Purchasing an Aircraft from Europe— Originally published in
BusinessAir Magazine, November 2012, Volume 22, No. 11.
With the current economic conditions in Europe, purchasing an aircraft from a European country is more and more enticing. Buyers are finding that certain European aircraft are the best option available on the market, based on price, condition and interior design. However, many buyers fear the added complexity of purchasing a foreign registered aircraft and avoid considering European alternatives.
Purchasing an aircraft from Europe certainly adds additional steps and layers of complexity, but with the right team handling the transaction, the buyer can complete the process as quickly as the purchase of a domestic aircraft. In addition to the typical team assembled for a domestic purchase, the international team requires a tax associate with Value Add Tax (“VAT”) expertise, a customs broker and a registry connection from the country of export.
Many pre-owned aircraft registered in Europe were purchased and registered VAT was avoidable. In this case, exporting the aircraft needs to be done with great care so that this benefit isn’t negated. A tax associate can help make sure this component of the purchase process is structured correctly.
The customs broker will facilitate the entry of the foreign aircraft into the United States. Many airports have special hours and document requirements, and a skilled customs broker can handle this with ease. If the aircraft arrives at the wrong time, wrong location or without proper notice or documentation, the cost and delay can be significant.
Finally, both the exporting and importing country’s registry need to cooperate to make sure the aircraft is handed off from one registry to another with simplicity. Having a team member that understands this process and knows the correct contacts will ensure there is not a long duration between the time of export and time of import. If there is a long lapse between registrations, complicated issues can arise including compromised insurability of the aircraft.
The costs and fees associated with purchasing a European aircraft will be higher than purchasing a domestic aircraft. The additional team members and coordination time necessary for the broker and aviation attorney will increase the initial purchase costs. However, many buyers today are finding that the additional costs are still significantly less than the higher acquisition price of a domestic registered aircraft. Further, with the right team, the process does not have to be longer or more complicated for the buyer.
Senior Transactional Counsel
Aerlex Law Group
Santa Monica, California