Short & Sweet no. 10
How to handle aircraft maintenance correctly in a customs context

• What about an aircraft’s normal Maintenance, Repair, and Overhauls (MRO)?
• What about improvements of aircraft?

• Are there differences between work done inside and outside the EU?

• Potential problems for EU outsiders with a full EU importation

• Learn how to avoid the pitfalls

In this article, we dive deeper into the customs context of correctly handling aircraft maintenance within and outside the EU.

Aircraft maintenance performed within the EU
EU insiders: always use the normal VAT accounting methods for any work performed.

EU outsiders: non-EU-based operators and owners will have to use a customs procedure called Inward Processing, even though the aircraft is already correctly EU customs import-handled with the use of the TA procedure or a full importation. The Inward Processing procedure is mandatory and must be initiated by the local workshop performing the work on the aircraft immediately after the arrival at the workshop. Using the Inward Processing procedure allows the workshop not to charge EU VAT on the invoice, so the procedure must be handled correctly.

Aircraft work performed outside the EU – both EU insiders and outsiders
The handling depends on whether improvements to the aircraft have been made.

Only regular maintenance performed: customs should be handled under the normal Returned Goods Relief rules, typically called the three-year rule. A customs declaration is made by the sole act of crossing the outer EU border if the return flight is less than three years after the departure.

An improvement has been made: the Outward Processing procedure must be activated at a customs office on the way out of the EU, flying to the workshop. However, any improvements made outside the EU are not an issue if the improvements are made in one of 32 signatory countries of the WTO Agreement on Trade in Civil Aircraft. If the improvements are not made in one of the 32 signatory countries, the Outward Processing procedure must be activated as described above, and a physical customs declaration must be made, declaring the improvements performed when the aircraft returns to the EU. Wrong handling of the above, including a missing arrival declaration, could result in serious customs fines.

IMPORTANT!

Potential problems for EU outsiders with a full EU importation

Any fully EU imported aircraft must follow the above. This will, in some cases, create problems for aircraft that have been fully imported by EU outsiders, such as US, Swiss, Middle Eastern, and Asian operators, in cases where improvements have been made outside the mentioned 32 signatory countries and where the Outward Processing procedure have not been activated prior to the workshop visit, and no customs end-declaration is completed when returning to the EU. The aircraft must be physically present within the EU to activate the Outward Processing procedure, and, e.g., an Asian-based aircraft normally getting aircraft work done in Asia will, of course, not fly to the EU with the only purpose of activating the Outward Processing procedure. Nevertheless, there is a serious risk of fines if these procedures are incorrectly handled. Aircraft using Temporary Admission when visiting the EU will not have this problem.