Tips on fuel tax exemptions and other savings on overseas trips
Helpful hints on how to avoid high-cost uplifts and other price shockers at foreign FBOs.
By Grant McLaren
Visiting Bombardier Global Express and Challenger 604 undergo fueling at Hong Kong Business Aviation Centre HKG (Chek Lap Kok, Hong Kong, China).
While aviation fuel quality issues are almost non-existent these days, and shortages overseas are usually predictable, there remains a potential for glitches in the world of international fuel uplifts.
When you leave North America you will, in almost all cases, be dealing with third party fuel providers and in competition with commercial airlines. Crews should be aware that overseas locations may require up to 72 hrs' advance notification, specific credit arrangements may be needed and you can face staggering fuel taxes—double or almost triple base fuel cost—at some European locations.
In most cases, fuel delivery delays and credit issues are addressable with adequate pre-trip planning. You'll be able to control fuel costs to a large degree by way of tankering, strategic planning of tech stops, taking full advantage of contract fuel discounts and tax exemption opportunities. Still, problem potential and unnecessarily high fuel costs may loom ahead.
Plan to depart FRA (Frankfurt-am-Main, Germany) during a period of busy airline activity and your $12/gallon fuel delivery may be delayed 2 hrs. If you have a Sunday afternoon departure out of NCE (Nice–Côte d'Azur, France), aviation fuel supplies may be low or unavailable.
Transport strikes in Europe frustrate timely fuel delivery from time to time. While you may qualify for value added tax (VAT) exemption when uplifting in Europe, this exemption may be lost, and not recoverable later, if you check the wrong box on a fuel ticket.
"You must satisfy the local fuel provider that you qualify for fuel tax exemptions," says UVair Fuel Sales Rep Allie Truesdell. "Mistakes happen. Sometimes clients call us from the ground to ask what box to check on the fuel ticket! Be sure your local fuel provider gives you correct tax exemptions."
To navigate the world of fuel uplifts successfully and minimize costs, work with your international support provider (ISP) and fuel provider during initial trip planning. "At the end of the day, pre-planning fuel uplifts can be your biggest cost savings driver," says UVair Dir Fuel Supply Jeff Bistany. "Do your homework. Shop for fuel, confirm credit arrangements and determine which fuel taxes may apply in your case.
Especially when you're on a quick turn, or have very specific fueling instructions, reconfirm uplifts and carry hard copies of fuel releases especially when operating to more remote locations. Be aware of nuances that each airfield has regarding delivery options, credit availability and taxes.
The European Union (EU) is constantly updating taxes and these apply differently depending if you're operating as charter, Part 91 business or Part 91 leisure. Fuel planning, and looking for all applicable tax exemptions, have become important aspects of managing costs overseas."
Fuel tips and challenges
Avfuel VP Contract Fuel Russ Standefer feels that one of the biggest mistakes an operator can make in terms of cost and service issues is not preplanning fuel uplifts effectively. "Some locations are more economical than others and there are places you'll want to avoid due to very high fuel costs.
We had a Bombardier Global Express operator who recently paid over $10,000 more for a fuel uplift by fueling in Germany rather than in the UK, as originally planned. Base price of fuel can triple in Germany for Part 91 operators not able to exempt, or reclaim, fuel taxes." Avfuel Intl Account Mgr Patrick Loughman highlights high domestic fuel taxes around the world.
"Fuel cost can be significantly higher if you uplift before a domestic leg within Brazil. If you make a tech stop in Brazil before your final destination, you'll pay the domestic rate and I've seen this double the price of fuel from $4 a gallon to $8.
If you're flying a domestic leg in the UK, prior to an international leg any fuel uplift will be subject to VAT (currently 21%). India not only charges much higher taxes for domestic legs but will tax you on fuel remaining in your tank if you arrive from out of country and your next leg is domestic."
For a smoother, lower cost fuel uplift experience have all your documentation—particularly AOC and copies of fuel releases—at hand. "At some busy locations, including GRU (Guarulhos, São Paulo SP, Brazil), FRA and DXB (Dubai, UAE), you may want to consider fueling, or partial fueling, on arrival to avoid delays on departure day," says World Fuel Service Jeppesen Liaison Brett Reid. "Reconfirming fueling arrangements 24 hrs out is often good practice. For best opportunities to exempt fuel taxes in Europe have your AOC ready."
World Fuel Service Jeppesen Liaison Brett Reid stresses the importance of reconfirming fuel deliveries and having paperwork ready to exempt fuel taxes whenever this option is possible.
Opportunities exist to exempt fuel taxes at the pump in Europe but be careful as rules, and local application of tax policy, vary widely. Part 91 "leisure" operators always pay VAT in the UK whereas Part 91 "business" operations are VAT exempt if the next leg is outside the UK.
The UK considers private aviation used for business to be commercial. If you're on a business flight and mistakenly check the "leisure" box on the fuel ticket, you're stuck with the VAT. Germany is very strict and considers all Part 91 flights to be "leisure—noncommercial," says Colt Intl Managing Dir Europe Daniel Coetzer.
In Italy, Part 91 operators are exempt from VAT if the next landing is outside the EU. France, however, always charges Part 91 operators VAT. Each country in the EU differs in terms of aviation fuel taxes and tax exemption opportunities. Throughout the EU—the world's highest aviation fuel tax region—the best tax breaks go to charter operators who can often exempt both VAT and mineral oil tax (MOT) at the pump.
"In most of Europe you'll avoid both VAT and MOT if you can show the fuel supplier an AOC with your aircraft registration number on it," says Coetzer. "The reason so many private operators in Europe register under a management company's AOC is to save money on taxes."
Still, charter operators face assorted idiosyncrasies in fuel tax application throughout the EU. In most of the region, charter operators can avoid fuel taxes if 50% of flights are international. France requires 80% of flights to be international to exempt fuel taxes. Switzerland is particularly strict and wants all of an AOC holder's Swiss charter flights to be operated on a commercial basis in order to exempt taxes.
They'll look at how your flightplan is filed, says Coetzer, and if it's filed as GA they'll charge full taxes. He adds, "In Switzerland, even if you're an AOC holder who'd otherwise qualify for tax exemption, if your aircraft remains in the country past midnight the day after fueling, fuel taxes, formerly exempted, become due and payable."