Martyn Fiddler January Update - Part 2

Keeping ahead of the latest regulatory, legal and policy movements is part of what we do. Here is part 2 of the latest updates from our team.

Martyn Fiddler January Update – Part 2

23 Jan 2025

Keeping ahead of the latest regulatory, legal and policy movements is part of what we do. Here is part 2 of the latest updates from our team:

Accounting: Pillar 2 – Global Minimum Tax Rules

While there are a few minor accounting updates the Martyn Fiddler team will have to consider in the coming year, one significant change being implemented during 2025 is the implementation of the OECD Pillar 2 Global Minimum Tax rules.

The rules will apply to jurisdictions (including the Isle of Man and Ireland) which have stated an ongoing commitment to align with international tax standards. The rules will ensure that large multinational enterprises with total consolidated group revenue in excess of €750 million are taxed at a minimum effective tax rate of 15% in each operational jurisdiction.

Although this is unlikely to directly affect many Isle of Man companies, it will require questions to be raised to ensure that a business’s global revenues are considered and not just those generated on the Isle of Man.

Looking further ahead there will be numerous implications of the FRS102 update in 2026 that will need to be considered and applied.

 

Tax: VAT rates

There will be 2 significant changes to the standard rate of VAT charged in two of the EU Member States during 2025. Slovakia will increase from 20% to 23% from 1 January 2025 and Estonia will increase from 22% to 24% from 1 July 2025. It is worth noting that Finland increased their VAT rate from 24% to 25.5% in September 2024. Please see the table below for standard rates of VAT in the EU.

Standard rates of VAT in the European Union in 2025

Country Standard rate Country Standard rate Country Standard rate
Luxembourg 17% Belgium 21% Ireland 23%
Malta 18% Czechia 21% Poland 23%
Cyprus 19% Spain 21% Portugal 23%
Germany 19% Lithuania 21% Greece 24%
Romania 19% Latvia 21% Denmark 25%
Austria 20% Netherlands 21% Croatia 25%
Bulgaria 20% Estonia 22% (↑24%) Sweden 25%
France 20% Italy 22% Finland 25.5%
Slovakia 20% (↑23%) Slovenia 22% Hungary 27%

 

There will be no changes to the ‘VAT free’ treatment for VAT ‘qualifying’ aircraft. However, it is prudent to remind all sellers of aircraft in the EU that even where there is no local VAT to account for, a local VAT registration may still be required. In each case this should be confirmed in advance in the local territory. Martyn Fiddler can assist with this via our network of local specialists.

 

Tax: due diligence

2025 will see no relaxation in the requirements for due diligence process checks to be completed by suppliers, in particular by tax advisers like Martyn Fiddler. Remember: these requirements apply prior to accepting advisory work.

Martyn Fiddler Tax (and any other qualified tax advisor service) are strictly regulated under Anti Money Laundering (AML) Regulations in the jurisdictions we operate. This means all client work must be reviewed according to the AML rules and must be signed off by our central compliance team before any work can begin. Depending on the circumstances these checks can be time consuming; this can lead to frustration where a fast turnaround is required to support a short notice transaction.

It is therefore crucial for any information which may be required to support client due diligence checks, to be provided as quickly as possible and ideally with the instructions to act – this allows us to provide the services needed in accordance with the client’s timetable. If you are concerned regarding what information will be required, please just ask and we can provide this in advance.

 

Tax: qualifications

There is an increasing focus by leading tax authorities on the qualifications held by those claiming to be tax advisors. In the UK, HMRC are now extending these concerns to related areas including customs. It is anticipated that initially a voluntary standard or experience and qualification will be applied for Customs agents and other intermediaries, with the assistance of the professional membership bodies.

To read more on this, please see our article: “There is no qualification requirement for tax advisers,”

 

Client services: transactional observations

In the final quarter of 2024, we saw an increase in aircraft transactions as parties from all sides and all motivations hurried to close deals before the Christmas and New Year shut down. This year felt especially busy and below are 3 things we commonly saw happening (or not happening) which impacted a smooth transaction.

Book Early

Whether you are a financier, lawyer, maintenance facility, aircraft registry, aircraft operator, corporate service provider, tax advisor or customs agent, sometimes there is a physical capacity to your work. Whilst everyone in the industry work extremely hard to ensure clients receive the service and support they need, there can be times when the sheer volume of work coming your way makes success a hard won victory. So, for those of you that can remember the advert from the UK in the 1970’s “book early!” https://youtu.be/Jhvw-eeUYH8?si=95i8YgEo814v9vnt

Know who you are dealing with

It is still surprising to see that many people involved in transactions fail to recognize the need for clarifying who is trying to sell or buy an aircraft. Getting this vital information before the ball starts to roll saves time, disappointment and potentially careers further down the track. CDD collection and identifying the source of funds in a transaction should not come as a surprise; there is a host of international legislation aimed at curbing the activities of criminals and all of us should and must be ready willing and able to comply.

What’s the rush?

From our experience and from the feedback of our industry colleagues, it is always advisable to resist (or at least question hard) the client or counterparty whose aim is to complete a transaction within an arbitrary timeframe. While the end of the year may sound good, is there really a need to rush and is it actually practicable? A serious counterparty should be happy to work with a buyer or seller to achieve a deal where everyone has the time and opportunity to work thoroughly and compliantly.

Potato/Potarto

Terminology, jargon and linguistic differences mean that what you think you are saying to someone is not always the same as what they hear you say, especially when the sides of a transaction straddle the Atlantic. Make sure you confirm goals and understanding at each step of the transaction and clarify if you think there is confusion; in our experience asking a ‘silly’ question often stops the disaster before it has the opportunity to build momentum.

 

Check out part 1 of our important updates from our Customs and Compliance team here!

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