28th &  29th November  2017  

What’s new for full import?• End use disappearing 01.01.2018

• Lessee import is NOT possible. (EU working paper 762)

• Register of real (ultimate) owners becoming EU wide requirement

• BTW – partial private use has NEVER been allowed! Paradise Papers.

• Lewis Hamilton – IOM registered – fully imported – 15% private use

28th &  29th November  2017  

Figure 1: Importation status versus privileges and restrictions for flying within the EU

Importation statusof aircraft

Entity responsiblefor aircraft

Imported into the EU Not imported into the EU

Domiciled in the EU Flying not restrictedAircraft is in free circulation Flying not allowed in the EU

Not domiciled in the EUAircraft with EU registration (like M-reg)

Flying not restrictedAircraft is in free circulation Flying not allowed in the EU

Not domiciled in the EUAircraft with non-EU registration

Flying not restrictedAircraft is in free circulation

Flying regulated by the Temporary Admission (TA) regulation

28th &  29th November  2017  

What’s new for full import?• In other words:

• Aircraft registered inside the Customs Area - Full importation

• Aircraft registered outside the Customs Area – Temporary Admission

• There are only the TWO! You cannot do nothing!

28th &  29th November  2017  

Temporary admission and the implications

• UCC – new version may 2016• https://ec.europa.eu/taxation_customs/business/union-customs-code_en

• Delegated Act - Article 212 – Total relief• http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.L_.2015.343.01.0001.01.ENG&toc=OJ:L:2015:343:TOC

• IOM, Guernsey, Jersey + + + – Temporary Admission is NOT allowed!• Article 250, 2 (c) ref article 4

• IBAC – NBAA – working paper – created a lot of doubt - STA

• Limitations: 6 months stay – no base in the EU.

28th &  29th November  2017  

The options for US operators

• Straight in and out: TA – Temporary Admission – do nothing!

• Inside the EU: STA – Secure Temporary Admission• Eliminates the doubt!

28th &  29th November  2017  

The options for US operators

Secure Temporary Admission - Myths and facts:

Persons on-board – are EU-residents pax or crew allowed? YES

Can the aircraft be used for part 91/135 without problems? YES

Does the owner have to be on-board during EU flights? NO

Which entity must be the declarant – who is actually using the aircraft?

TYPICALLY THE ENTITY EMPLOYING THE PILOTS

28th &  29th November  2017  

Figure 2: What is the difference – what can you do?

Simplified Pros/Cons for a US Part 91 operator Secure Temporary Admission

Flying to the EU No risks or restrictions

Flying internally in the EU Restriction: max. 6 months per stayMultiple entries are allowed

Fixed base or longtime parking Not Allowed

EU passengers Possible

EU crew Possible

28th &  29th November  2017  

Figure 3: What is the difference – risk and liability?

Full importation does include a lot of potential risk and liability which nobody wants - without any gain for the typical US operator.

Simplified Pros/Cons for a US Part 91 operator Full Importation Secure Temporary

Admission

The VAT handlingVAT imposed must be paid back if incorrectly applied.

• Requires 100% usage for accepted VATable economic activities continuously for 5 years and 7 years of record-keeping

• Owner must import (EU working paper # 762)No risk

Private/personal/entertainment use of a corporate aircraftVAT imposed must be paid back if incorrectly applied.

• Non-business use not allowed unless handled correct compensation-wise• Non-business part is not allowed to reclaim upfront (see EY survey)• Term “Predominately used” is not accepted anywhere (see EY survey)• An EU import requires correct handling of worldwide non-business use• Imputed income will not solve compensation problem • SIFL will not solve compensation problem, value often to low

No risk

EU Tax/VAT liabilityComes with establishment and local EU economic activities etc

• Maybe, depending set-up No risk

The customs duty handlingCustoms duty must be paid back if incorrectly applied.

• No risk in 2018 and thereafter, if aircraft is duly registered No risk

28th &  29th November  2017  

Caution!Lax tax practises – no such thing as ”Predominantly used” – illegal!EY Survey – Danmark, UK, Germany, IOM, Ireland, the Netherlands

OXFAM listIn December 2016, Oxfam released the ‘Tax Battles’ report, Oxfam has shown that 0% jurisdictions like the Bahamas and Bermuda belong to the top 15 corporate tax havens. The report also exposes that four EU countries are among the world’s worst tax havens: The Netherlands, Ireland, Luxembourg and Cyprus.

https://www.oxfam.org/en/pressroom/reactions/blacklist-criteria-small-victory-tax-havens-can-still-escape

Register of real (ultimate) owners becoming EU wide requirement!