Wednesday, 21 April 2021
Department of Finance
539. To ask the Minister for Finance if he will clarify the tax free status of Shannon Airport; if an aircraft transfers ownership whilst parked at Shannon if the transaction becomes liable for taxes for either the seller or purchaser; and if he will make a statement on the matter. [20745/21]
The tax treatment of the transfer of ownership of an aircraft will depend on the facts and circumstances pertaining to that transfer. The treatment may vary depending on:
- whether the transfer was carried out in the course of a trade carried on in Ireland,
- the place where the parties to the transfer are resident for tax purposes, and
- the manner in which the transfer took place – for example the tax treatment of the outright sale of a plane will differ from the sale of a company which holds a plane.
The above factors will inform whether the transfer of the plane is subject to income tax, corporation tax, capital gains tax (“CGT”) or stamp duty. The reference in the question to Shannon Airport does not invoke any specific treatment for the purposes of these taxes.
Prior to 1 January 2006, a company could avail of a reduced rate of corporation tax in respect of ‘relevant trading operations’in the Shannon Airport Area (introduced by Finance Act 1981). Such trading operations, when certified by the Minister for Finance, were subject to a corporation tax rate of 10%. Qualifying operations included any such operation which contributed to the use or development of the Shannon Airport Area. The 10% rate was not available where the operations were not carried out in the course of a trade. All certifications expired by 31 December 2005.
Since 1 January 2006, profits arising from the disposal of a plane in the course of a trade in the Shannon Airport Area are subject to the standard corporation tax rate of 12.5%.
An aircraft is an asset for CGT purposes. If the disposal is not made in the course of a trade, and if the disponer is an Irish resident individual, CGT may be charged at a rate of 33% on the gain arising on the disposal of the aircraft. If the disponer is an Irish resident company, corporation tax at an effective rate of 33% may be charged in respect of the chargeable gain arising on the disposal of the aircraft.
If the disponer is non-resident, the asset which is being disposed of must be situated in Ireland and used for the purpose of a trade carried out in Ireland through a branch or agency to fall within the scope of Irish CGT. The taxation of such disposals will therefore depend on the facts and circumstances of a particular case.
Prior to the introduction of the Union Customs Code in 2016, goods could be imported into Shannon without paying customs duty or value added tax (“VAT”). Since 1 May 2016, imports into the Shannon Airport Area have been liable to customs duty and VAT.
Although all transactions in the Shannon Airport area are now subject to VAT and customs, certain transactions within the Shannon Airport area (which following the commencement of section 25 of the State Airports Act 2004 is limited to land that is within the airport itself) are zero-rated for VAT purposes. These include:
- the supply of goods by a registered person within the Shannon Airport Area to another person within that area (Section 7(2) Schedule 2 of VATCA 2010).
- the supply of goods that are to be transported directly or on behalf of the person making the supply to a registered person within the Shannon Airport area (Section 7(3) Schedule 2 of VATCA 2010).
Irrespective of the above, both Irish and EU VAT legislation provides for a zero rate of VAT to apply to the supply in the EU of aircraft used by a transport undertaking operating for reward chiefly on international routes. Where an Irish company owns an aircraft, the transfer of shares in that company is generally exempt or outside the scope of VAT.
Section 113(b) of the Stamp Duties Consolidation Act 1999 exempts from stamp duty the transfer of any aircraft or any part or interest in the aircraft, irrespective of its location in Ireland. Where an Irish company owns an aircraft, the transfer of shares in that company is chargeable at the rate of 1% of the value of the shares transferred.