Short & Sweet no. 1
Flying with the CEO within the EU
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What are the consequences and the pitfalls?
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How to get the greatest flexibility?
This is the first article in a new OPMAS series of mails called Short & Sweet, intended to offer a quick insight into various topics about flying within the EU.
The Flying with the CEO within the EU case describes a scenario where the aircraft is imported/admitted by a non-EU corporation that operates and uses the aircraft mainly for their own business, flying with the CEO and/or the management. But please remember that many other scenarios are in play that influence the situation.
Introduction
Any aircraft flying into the EU will fly under EU customs control using either the Temporary Admission (TA) regulation or full importation (FI). There are no other options. The TA can only be used by entities and aircraft owned, operated, registered, and based outside the customs territory of the Union while anyone can use the FI. However, both can be used commercially or privately if applied correctly.
It is often tricky for laypeople to see the differences between the two entry options, but the flexibility and long-term consequences are very different, and there are certain conditions, which must be taken into consideration when opting for TA or FI. Non-compliance with either the TA or FI regulations will most likely activate a direct payment of the VAT (ranging 17-27%) and customs duty (2.7-7.7%). Please see the below-mentioned topics and comments for TA and FI.
What about business/corporate use in general?
FI: Business use, in general, is not a problem if the usage is directly in pursue of approved economic activity of the importer.
TA: The aircraft can be used for any purpose as long as tickets are not sold.
What if the aircraft is used for e.g., commuting by the CEO?
FI: Any flight where the purpose is commuting, entertainment, hobby and personal recreational travel, or any travel in furtherance of another business than the importing entity’s affairs, cannot be considered business/corporate use. The mentioned usage can cause payment of the VAT imposed during the importation, but any non-business use can be justified if the CEO pays the correct compensation for these flights.
TA: The aircraft can be used for any purpose as long as tickets are not sold.
FI: The CEO must pay the importer directly for the flights at a market rate. The use of imputed income will not work as the payment is not effectively made to the importer.
TA: Use of imputed income, timeshare, or any other form of payment is accepted as long as it is not a payment for a ticket.
Is the EU importation/admission affected when the aircraft flies outside the EU?
FI: Yes, this means that a non-business/corporate leg flown, e.g., in the US/Asia, will have a negative impact on an EU VAT assessment during an audit by the EU VAT authorities which will in many cases trigger a payment to the authorities, as the importation VAT will partly be seen as wrongly declared as business/corporate use.
TA: No – only flights within the EU matters.
Legal background – learn more
The description is based on the EU Customs Code (UCC) and various EU working papers and directives. Especially the 2014 working paper from the EU Customs Code Committee (available in English, French and German) is important. The usage of TA includes a few limitations which must be handled correctly and situations which must be avoided. Please learn more on opmas.dk or contact us.
How can we help?
If you have questions about the above, please do not hesitate to contact us. We offer a cost-free introduction and analysis of the owner/user/operator scenario to find the best option when flying within the EU. Please, feel free to contact us anytime.
List of all OPMAS
Short & Sweet mails:
No. 16 – Which customs procedures can be used for parking an aircraft within the EU?
Jan 2023 TA FI
No. 15 – Liability and risk elements associated with EU importation and admission
Oct 2022 TA FI
No. 14 – Temporary Admission is easy and flexible if you know how to use it
Aug 2022 TA
No. 13 – Importation impacts when traveling the world in corporate aircraft
Jun 2022 FI
No. 12 – How to get the 0% airline VAT exemption meant for commercial operators
May 2022 FI
No. 11 – Part 2: what to do when arriving in the EU using the Temporary Admission procedure?
Mar 2022 TA
No. 10 – How to handle aircraft maintenance correct in a customs context
Feb 2022 TA FI
No. 9 – Part 1: what to do when arriving in the EU using the Temporary Admission procedure?
Dec 2021 TA
No. 8 – Do not fall into the operator trap when flying within the EU and UK
Oct 2021 TA FI
No. 6 – Flying with EU-resident persons onboard when using Temporary Admission
Aug 2021 TA
No. 5 – What about private use
of corporate aircraft?
May 2021 TA FI
No. 4 – What does ‘VAT paid’ mean?
Mar 2021 FI
No. 3 – Is a full importation needed
in both the UK and the EU27?
Mar 2021 FI
No. 2 – Flying commercially
within the EU
Feb 2021 TA FI
No. 1 – Flying with the
CEO within the EU
Nov 2020 TA FI