Importing business aircraft to the EU

While full importation provides broad rights, temporary admission provides restricted options in terms of cabotage.

By Grant McLaren

LTN (Luton, London, England) is a popular and efficient location to process paperwork for temporary admission of business aircraft to the European Union.

Importing aircraft to the European Union (EU) on a permanent or temporary basis improves operator flexibility in terms of rights to move EU residents within the EU.

Flying to the EU for multistop missions, with foreign nationals on board, or transporting EU residents to and from the EU is permitted under "implied temporary admission" of your business aircraft.

Regulatory risks arise, however, when transporting EU residents point-to-point within the EU. This remains a somewhat murky area from the regulatory perspective, and a matter of confusion for many operators.

If you violate EU cabotage or tax laws, knowingly or unknowingly, you may be subject to fines, have your aircraft impounded or face demands for multimillion-dollar value added tax (VAT) payments.

While such nightmare scenarios seldom materialize you could face operational delays of several days while customs, VAT and importation related matters are sorted out.

"Until Jan 2011 operators could import business aircraft (over 8 metric tons MTOW) to the EU, via the UK, at a zero VAT rate and this essentially gave them free movement within the EU," says Managing Dir Universal Aviation UK and Ireland Sean Raftery. "The situation changed, however, when the EU decided to base aircraft importation VAT rules on use of aircraft and not on MTOW.

Today, you'll pay VAT of 20% to import aircraft to the EU via the UK, unless you qualify for a VAT exemption. This has made the permanent importation option much less attractive."

Temporary admission

Any foreign-registered operator flying to the EU has implied "temporary admission" (TA), with privileges to move around and within the EU for up to 6 months. Operators may choose to do a more formal TA by filling out a form and having it stamped by customs at their EU point of entry. While paper TA options are not necessary—Euro­control has records of all flights and implied or oral importation have the same legal status—many international support providers (ISPs) and regular operators to the EU feel the physical paper option provides better TA evidence should they be questioned by customs or ramp checked.

While TA generally protects private operators transporting EU residents within the EU, it does not technically cover commercial or business ops says Raftery. Most countries in the EU consider a corporate aircraft to be commercial and not private—and this is where problems can begin.

"There's a misconception out there that if you're operating Part 91 you're private rather than commercial but this is not how the EU sees it," he says. "In one recent case an N-registered operator arranged TA but ran into problems in Germany after a flight from France with EU residents on board.

German customs inspectors found marketing materials and laptop computers on the aircraft, decided the flight was commercial, not private, in nature and that TA paperwork did not cover transport of the EU residents within the EU." There have been other cases where operators have been held on the ground and questioned for several days, until some sort of solution was negotiated.

Rockwell Collins Senior Mgr Contracts and Compliance Rick Snider explains, "Permanent importation and TA allow operators certain rights, in terms of transporting EU residents within the EU, but there are differing interpretations of regulations.

The best option, if you operate within the EU with EU residents on a regular basis, is to fully import your aircraft. Operators of "qualifying aircraft"—defined as commercial aircraft used by an airline for reward and operating chiefly on international routes—may import into the EU at a zero VAT rate. Governing authorities of the 27 EU states, however, often have different interpretations of regulations.

"If you're considering making a 'qualifying airline declaration' to import your aircraft you should seek legal counsel, and very qualified professional opinions, before doing so," adds Snider. "The risk is that you may start the process—feeling you qualify for zero rate VAT importation—then the governing body decides otherwise and charges you full VAT."

Cabotage issues

Can EU residents be transported within the EU aboard foreign-registered aircraft? Operators who fully imported aircraft into the EU prior to Jan 2011 continue to enjoy free circulation and the right to carry EU residents within the EU.

"If you have an EU importation certificate it's good for as long as you own your aircraft," says Intl Trip Planning Service (ITPS) COO Phil Linebaugh. "These rights, however, are not transferable to a new owner and you'll need to go through the process of 'de-importing' your aircraft prior to selling it." You should always carry your importation documentation (in both English and French) on board your aircraft while in the EU.

As operators continue to upgrade equipment many previously imported aircraft are being sold and de-imported observes Snider. "It seems that the rate of aircraft replacement has increased over the past 10 years," he says. "It's very common to see people upgrading aircraft and losing their full importation status."

Raftery explains that under TA you may carry EU residents within the EU when operating privately, but not when operating for business. This is problematic as most corporate aircraft movements within the EU are for business, as opposed to leisure purposes. "There are gray areas to be aware of with TA," he says. "A foreign-registered aircraft may pick up the president of a local division of the company and transport him/her within the EU so long as it's for private and not business purposes.

If it's in the employee's contact that he/she has access to 'private' use of the company aircraft, this may cover you. However, if customs finds business cards, marketing materials or evidence of business/ commercial use on the aircraft on board, this could in some cases cause problems. EU residents may be deemed to be on board for commercial purposes and this, under strict interpretation of regulations, is not permitted with a TA."


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