Menu Sign In Contact FAQ
Banner
Welcome to our forums

Selling a UK registered aircraft to an EU-based buyer post-Brexit

Hi All,
I have scoured the posts but can’t find one that deals with this specific topic. However, I am sure it is relevant to many UK owners.
I have a G-Reg aircraft for sale. The majority of potential buyers are in the EU, but the import taxes are putting them off and effectively devaluing the aircraft by anything up to 25%. One Italian buyer has suggested I export the aircraft myself to any preferred EU state (one which has a lower VAT% such as Malta) and he then buys the aircraft and keeps it on that registration. I am struggling to find any info online about the feasibility of doing this. Can anyone here help?
Thanks in advance!
Porteus

United Kingdom

I fear the Malta plan makes no sense. For customs purposes you need an aircraft which is in free circulation in the EU, the registration usually does not matter. You could fly the plane to Malta, say you are not on a trip but importing it, pay 18% import VAT and it would be in free circulation. But if somebody buys it from you in the UK he/she could just do the same and pay the same. The Malta exiercise would only bring down the VAT from maybe 19% in case of a direct import to for example Germany down to 18%. Other EU countries have VAT rates a little higher so a buyer can save a litt by making the first EU landing in such a low VAT country. Luxembourg use dtobe the typical go tto spot for aircraft imports.

Unfortunately this is the reality of Brexit. From a realistic point of view you should try to sell in the UK even at a discount. Only for a private UK buyer your UK in free circulation status of the aircraft is valuable. For those buyers a EU aircraft would come at additional cost so effectively for VAT paid airplanes we have a split the market with less opportunity for everybody.

On another note the same applies to EU vs US aircraft. Once the VAT has been paid such aircraft should remain in the EU as its expensive in free circulation status would be worthless to US buyers.

www.ing-golze.de
EDAZ

Thanks. That is really helpful. I did suggest Luxembourg, but my buyer seemed to think Malta was even better at 9% !! Think he has that wrong though. Italy is 22% so Luxembourg at 17% represents a saving of 5%.

The whole thing really sucks!

United Kingdom

Unfortunately this is the reality of Brexit. From a realistic point of view you should try to sell in the UK even at a discount.

Or sell it in the US, where taxation on aircraft imports doesn’t exist. Marketability is one of a number of reasons that I would never take an aircraft off N-register. The same applies to selling aircraft with VAT tax paid in the EU, the only difference being that the EU market for a given type may be larger that the UK market. The bigger and less taxed the potential market the better.

Last Edited by Silvaire at 14 Jan 17:10

UK to EU is same as US (or anywhere on the earth outside the EU) to the EU. Or US to UK, etc.

Into the EU, there is EU import VAT to be paid. See “Threads possibly related to this one” below for more info.

Between the UK joining the EU VAT system (many years ago) and brexit, the UK shared a VAT system with the EU so during that time stuff was more marketable.

I would be extra careful with buyers in certain countries

Selling to the US would mean putting it on the N-reg which needs an FAA DAR. This costs a few k. How much is this plane worth, and what is it?

Administrator
Shoreham EGKA, United Kingdom

Peter wrote:

UK to EU is same as US (or anywhere on the earth outside the EU) to the EU. Or US to UK, etc.

I understood the issue was where to sell a plane already located in the UK? The difference in potential markets in that circumstance is that the US buyer does not pay any import tax for any plane bought worldwide, it makes no difference where he buys it, and he is therefore more likely interested in importing a plane than a buyer in a country where the buyer would pay 20% VAT to import the plane, versus no VAT for a plane already based in his country.

When selling a plane in either UK or EU I think the objective would be to find a buyer who will pay no import tax when buying the plane. There are more US buyers in that circumstance than elsewhere. Both the UK and EU markets are relatively small, depending on the aircraft, making local sales slow.

Last Edited by Silvaire at 14 Jan 18:28

Silvaire wrote:

I understood the issue was where to sell a plane already located in the UK? The difference in potential markets in that circumstance is that the US buyer does not pay any import tax for any plane bought worldwide, it makes no difference where he buys it, and he is therefore more likely interested in importing a plane than a buyer in a country where the buyer would pay 20% VAT to import the plane, versus no VAT for a plane already based in his country.

When selling a plane in either UK or EU I think the objective would be to find a buyer who will pay no import tax when buying the plane. There are more US buyers in that circumstance than elsewhere. Both the UK and EU markets are relatively small, depending on the aircraft, making local sales slow.

I don’t share this analysis. I expect that in places that have import tax, the amount of the tax will just be added to the internal resale value of the plane, to the “expected total price” for the buyer. BTW I believe some US states apply sales tax to aircraft purchases, and will apply the same rate of tax to an out-of-state purchase by a resident?

