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VAT payable in case of sale of goods bought VAT-free

Tue, 15/12/2009 - 14:07 — amarkey

Hello,
I wonder if someone can answer this question for me.

A couple of years ago I bought a private aircraft from a Swedish dealer who had a Danish company (so it was bought VAT free, because at that time there was no VAT payable on aircraft in Denmark).

I believe that from 2010 VAT is payable on aircraft in Denmark.

I want to sell the aircraft in 2010 and I need to know whether there will be a VAT liability. The sale is likely to be to a European but non-Danish buyer.

Best regards,
Anna Markey

‹ VAT on a gift bought from Israel? Some change of rate queries ›
Wed, 16/12/2009 - 12:38 — admin

VAT on aircraft sale purchased VAT free

Hi Anna

Sorry I can't help very much as your query is about Danish VAT and I don't know the Danish rules. But I assume that you can have a look on the Danish Revenue's website for further information?

I've listed below a few issues that would apply if the sale were being made in the UK and I assume that similar principles may in Denmark.

  • First, you don't say whether you are registered for VAT or carrying on any business activity. This might be relevant because if the sale is a "private" sale rather than a business transaction then it might not be liable to VAT.
  • Second, if the sale is a business transaction then it might qualify under the "Margin scheme" whereby you only pay VAT on the profit margin, but you don't issue a VAT invoice to the purchaser.
  • Third you say that the purchaser might be European but not Danish. If the purchaser is a business and will be exporting the aircraft from Denmark then the sale might qualify for zero-rating (ie VAT free) as an EC despatch. If the aircraft is being exported outside the EC, then it might qualify for zero-rating as an export whether or not the purchaser is a business or a private individual.

I'd suggest that you start by having a look at the information issued by the Danish Revenue service about these issues to see if you can find the answer. Otherwise as the value of the sale will be significant, it is probably worth investing in some formal advice from a Danish tax consultant or accountant to ensure that you get it right.

Marie