January 6, 2012

As part of Italy’s plan for returning to fiscal solvency in the wake of the global economic recession, new taxes have been proposed for business aircraft operations.

An emergency budget plan, approved by the Italian parliament in December, includes steep new taxes against owners of all non-Italian registered general aviation aircraft – used for either recreational or business use – staying in the country for longer than 48 consecutive hours. The fees, which rise proportionally with the aircraft’s maximum takeoff weight, could mean over €300,000 in new taxes for operators of some business aircraft. Helicopters will be taxed at twice the rate of fixed-wing aircraft, using the same weight scale, with gliders and hot air balloons paying a flat €450 per year.

“According to our estimation, the tax has been designed to bring roughly €40m to the Italian equivalent of the Exchequer on an annual basis,” explained Fabio Gamba, CEO of the European Business Aviation Association. “Because of an Italian specificity – that most [Italian] business aviation operators operate on a commercial basis – non-Italian private owners will bear the brunt of it. Indeed, they should pay for more than 95% of the amount.”

Gamba added the new levies may also have the opposite effect than what lawmakers intended, as operators could seek ways to avoid paying the fees. “[T]hey will find alternatives, such as flying to nearby Ticino, for instance, or simply slash their planned trips to Italy,” he said. “This will have adverse consequences on the amount perceived by the Italian State, and I wouldn’t be surprised if rather than getting €40m as originally planned, it gets less than half of it.”

The ruling has also raised the ire of the British Business and General Aviation Association (BBGA). “The actual legality of the tax, especially for non-Italian registered aircraft, is highly questionable,” the group stated in a release, “and unless amendments or mitigating measures are introduced within the implementing regulation, subject to judicial challenges nationally and at EU level.”

Italian government officials are expected to release their plan for how to collect the new fees within the next two months.

For additional information, visit NBAA’s web page on the Italian tax plan.