There’s many illegal things everywhere. Is that news to you? :-)
Thats what I love about Hungary they havent caught up to civilized western Europe… yet. Give them enough incentive ($$$) Im sure they will.
How do they figure on the amount of VAT due on anything that is used and old like most of our planes especially when its a private sale?
Average market price? Sales contract?
Yes, market price, less any damage like past accidents, prop strikes. The more damage the better because it lowers the value 
but it needs to be justifiable, preferably with a letter from a dealer saying how little he would give you for it.
Sometimes N-reg aircraft are on the market where the seller claims “EU VAT paid”. They also usually command a price premium for that. Obviously the seller will not indemnify the purchaser from any possible tax claims so a proper due diligence is in order.
How does one go about this?
The aircraft in question was sold new in 2006 via a factory dealer to a Delaware Inc. and imported into the EU via Denmark using their 0% VAT concession at the time. The exporter is the UK dealer (bankrupt, dissolved), the importer is the Delaware Inc. c/o Danlaw Air Services ApS (bankrupt, dissolved — Danlaw, not the Inc.) and the representative is Danlaw Air Services ApS. There is a stamped and signed hardcopy from the Danish tax administration which is in Danish and declares the import into the EU. The Delaware Inc. has always been the owner of the aircraft, is in the FAA register and will remain the owner. The aircraft was in the UK from 2006 until 2014 and since then has been in the US with trips to Europe on a regular base. According to the seller, the aircraft was subject to two VAT inspections — one in France and one in Germany and in both cases the police spent considerable time with the Danish form and let the aircraft pass.
I know that some Danish 0% VAT imports are safe until today while others were challenged in Germany and other countries. I was never able to find out what the difference was between the two cases. Also it is said that the French keep database records for N-regs to avoid repeated VAT checks. Germany would probably do something similar.
Is anybody aware of a good approach to a due diligence on this?
achimha wrote:
Is anybody aware of a good approach to a due diligence on this?
I’ve been through this countless times.
As with most things in aviation, it all comes down to documentation.
achimha wrote:
There is a stamped and signed hardcopy from the Danish tax administration which is in Danish and declares the import into the EU.
That is all you really need.
Supporting documents such as the declaring Import Agent’s Invoice & correspondance would be a plus.
There is essentially no way you can check other having than the hardcopy form (C88). When I have sold N registered aircraft that is what I agree to provide.
BTW: The process of importing and paying duty & VAT in the EU is no different for an airplane as it is to just about any other commodity.
The tax & duty declaration form is exactly the same for a Boeing 747 or a pair 40’ container of sneakers.
Many previous threads – do a search on
VAT
and you will have many hours of happy reading
There are two separate issues here:
I would not worry about the first one (especially if done by OPMAS who did most of them), and the second one will never be resolved, except through the passage of time i.e. how many years have passed since the EU import (or the most recent EU import – see below).
If the aircraft was made in the EU then VAT is not actually an issue, despite much fear and French ramp checks – see here – unless it has at some point been exported out of the EU (e.g. the USA, Channel Islands, Switzerland, Norway, Croatia at the time, etc).
If it was imported via Denmark that must have been in 2010 or before, so it would be difficult – in the UK for sure – for the transaction to be queried as having no commercial purpose. Maybe @howard might know the current situation but AFAIK here it is 6 years max unless there has been fraud in which case they can go back indefinitely.
If it then lived in the USA since 2014, what was its status there? Was it formally exported from the EU? If so you will to pay the import VAT again, AFAIK. I bet the rules on this are complicated.
