What to Consider When Requesting Fuel Uplifts in Europe?
In this blog series, we are going to share some helpful tips and considerations for minimizing jet fuel costs and duties for your flights in Europe.
Jet fuel is usually the largest variable factor in the cost of operating a private aircraft. Pre-planning fuel uplifts cannot be considered trivial to your flight plan. Minimizing the impact of fuel taxes and duties for fuel uplifts in Europe can significantly impact the overall operating costs.
Depending on where you uplift and the purpose of your flight, fuel costs at some locations in Europe can vary two to three folds what they would be at other locations.
Communicating with your third-party fuel provider, in advance of the day of the trip, can reduce the overall costs of fuel uplifting in Europe.
Here are the main factors worth knowing before your next fuel-uplift in Europe:
1. Fuel volume and cost units
Fuel pricing in Europe is usually quoted in U.S. gallons and USD pricing is also available in line with global industry standards. In some locations like Spain and Portugal jet fuel is quoted in Euro with volume indicated in Liter Euros/liter or Euros per metric ton, but it is still possible to get the quote in USD and U.S. metrics. However, in some airports in Great Britain jet fuel is quoted in USD and subject to currency movement due to EUR, GBP/Dollar exchange rate.
2. Base fuel price is usually constant across Europe
The base price of jet fuel is usually within a fairly tight spread across Europe and doesn’t vary much from one country to another, which has the potential to triple the cost of the fuel uplift are taxes and duties.
3. Duties and Taxes can triple your uplift cost
For most of Europe, aviation fuel uplifts are subject to both value-added tax (VAT) and Mineral Oil Tax (MOT). You may, for example, be able to uplift fuel without taxes or duties at one location for $3.09/gallon. While at another location you may pay $9.57/gallon due to the application of Mineral Oil Tax (MOT) and Value-added Tax (VAT).
4. Mineral Oil Tax (MOT)
MOT is calculated on a volume basis, it is considered as a duty, not a tax, and charged as a line item in your fuel invoice and subject to VAT at the applicable percentage rate.
So, let’s say you are paying $2/gallon in MOT and the VAT rate is 20% you will be effectively paying $2.40/gallon in MOT charges alone, you could pay more than the base fuel price in MOT charges at some locations, even when fuel prices drop, remember MOT is a duty on volume regardless of the base fuel price.
5. Value-added Tax (VAT)
VAT rates in Europe are up to 27% and are applied not just to the base price of fuel but also to MOT duties, airport fees and any additional charges like handler fees.
For example, the VAT rate on fuel uplifts in Switzerland is 8%, Germany 19%, and in Hungary 27%.
6. Fuel delivery cost
In addition to MOT and VAT, fuel costs at some locations may vary depending on fuel delivery method to the airfield. An airport may have a direct pipeline, while another airport trucks fuel in from a storage facility tens of miles away. The local transport costs can add up to 2% to the base fuel price.
7. VAT and MOT exemptions
You can be exempt from VAT and MOT in the majority of European countries, but to benefit from the exemption you must be operating for reward on primarily international routes. “Operating for reward,” however, it is interpreted at different percentages between countries.
Also, be ready to show the required documentation to exempt jet fuel taxes and duties at the point of sale. You’ll usually need to provide applicable documents such as an AOC (Aircraft Operator Certificate), at the time of uplifting, additional documentation may be also required in certain airports and countries.
8. Local charges and restrictions
Expect an additional 2-4% to base fuel price as local airport fees. These fees are based on the uplifted fuel volume.
Also, in some locations, overtime fees are charged by fuelers for after-hour uplifts range between $50 to $200.
Additionally, local fixed-base operators (FBOs) may have restrictions in place on who may be able to fuel an aircraft on their ramp. It’s important to be aware of this in advance. You should always communicate in advance with your ground handler and local fuel supplier.
Right planning of fuel uplifts in Europe can lead to dramatic savings in your total trip costs. We recommend comparing fuel costs on a location to location basis. However, the benefits must be viewed from the perspective of all costs. Our team of fuel experts is available around the clock 24/7 to help you with fuel pricing and planning. MoonJet provides competitive fuel pricing in more than 2000 locations worldwide, we can also help you with VAT and taxes take a look at our Jet Fuel VAT Exemption program.