel Tax (ATT) policy resulted in a VAT of 10 Euro per ticket on all public flights from Ireland to airports situated more than three hundred kilometers from Dublin Airport. Beside vat on flights, if you're worrying about vat on train tickets, read our comprehensive blog about VAT on Train Tickets and Taxi Fares.
The type of flight, domestic or international, may have different VAT schemes or taxation policies affecting them. Such policies are revised throughout the year and changed with time by the local government. Now, let us go through a brief overview of VAT on domestic and international flights.
Generally, domestic flights in the European Union are charged with VAT. Some countries of the EU charge a standard rate, while some cost a reduced VAT rate. However, in some countries like Ireland, domestic flights are tax-exempt. This also means that people in these countries will not be able to reclaim any VAT.
Like in train travel, plane travel in the Union is also zero-rated as passenger transport provided that the plane has ten or more seats, with pilot and crew seats included. VAT might be applicable if you are traveling in a private aircraft or jet or if the plane has fewer than ten seats. As the saying goes: “ Exceptions are always there,” there are also some exemptions to zero-rated flights, which include:
International flights are also subjected to VAT on similar policies. When traveling from one country of the European Union to another, you might be charged with VAT. However, airlines outside the EU might be exempt from VAT and all related taxes and policies in the EU.
VAT on international flights also has some exemptions which must be taken into consideration. For example, VAT is not charged if the flights are used for educational, business, or any other related purposes. Government officials might also not have to pay any VAT on their flights to other countries when they are sent as a delegate to represent their country.
These policies on VAT on flights are under constant review and change, so we recommend visiting the government website or contacting the travel agencies. If you are going for a business trip or some related job, hiring a VAT professional adviser might be a fruitful investment to keep you up-to-date about the latest policies to avoid any unwanted situation.
You may have wondered sometimes, “Do flights have VAT if they are for specific purposes like for education or training of the officials?” While the policies might not be the same tomorrow as today, as of yet, no VAT is charged on flights that are used for business or educational purposes. In addition, flights operated by charities or non-profit organizations are also usually tax-exempt.
VAT is also not charged to transport people having physical or mental disabilities, as well as flights that are used to transport people who are accompanying people with such disabilities. Moreover, flights used to transport people in need of medical treatment to and from the hospitals and to and from the funerals are also not charged with VAT.
In addition to these general exceptions, there are some specific exceptions that you need to be aware of. For example, in Ireland, there is no VAT on flights. Therefore, passengers cannot claim back any VAT on flight tickets.
For a more comprehensive exploration of VAT on rent and its implications, you may refer to our article on VAT On Rent, How It Works & Do You Pay VAT On Commercial Rent.
VAT on flights depends on the country the airline belongs to. You are required to pay the VAT on the ticket price at a rate applicable in the country the airline belongs to. Let us consider a simple example for understanding.
If we purchase tickets from a French airline to fly from Berlin to Paris, we will have to pay VAT at a rate of 20 percent, which is the standard rate in France. However, if the tickets are bought for the same air travel but for different airlines, the VAT rate would be different. In the case of German airlines, it would be 19 percent.
Some EU countries apply a reduced or even zero rate of VAT. Consider Ireland; the VAT rate on flights there is zero percent for the flights departing from Ireland, while Spain applies a reduced rate of about 10 percent only to flights. You can check the latest VAT rates and rules for each EU country here.
For flights outside the EU, you are not required to pay any VAT if you are using an airline from any country of the EU. This is because of the policy which allows any sort of export from the EU to be exempt from VAT. For example, When traveling from Amsterdam to New York using a Dutch airline, you will not pay any VAT on the ticket price.
In the EU as well as the UK, passenger transport in a vehicle with more than ten seats is usually zero-rated for VAT. That simply means that you can not claim back any VAT. Sometimes, such airlines do impose another form of tax known as the Air Passenger Duty. APD is usually imposed by airlines in the UK.
APD can not be reclaimed, and it works in the same way as VAT does. The only acceptable reason for you to reclaim APD is when you do not use the flight. If you do not take a flight, you might get a refund to cover APD costs, but some administration fees might still be deducted.
The only exceptions to the zero-rated flights are private jets and aircraft or other vehicles having fewer than ten passengers, such as helicopters. Generally, the standard rate of VAT in such cases is 20 percent; however, it varies from one country to another. If you want more details, you can navigate to the HMRC official website or contact the airline you want to use.
Aviation Tax In the European Union
Some countries in the EU charge taxes other than VAT, like the aviation tax. The aviation tax is not related to VAT and has different rates and rules that depend solely on the country the airline belongs to. Such a tax is usually included in the ticket price.
A part of the revenue generated from the tax is used to fund environmental projects and other social programs. Some countries like Belgium, Bulgaria, Cyprus, Estonia, Finland, Greece, Latvia, Lithuania, Luxembourg, Malta, Poland, Portugal, Romania and Slovenia do not charge any aviation tax. In contrast, other countries charge different rates depending on distance, destination, class, and type of flight.
For example, Germany charges an aviation tax ranging from 8 to 42 Euros depending on the factors mentioned above. France charges an aviation tax ranging from 1.13 to 45.07 Euros, whereas the Netherlands charges a flat rate of 7.85 Euros per passenger for all flights. The latest aviation tax rates for any EU country can be checked.
Other than aviation tax and VAT, some other taxes may affect your travel costs. These include the Departure Tax and the Solidarity Levy. Solidarity Levy is another form of specific tax that some countries of the European Union apply to air travel. These taxes are applied to generate revenue for the government so that it can be used to ensure the prosperity of the country.
The Bottom Line
VAT on flights is rather complex and depends on various factors. It varies greatly across the different countries in the European Union. Some countries charge a standard rate of around 20 percent, whereas others, like Ireland, exempt flights from VAT. On the contrary, some countries offer a reduced rate of VAT varying around 3 to 10 percent.
When discussing VAT on flights, there are always some exceptions, like the air travel used for education and business travel and those used by people traveling for funerals or health treatment and related issues.
In case you are still unsure whether tax will be applied to your travel or not, then we suggest talking to your airline or the agency that bought the tickets for you. It is advisable to keep up-to-date with the latest policies as they are under constant change. You should hire a travel expert if you are running a large-scale business.
FAQs
Goods and services that are required by vessels, aircraft, or their cargoes may enjoy zero VAT rate if they fulfill qualifying criteria.
Persons traveling outside the EU don’t need to pay VAT on Vatable goods that were priced more than £6. But since January 2021, the Government has not offered any VAT relief on sales of items to people traveling outside the EU.
Goods and services that are required by vessels, aircraft, or their cargoes may enjoy zero VAT rate if they fulfill qualifying criteria.
Rían Doyle
I'm a VAT professional with years of experience helping businesses with compliance and reporting. My goal is to simplify VAT calculation and provide valuable insights through my engaging writing style and clear explanations of complex concepts.
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