Facts
The [X. AG] , a Liechtenstein company, was registered with effect from 1 April 1999 in the register of VATA-liable persons with the tax administration of the Principality of Liechtenstein. The company's purpose was the acquisition, management, and disposal of commercial aircraft, as well as all activities in the field of aeronautics and air transport. In 2000, the [X. AG] acquired from [S. SA] the exclusive right of use to a Pilatus PC 12/45 aircraft registered in Switzerland. The aircraft was flown almost exclusively by [B.] , a resident of Switzerland, who was the economic beneficiary of the [X. AG] .
The tax administration of the Principality of Liechtenstein struck the [X. AG] from the register of VATA-liable persons with retroactive effect and ordered the refund of all claimed input taxes. The [X. AG] applied to the Federal Court to set aside the decision of the Administrative Court of the Principality of Liechtenstein and to establish that it was not obliged to repay the input taxes declared for the periods from 1 January 2001 to 31 December 2004.
Considerations
The Federal Court examined whether the [X. AG] could be recognized as a tax subject. It found that the company was mainly used to satisfy the private needs of its sole shareholder. The aircraft was piloted by the economic beneficiary with few exceptions, and the company did not provide any flight services or flight operations.
The Federal Court found that the registration of the [X. AG] as…