Short & sweet no. 2
Flying commercially within the EU

• Can Temporary Admission be used for commercial flying? Yes, it can.

• What is the real difference between Temporary Admission and full importation in this context?

• Which limitations were removed in 2016?

This issue of Short & Sweet focuses on scenarios where a non-EU operator uses an aircraft commercially for charter (e.g., Part 135) within the EU.

The customs aspect of flying within the EU

Any aircraft flying into the EU will fly under customs control using either Temporary Admisison (TA) or full importation (FI). There are no other options. If the aircraft is not already fully imported, the aircraft will automatically be considered as flying under TA even though the owner or operator has not themselves taken any action to activate this procedure or realized that their aircraft is flying under TA. The TA procedure is thus always required for non-EU imported aircraft, even for flights with only one stop within the EU. Here, non-compliance with TA will most likely activate a direct payment of the VAT (ranging from 17-27%) and customs duty (ranging from 2.7-7.7%) for the owner or operator. The TA procedure can only be used by EU outsiders where the aircraft is owned (including any UBOs), operated, registered, and based outside the EU, leaving EU insiders only one option: full importation. EU outsiders can, of course, choose to use full importation instead of TA if they find it beneficial. However, both options can be used commercially, corporately, 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 indeed very different, and certain preconditions must be considered when opting for TA or FI. Non-compliance with the TA or FI procedures will likely activate a direct VAT payment (17-27%) and customs duty (2.7-7.7%).

Below are typical scenarios.

Scenario A: Flying charters under Temporary Admission

Union Customs Code restrictions: The aircraft can be used for any purpose *)
Traffic restrictions: Where needed, proper traffic rights (also known as charter permits) must always be obtained from the competent authority.
Internal EU trips with EU-resident passengers: Yes, this is allowed.
Period of stay: Up to six months of flying within the EU.
EU base: Not possible.

Flying charter under TA is, regardless of the commercial aspect under aviation regulation, considered private use in the Union Customs Code. This grants extra privileges for how the aircraft can be used and the period of stay.

*) When the aircraft is used against a ticket fee, it will be considered commercial use; please see Scenario C.

Scenario B: Flying charters under full importation

Union Customs Code restrictions: The aircraft can be used for passenger transportation without customs restrictions.
Traffic restrictions: Where needed, proper traffic rights must always be obtained from the competent authority.
Internal EU trips with EU-resident passengers: Yes, this is allowed.
Period of stay: Unlimited.
EU base: Yes, this is allowed.

Scenario C: Flying charters under Temporary Admission, selling tickets or similar (such as airlines)

Union Customs Code restrictions: The aircraft can only be used for passenger transportation with a ticket-like payment.
Traffic restrictions: The competent authority must always obtain proper traffic rights
Internal EU trips with EU-resident passengers: Yes, this is allowed.
Period of stay: As long as the charter takes yet limited to a maximum of 24 months. The aircraft must leave the EU as soon as the charter ends if the aircraft is in an EU airport.
EU base: Not possible.

Flying charters under TA selling tickets or similar is considered commercial use in the Union Customs Code and grants limited privileges for how the aircraft can be used and the period of stay. Such a commercial flight cannot start as a Part 135 or 121 and continue as a private flight when inside the EU. Flying charters under TA selling tickets or similar is also the procedure used by foreign airlines flying to EU destinations. However, it is often difficult for non-EU airlines to get traffic rights for internal EU trips, which is usually the real limitation in this category.

Consequently, an operator that sells tickets will be placed in category C. This is not a catastrophe, as any non-EU operator will normally fly back home immediately after the charter ends. It is not an option to take an extra rest or wait for a new charter within the EU before flying back.

A ticket-like payment or a group charter fee split between and invoiced to each person onboard the aircraft will give the same result.

The following limitations have not been a part of the Union Customs Code since 2016

The arguments below are often wrongly presented as the reason why charters within the EU are not possible under TA. However, this argument is not valid as these restrictions have not been included in the Union Customs Code for the past five years and are still not included.

1. Internal traffic (i.e., cabotage issues regarding traffic rights) is no longer mentioned as a customs restriction in relation to TA use. While it is still the responsibility of the operator to secure traffic rights, a violation can no longer create a customs debt or be seen as violation of TA regulation.

2. Commercial use traffic in relation to the use of TA (scenario C) is no longer limited to flights that begin or end outside the customs territory of the Union. It is solely limited by the terms for the period of stay mentioned in scenario C.

Traffic rights (charter permits)

Non-EU-based charter operators may need to obtain traffic rights on some internal EU legs, but this is independent of the TA or full importation status. Any fully EU-imported aircraft must also obtain the same traffic rights. A fully EU-imported aircraft, instead of a TA aircraft, will not improve the situation. Full importation does not grant better traffic rights than aircraft flying under TA or EU-registered aircraft. Always ask locally if there are any doubts.

Legal background for Temporary Admission

The Istanbul Convention from 1990, regulating the worldwide usage of TA, is not very precise, and the EU Commission has been and is continuously publishing various working papers and guidelines to clarify the correct understanding of TA and its usage in the EU. The 2014 working paper from the Union Customs Code Committee (available in English, French, and German) is especially important. Operators should always be aware that these documents are not legally binding for EU member states. Interpretations may vary between member states, which is why it is crucial to have a competent customs agency provide guidance based on the specific setup.

Important things to know about full importation

Operators should be aware that full importation includes a potential VAT and tax liability, requires continuous correct worldwide economic activity, and correct handling of any potential worldwide non-business use and/or non-commercial use. These requirements do not apply under TA. The statute of limitations is five years for full importation, and the aircraft’s use must stay fully compliant with current EU regulations worldwide throughout this period.

How can we help?
If you have questions about the above, please do not hesitate to contact us.