So I’d expect prices for “VAT paid” aircraft are just approx 20% higher in the EU than they are in the US. That is, if the plane can be sold to the US for an amount N, an EU buyer will also buy it for the same amount N (or even a bit more, because less ferry costs), because he will compare it to same aircraft EU sales costing 1.2 × N. An EU buyer will buy the same plane for N from the UK, or for 1.2 × N from the EU.

Said from the other side, an US buyer will expect a 20% lower price than an UK buyer (or an EU buyer after the plane is imported / tax paid).

I recently helped a customer import a plane into Luxembourg; he is Luxembourg resident, though. In theory it would not make a difference that you/they buyer are not. You don’t have to register it in Luxembourg for that. In practice, if neither the importer nor the buyer nor the owner nor … has any ties to Luxembourg, and the plane will not be used in Luxembourg, the VAT tax authority of the buyer might attack this under anti-“abuse” clauses in their legislation, as a totally artificial construction whose sole purpose is only to pay less VAT.

If the plane is above some MTOW threshold (1550 kg IIRC), all I write above is valid only for not-new planes (more than X months old and more than X hours of flight). New means of transport follow slightly different rules.

Last Edited by lionel at 14 Jan 19:52
ELLX

What I was sort of getting at is that huge numbers of planes were imported from the US into UK/EU over the decades, and all were supposed to have import VAT paid. Many didn’t and in most countries it didn’t get detected because the CAA there didn’t check, but that’s a different discussion – see the Aircraft VAT thread.

So for an EU buyer, the only thing which has changed is that UK sourced planes are now about 20% more expensive.

To the OP: can you not sell in the UK?

Administrator
Shoreham EGKA, United Kingdom

Peter wrote:

So for an EU buyer, the only thing which has changed is that UK sourced planes are now about 20% more expensive.

… plus complying with all the paperwork requirements when transferring from register to register.
If some xAA decides to be extremely thorough, it will increase the time (and cost) required.

EGTR, United Kingdom

lionel wrote:

BTW I believe some US states apply sales tax to aircraft purchases, and will apply the same rate of tax to an out-of-state purchase by a resident?

Yes, between 0% and 10% depending on where the plane will be based, but it is the same for any aircraft regardless of where it was sourced, and regardless of being (re) imported to the US or not. There is no Federal or State tax on imports. So if you are selling an aircraft from the UK to a US buyer you are on almost equal footing with a US seller.

lionel wrote:

So I’d expect prices for “VAT paid” aircraft are just approx 20% higher in the EU than they are in the US.

Then why do EU buyers want a discount when buying from outside the EU, as per the original post?

I don’t think one can bet on local import tax payments being an investment that will be returned when later selling to an international market, in most cases its just lost money and (answering my own question) EU buyers know that to be true. That aside, unless the EU buyer can’t find what he needs in the EU he won’t try to beat up the seller located elsewhere (too much work) and will instead buy a plane from within the EU and pay no VAT. Either way, this means a UK seller is better off to sell where his buyer pays no import tax, meaning within the UK (to a small market, typically with limited demand in relation to supply) or to the US (to a large market, with greater demand in relation to supply). Of course the downside to selling a UK based plane in the US is the ferrying cost, which is however proportionately less as the plane gets more expensive, plus the potential cost of registry change – which supports never taking many types off N-register if resale is expected, regardless of where the plane is based in the world.

A Mooney Bravo owning friend in Austria is for example very aware of this: 15 years ago his plane came from only 100 miles away from me in the US, happily VAT for entry into Europe was paid by a previous owner and my friend did not pay above the international market price, the seller just lost the money. When my friend sells it someday he thinks it will likely go back to the US, because that’s where he’ll find a buyer efficiently. He’s already flown it to the US (and back) once and would do it again. I also BTW have a friend based near me in the US who imports planes from Europe, typically D-registered and long since EU import tax paid. He buys them cheap regardless, in relation to US prices, typically because they have maintenance issues that would be expensive to resolve on D-register and have as a result been sitting unsold for a while. The current near USD/Euro parity also contributes. He then moves them onto N-register with a local DAR and repairs them himself (he’s an A&P IA). They are then sold quickly in the US. They typically get shipped transatlantic in a container, and he has figured out how to do that cheaply.

lionel wrote:

Said from the other side, an US buyer will expect a 20% lower price than an UK buyer (or an EU buyer after the plane is imported / tax paid).

A US buyer will have no idea what the acronym VAT means, has no interest in what foreign tax percentage somebody else once paid on the plane in Europe, and is only concerned with the delivered price in relation to other planes he could buy from the open market. He will pay the same sales tax rate on any of them.

Last Edited by Silvaire at 14 Jan 23:40
31 Posts
Sign in to add your message

Back to Top