Short & Sweet no. 1
Flying with the CEO within the EU

• What are the consequences and the pitfalls?

• 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.

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.

Selected links covering this issue
Survey 1: About private use, is non-business use accepted?
Survey 3: About private use, does the flight pattern/geography and size/type of compensation matter?
A quick overview of aircraft importation and admission issues
Theme page full importation
Theme page Temporary Admission