Can lessees claim deduction of import VAT?

At its 98th meeting, the committee dealt with the import of an aircraft where the importer of the goods was also the lessee. The question was whether the two conditions for exercising the right to deduct, i.e., the incurrence of the related costs to carry out the business activity, and their inclusion in the price of the output supply, had been met. The committee ruled that this was not the case as usually, the total cost of the goods themselves is borne by the owner of an aircraft and not by the lessee who will only bear the expenses charged by the owner for the lease as such.

This view seems to be in line with the committee’s earlier conclusions and the judgment of the Court of Justice of the EU (CJEU) in Case C-621/19 Weindel Logistik Service, in which an EU company imported goods for repair into the EU. In this case, the court denied the importing company the right to deduct import VAT, as it did not own the imported goods and at the same time did not include the costs associated with the repair of the goods in the price of the output supply.

The committee thus essentially concurred with the CJEU's opinion and its own previous conclusions, see Document No. 762 for more details on the leasing of aircraft. Considering the committee's current discussions, the conditions for exercising the right to deduct import VAT should be respected. Therefore, to exercise the related right to deduct import VAT on the import of goods, the lessee of the goods must prove a link with their business activity and, at the same time, include the costs of importation in the price of their output supplies.

However, the committee is aware of the different approaches taken by member states. Therefore, also in the light of the previous case law of the CJEU that allows the right to deduct import VAT by a non-owner, it has invited delegates to present their views on this matter.