Import Costs

[J32/41]

How much tax and duty is applied when important an aircraft from the States?

Say for example a B200 Kingair?

Thanks

[flyingfemme]

VAT is 17.5%....only the stupid pay duty.

[Mark 1]

Correct, there is no import duty on aircraft or aircraft parts.

It may be worth going via Denmark for something more expensive. This provides a low (no?) VAT route to gaining free circulation in the EU.

There are companies set up to administer this, and you have to offset against the registration/certification costs of doing the extra transfer.

May be worth it for something like a Kingair.

[J32/41]

Correct, there is no import duty on aircraft or aircraft parts.
It may be worth going via Denmark for something more expensive. This provides a low (no?) VAT route to gaining free circulation in the EU.
There are companies set up to administer this, and you have to offset against the registration/certification costs of doing the extra transfer.
May be worth it for something like a Kingair.

Can you give anymore info on going via Denmark, how does that work?

Thanks

[nouseforaname]

j32/41 send me a pm if you want to know more about the denmark route...i've done it twice recently.

[J32/41]

j32/41 send me a pm if you want to know more about the denmark route...i've done it twice recently.


Ok done.

Thanks

J32

[flyingfemme]

Correct, there is no import duty on aircraft or aircraft parts.

Actually there is duty on aircraft (and parts for) under 8 tonnes - in the UK. But you can easily be exempt duty if you put in a little effort.

The Danish route is not VAT-free....the VAT (on used aircraft) is 0%. It is not, however, fee free. If you are doing it this way, use a reputable lawyer.

[IO540]

The Denmark route costs a few grand (or more) only because of the ripoff merchants who position themselves in a business which offers this service.

If you knew somebody who lives there, and trust them to buy the plane and then sell it to you, there is no reason why it should cost anything.

Same with US trusts for N-reg. If you know somebody who is a US citizen, they can own the plane and rent it to you, or just let you fly it. No trust documents or fees required. The trust arrangements are required only because most aircraft owners don't know anybody who is a US citizen and who can be trusted :)

[Arrestahook]

Presumably if the aircraft was imported from the US for business use, you could claim the VAt back anyway.

[Mark 1]

There's a new simplified procedure for bypassing the import duty for occasional importers.

You use form C100 from the HMC&R website when clearing it through the UK.

Only relevant for direct to the UK, so wouldn't apply to the Danish option.

Handy though, if you're buying spares from the US.

[IO540]

Don't you also need an End User Certificate, Mark 1 ?

Yes you can claim back the VAT if the aircraft is used in a business, but the issues are similar (though less stringent) to the Benefit in Kind ones I referred to elsewhere. HMCE (or HMRC as they now are, but I mean the VAT man) will want to see a business plan, etc.

The problem is that if there is any significant amount of private use, the private user ends up being charged VAT, which makes the whole thing 17.5% more expensive.

[ifonly]

You need to be careful with the Danish route. I've heard of two people who paid one of the rip off merchants for this, but because their aircraft routed via the UK without the necessary paperwork / bond in place they've since had to cough up the VAT as well !!

[Mark 1]

Don't you also need an End User Certificate, Mark 1 ?.
They seem to be positively discouraging the end-user certification if you are importing no more than 3 or 4 times a year.
I recently got some bits released using C100 - very straightforward. Still had to pay the VAT though.:hmm:

[mm_flynn]

You need to be careful with the Danish route. I've heard of two people who paid one of the rip off merchants for this, but because their aircraft routed via the UK without the necessary paperwork / bond in place they've since had to cough up the VAT as well !!
You must be very clear about the route you fly. There is a theoretical risk that the landing in the UK could be deemed to be the point of import into the UK. This risk is low to nil for a proper international airport (Prestwick), low for an airport with local agreement (Wick), moderate to high for other airports, and certain if you make several stops in the UK. Although, I am not aware of anyone coming to grief with an Iceland, Wick, Denmark routing.

HMR&C checks inbound aircraft from Denmark against their import records.

On the forums there is plenty of info on what you can and can not do. Some right, some misleading, some historic, and some totally wrong. If you do this you want it done with a pro company who has professional liability insurance you can claim against if they have not advised you properly.

[IO540]

Can you really claim against anybody if HMRC do you for VAT? After all, it is a manoeuver with no commercial basis and as such HMRC have the theoretical power to set it aside. I would guess they might try that if the eventual owner was in some way involved or connected with the aircraft before finally purchasing it from the Danish owner.

I wonder if there is any way to do this: you are a UK based ltd co., VAT registered, own a plane, and you wish to sell the plane to a customer who isn't VAT registered, and do it such that he doesn't have to pay the 17.5% extra. Is it possible to sell the plane to a Danish owner (being in the EU, and assuming this Danish owner supplies a VAT number, this sales invoice would not as per standard export practice have VAT on it) and have the new owner buy it from the Danish chap?

I have no use for this myself but I am curious. There are currently, in effect, two separate aircraft markets: (1) those for VAT registered customers, and (2) those for non VAT registered customers. If you are a VAT registered company and want to sell your plane, you are not likely to attract many customers in (2) because they will pay the 17.5% extra and won't be able to get it back.

[mm_flynn]

Can you really claim against anybody if HMRC do you for VAT? After all, it is a manoeuver with no commercial basis and as such HMRC have the theoretical power to set it aside.

On importing it is not without commercial basis. As I understand the rules - If you (A UK non-VAT registered entity) imported an aircraft and its point of entry was France, you then flew it around France for a week and then flew to the UK and declared it for import, the French would have a case that you failed to declare on import and owe them VAT and penalties. You can not put the aircraft to end use (i.e. just fly it around) until VAT is paid and the VAT is for the country of entry. This is why there is a theoretical risk going via Wick (HMR&C could argue the act of landing and refuelling was actually where the import should have occurred - However, as I said I am unaware of anyone coming to grief in this specific case).

The same logic goes for Denmark, you have arrived in the EU there you are now going to fly it around Europe at random (place it in Free Circulation) you are obligated to declare and pay VAT (which through rules I don't understand means that for some owning entities are at 0% VAT for used aircraft).

On your second point, I doubt it would work and certainly it would be worth HMR&C's time to lean heavily on those involved.

My point on liability insurance is - The cost of screwing up a complicated import process can be high, if you have used a professional advisor and followed his advice, yet the advice was wrong, you have a chance of recovering legal costs and penalties. Obviously you wouldn't expect PLI to pay the VAT as you would clearly owe it.

[ifonly]

If you routed via Wick then technically that would be the point of entry into the EU and it should be declared. It could possibly go on a transhipment to Denmark but this would involve paperwork and the lodging of a 'bond' for the VAT involved. I know a lot of aircraft go via Wick but it doesn't appear to be a designated airport so should it really be used ?

[IO540]

Excuse my ignorance, but can't one fly via a place which is not in the EU (Jersey?) and then direct to Denmark?

Might be a problem if coming from the USA, via Iceland. One needs a pretty decent range to do Iceland-Jersey...

[mm_flynn]

If you routed via Wick then technically that would be the point of entry into the EU and it should be declared. It could possibly go on a transhipment to Denmark but this would involve paperwork and the lodging of a 'bond' for the VAT involved. I know a lot of aircraft go via Wick but it doesn't appear to be a designated airport so should it really be used ?

I believe you are correct and some of the consultants are religous about complying with every detail and either avoiding the UK or posting the bond and associated paperwork. However, even in HMR&Cs 'revenue enhancement mode' I am unaware of anyone actually having to pay when flying via Wick