Yes, but the US is much sneakier than that. In Europe you pay VAT on the plane when it gets registered. If you then sell it to someone else, the VAT is already paid once and you don’t need to pay that again, right? In the US, they charge you their sales tax each time it changes hands. So if you sell a plane more than 10 times at 10% tax, the state has now gotten 100% of the value in taxes.
Average sales tax in the US starts at zero % depending on location. Adam lives in an area where it’s extremely high at 10%, and vehicles are a special case where sales tax is payable on sale of a used item, at a depreciated value. It’s possible because vehicles are government registered, otherwise impossible to implement.
Whatever the local rate may be, for used vehicles it’s typically charged on the buyers statement of the sale price, no record required. I’ve bought a number of special tools over the years in conjunction with purchases of highly depreciated used vehicles. The expectation is local sales tax rate (in my area around 7.5%, also a little high) paid on wholesale value of the vehicle at the time of sale.
AdamFrisch wrote:
Yes, but the US is much sneakier than that. In Europe you pay VAT on the plane when it gets registered. If you then sell it to someone else, the VAT is already paid once and you don’t need to pay that again, right?
Yes and no. Basically businesses don’t pay VAT, only people do. Between people no VAT is charged. If a business buys something from an individual for the purpose of sellíng it on (e.g. a used aircraft dealer), then when they sell they only have to charge VAT on the profit. (I’m simplifying enormously, but that’s the gist of it.)
This is very country dependent.
AdamFrisch wrote:
In Europe you pay VAT on the plane when it gets registered. If you then sell it to someone else, the VAT is already paid once and you don’t need to pay that again, right?
No! VAT is a sales tax and therefore completely independent of registration.
VAT has to be paid each time when a good is sold by a business. If the buyer is a business as well, they can, however, reclaim that VAT they have paid so that in a chained production system each business effectively only pays the VAT on the increase in value they have generated (hence the name VAT).
E.g. if A sells a plane to be for 100k and B sells it to C for 120k, A has to pay VAT on 100k and B effectively only on 20k.
Private individuals do not have to pay VAT and can not reclaim paid VAT. Therefore if A sells the plane to an Individual P for 100k, A has to pay VAT on 100k. If P now sells it again to business B then no VAT has to be paid as P is a private individual. If now, however, B sells the plane to C for 120k, VAT on the whole 120k has to be paid again.
So coming back to your statement: VAT has only to be paid once as long as the plane is sold from business to business or from private individuals to private individuals only. As soon as the plane is sold from a private individual to a business the VAT status is “reset” and if the business sells it again VAT has to be paid again.
Country dependent 
No vat on used items here, generally.
Peter wrote:
Country dependentNo vat on used items here, generally.
Same here. A private seller or buyer does generally not pay VAT when selling/buying a used good in Germany.
Malibuflyer wrote:
As soon as the plane is sold from a private individual to a business the VAT status is “reset” and if the business sells it again VAT has to be paid again.
Often § 25a Differenzbesteuerung will apply in Germany, else for example used car dealers would stop to exist.
https://www.gesetze-im-internet.de/ustg_1980/__25a.html
Sebastian_G wrote:
Often § 25a Differenzbesteuerung will apply in Germany, else for example used car dealers would stop to exist.
I agree. Sweden has the same so I would guess this is an EU rule. (As a directive.) Also see my post #36.
Oddly enough I received my aircraft annual property tax bill today and just paid it on line. $235 this year. They assess my plane at about half its actual market value, knowing that I could display it for an hour monthly and pay them nothing instead. Better to go easy, ruffle few feathers and take what you can get… 
