Has anyone done that?
People have tried that with houses here in the UK and it was stopped some years ago.
I don’t see why the company can’t be sold with the aircraft inside it.
However as a buyer, I’d want a very significant discount for such an arrangement. To unwind it would be expensive (VAT, CGT and accounting/liquidation fees). Keeping it going involved ongoing administrative activities and accountancy fees.
It’s even more difficult if the purchaser is in a different country and subject to different accounting and tax rules (so they need support from someone experienced in company accounting in the country in which the company was incorporated rather than an accountant in their home country).
And then when you come to sell it, you’ve got to convince someone else to take on your accounting hassles. So they will want a very significant discount too.
I don’t see how it would be viable cross-border (with the company remaining intact) because each country has different company environments.
I’d be also worried about the company history, obligations & debt – you might discover this later…
Peter wrote:
Has anyone done that?
Yes, as seller and as buyer, more than once.
Btw, buying a Delaware LLC, which happens to hold an aircraft isn’t that uncommon.
That’s completely different. That is a trust company, which under most modern tax jurisdictions (certainly the UK one) is totally tax-transparent and thus basically irrelevant to VAT etc.
Buying an company that owns a aircraft as an asset in nothing strange.
Within the same country that would work just fine.
Buying an company could be problematic if history isn’t clean with taxes etc.
Don’t know why you would do it, would be much better to just buy the “asset” from the company to your own company.
Between different countrys that won’t work, but you can still buy the aircraft from Company to Company as any other goods.
I would never do this transaction, unless you know and tryst the seller really well. There is huge risk that the company has undisclosed legal, financial or reputational liabilities, perhaps relating to previous activities. You would need to have the benefit of very significant warranties against such liabilities, backed by financial guarantees.
Exactly that. For example, if the tax authorities find out that the previous owner should have paid any tax (for example income tax on benefit in kind) and did not, they might go after the company. This is hugely country dependent.
When buying a company, one needs to conduct due diligence (basically a pre-buy for the company) which is costly, and a properly drawn up purchase agreement with warranties and indemnities. The transaction costs will be in the tens of thousands and can easily approach 100 AMU.
If you really want to use a company structure to avoid VAT, much easier to set up your own VAT registered company and use that to buy the asset.
One way or the other, if you as a private individual are getting the benefit of any aircraft for which VAT has not been paid, expect to deal with whichever anti-avoidance legislation you are subject to.
