VAT-friendly leasing of private aircraft and yachts

As I always proclaim on my presentations and webcasts, VAT is due on almost everything that you pay for. And – like U.S. sales tax – the burden of VAT is on the end customer; the VAT-exempt company or individual that has no way to reclaim or deduct VAT.

This leaves us with on-going efforts to minimize the VAT burden of individuals. There have been structures that use different countries to lease cars, and another persistent set-up is leasing aircraft and yachts through Cyprus (which is an EU member state). The payable VAT rate would potentially drop as low as 4.37%.

Cyprus considers these structures a part of their foreign investment policy, and the tax authorities encourage and support leasing with two very useful public rulings. The one for aircraft has recently been updated and is discussed in the link below.

Obviously, this structure is only useful for flying within the EU – outside the EU generally no VAT is due on aircraft and yacht leasing. Also, I should note that other EU tax authorities consider this leasing process tax avoidance and will do their utmost to investigate and catch lessees. So let me know if you are interested in pursuing these (by themselves very beneficial) opportunities.


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Prep for a new GST in India

This summer is unusually quiet in the global VAT scene and therefore my updates have been scarce. I did come across this piece of thoughtware from EY India, which highlights the need to be very proactive in the preparation for a potential new GST in India.

From my own experience I know that some multinationals were not ready for the implementation of GST in Malaysia last April, and needed to scramble to put in the first GST return. This even to a point where the Malaysian authorities decided to delay the filing deadline for the second quarter GST return. (It should be mentioned that the Malaysian government was not as prepared either.)

Implementation of GST in India on April 2016 is still a big “if” – there are many challenges to be resolved and frankly I would be surprised if they would meet the April 1 date. Nevertheless, the points EY makes are noted. If you do business in India, the upcoming GST implementation (whenever that happens) should be high on your to-do list for the rest of this calendar year.

EY India says:

“Businesses that are proactive in preparing for the GST early can gain a real competitive advantage by reducing disruption and maintaining and improving relationships with suppliers and customers alike. Each action will require early planning and timely execution to leverage this advantage, including managing budgets, resourcing and the overall success of the project.”

See the article here:

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UK tax man and U.S. tax debt recovery

The Brits finally get to turn the tables after the Boston Tea Party! A posting on LinkedIn suggests that HMRC will go after U.S. companies that don’t pay their UK VAT liability.

This is going to be interesting because there must be hundreds of U.S. e-businesses that still have not registered for VAT to file their B2C VAT liabilities.

Could HMRC even collect non-UK e-business VAT debts, based on the “simplified” one-stop shopping registration rules for electronic services? I don’t think so, because the ‘simplification’  (register in one country and file VAT for all EU liabilities) is optional and conditional.

And then there is the question of disclosure. If a U.S. e-business now starts the EU VAT registration process, should they pay VAT retrospectively – going back 5 ton 7 years? (Err… I think that HMRC will now be much more reluctant to make a deal than a few years ago).

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Fall VAT conferences in the U.S.

The Big 4 accounting firms each have their own global VAT seminars in the U.S. – I am not aware of any happening soon, and these meetings are typically closed to the public. However, there are three conferences and a webinar over the next few months that I am speaking at which may trigger your interest:

Institute of Professionals in Taxation – VAT Symposium: September 30 – October 2, Indian Wells, CA

The IPT VAT conference is the only independent VAT conference in the U.S. It serves a broad range of VAT content: from the basics to more advanced sessions, case studies and “VAT around the world”-type update seminars. I have attended (and taught at) the previous two conferences, and I was impressed by the level of the speakers. If you have no or very limited VAT knowledge, this is the conference to attend. Attendees are not shy to ask basic questions and I found that the conference rooms are better set up to invite discussion than the Big 4 conferences.

Attendance is limited to IPT members or companies that have IPT members. If you don’t meet this requirement, but would like to attend, let me know and I will see what I can do.

The conference website is here: (click here – the link is too long to fit this column)

The U.S. Department of Commerce – Commercial Service: October 8 – Knoxville, TN

The U.S. government got hold of me – in a good way! I am working with the Knoxville U.S. Export Assistance Center to talk about VAT at an October 8 event in Knoxville, TN. If you are interested in learning more about export and overseas trade, please come and join the event. Rob Leach ( is coordinating and will be able to share more details.

Vertex Exchange: October 25-28, Orlando, FL

I am a 6 year veteran speaking at these Vertex conferences. Although I am teaching only VAT, the conference content is predominantly sales tax and (unsurprisingly) tax systems implementations. Like the IPT conference, this is a great opportunity to discuss, hang out and where appropriate commiserate with like-minded tax specialists – the Vertex Exchange is particularly highly rated in the networking area.

The conference website is here:


These three are on my list of this year’s speaking engagements – October will be a busy month! I will update whenever I hear of other VAT conferences or meetings here in the States.

There is also a Bloomberg BNA webinar on “VAT for U.S. Companies” on September 24. See here for the details: This will be an hour of basic VAT training. Check in with me please before you register if you plan on attending.

Of course, outside of these opportunities I would be happy to discuss any VAT challenge with you, share slides or otherwise provide VAT support. Email me ( if you need me.

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A UK requirement to publish your tax strategy?

The UK authorities have been chastised for being lax on the tax compliance of large businesses, and now they have come up with a number of proposals to introduce:

  • A legislative requirement for all large businesses to publish their tax strategy, enabling public scrutiny of their approach towards tax planning and tax compliance;
  • A voluntary ‘Code of Practice on Taxation for Large Business’, which sets out the behaviours which HMRC expects from its large business customers; and
  • A narrowly targeted ‘Special Measures’ regime to tackle the small number of large businesses that persistently undertake aggressive tax planning, or refuse to engage with HMRC in an open and collaborative manner.

I will spend more time on discussing this initiative when the time is right, but for now it sounds like the “partnership with businesses” that HMRC (and other tax authorities, like the Dutch) has been trumpeting did not work out as well as they had hoped. Apparently now it is time to put down the carrot and show the stick!

First, however, HMRC invites large businesses to provide feedback as to how exactly they propose to be more compliant.

Read it all in the hefty pdf linked below.

Download (PDF, 507KB)



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Electronic invoicing in Latin America

I just love it when governments are getting creative with improving their VAT revenue numbers. We have seen the excellent fa piao system for restaurants in China (this is the lottery on VAT receipts) and, less successful, the suggestion of the Greek finance minister that tourists should rat out restaurant holders that don’t account for taxes.

In Latin America the issue of VAT collection is equally important. A couple of key countries have started implementing electronic invoicing rules, which they smartly connected with automated VAT filing and reporting.

The e-invoicing platform writes:

  • Brazil, the first country to implement such requirements and the model for other governments, has seen a $58 billion USD increase in tax revenue as a result of plugging leaks in invoicing and reporting.
  • Mexico increased tax collections 34 percent in the first wave of its e-invoicing rollout, before mandates on reporting even went into effect.
  • Colombia recently conducted a feasibility study into e-invoicing, and found that if it could reduce 50% if its tax evasion, it could increase revenue by $8 billion USD. Needless to say, e-invoicing mandates here are imminent.

If you are doing business in Latin America, these broad invoicing rules apply to you as well, now or in the near future.

Have a look here:


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Supply of medical staff to hospitals is taxable

Not many U.S. companies will have to deal with this, but I just wanted to raise as a public service announcement that the supply of medical staff (doctors, nurses) to hospitals is NOT considered an exempt supply and therefore VAT is due.

Medical services are generally exempt, supply of medical staff is not… Hospitals are unable to recover the VAT incurred on this type of purchases – VAT at the standard rate will become a cost.

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