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Aircraft VAT / import VAT / getting busted upon landing in the EU (merged thread)

I attended a presentation of customs officials here a while back who were giving information about what needs to be done and what not in Switzerland and gave some insights to possible traps in the neighbouring countries.

Their main take was: If unsure, ASK and get a reply IN WRITING. If you do that, you are safe in most cases.

At the time it was said that foreign reg airplanes operated or based in Switzerland for more than 6 months need to get imported into Switzerland. They will then carry a Swiss Customs receipt and with that are free to operate as long as they carry the certificate. This goes for ALL foreign registers including EU registers.

The question brought up by Shorrick is what needs to be done if an airplane which has a Swiss import document is based on an airport in France. Given the proximity of several French airports near Geneva and the problems Geneva has for based airplanes (slots, landing fees, passenger fees e.t.c.) the majority of Swiss operators there have moved to Annemasse across town. The question would now be:

As a Swiss resident am I allowed to keep an N-Reg airplane stationed in Annemasse without having to import it into the EU?

I talked to one of our customs guys here and he sais, generally yes, provided that the airplane leaves the EU regularly into the state of the operators residence. Aditionally it is helpful to demonstrate that all bills e.t.c. are paid by the operator in Switzerland. That is, a parking contract in France with a Swiss resident as contractee would suffice if additionally it can be shown in the aircraft log that the airplane operates into Switzerland regularly.

That is the legal side of things. He also told me that several Swiss owned and based owners still imported their planes into the EU to get an import document to carry along out of fear of lenghty investigations (particularly in France). What apparently is the practice in such a case is to import the aircraft into an EU country with the lowest cost for that (used to be Denmark, not sure now) and get the certificate and be done with it. It does NOT have to be the country you plan to station the airplane in.

According to him, Italy normally does accept the Swiss VAT paid proof for any citizen than their own. The Italians seem to be mostly interested in hunting down their own people and are relatively unconcerned about foreigners. The luxury tax problem has largely been nullified by the ammendments done shortly after it was implemented. It now exempts airplanes of more than 25 years of age generally as well as has the new rule of 6 months as well as exemption for maintenance visits exceeding that time.

AOPA as well as the Aeroclub here have reported many incidents with the "Police de l’Air et des Frontières " in France. Their “pet” offences seem to be pilots who operate into France to French only airports without a French radio license and French LP 4. I have had one ramp check there years ago, which was relatively friendly and openly done and yes, it was criticized that I had not yet logged my flight in the logs (airplane and pilot) but I did produce my operational flight plan which had all the data and told them that I had not yet written it in because they had basically been waiting when we arrived and I always did the logging post flight. They made me write the logs while they checked our baggage and paperwork were satisfied thereafter. The worst customs experiences I have had so far were in Germany.

LSZH, Switzerland

a French radio license

Once again: there is no such thing in France.

Last Edited by boscomantico at 11 May 07:15
Frankfurt (EDFZ, EDFE), Germany

As for the ramp checks..

I was rampchecked in france. I had the proper vat form with me .. It is a document where you actually declare payment to the state. A vat form
A year later I was refuelling and a cessna 2xx came and waited second in line.. 4 customs people come out and started checking some planes except mine. So when I got a chance I asked why mit. The answer is simple .. I was in the database as checked and oke.

About the Italians I hear that they can also make a big fuss about the aircraft which came through the Danish route. Allthough this was perfectly legal they seem to have taken the point of view that you will have misused this law with the sole purpose of avoiding tax .. And that by itself is now illegal with VAT. I presume this only applies to non danish residents who only used Danmark for their vat system.

I also was rampchecked in Holland .. Once. After two years of being based in Rotterdam which is a customs airport I flew to Den Helder the Kooy. 2 customs guys came out and so I gave them the tax form which they copied.. These guys had come from Amsterdam ( a good 1 hours drive) specially for my flight.. (Rotterdam is much closer and local people are at hand).

Last Edited by Commander at 11 May 07:17

I talked to one of our customs guys here and he sais, generally yes, provided that the airplane leaves the EU regularly into the state of the operators residence. Aditionally it is helpful to demonstrate that all bills e.t.c. are paid by the operator in Switzerland. That is, a parking contract in France with a Swiss resident as contractee would suffice if additionally it can be shown in the aircraft log that the airplane operates into Switzerland regularly.
That is the legal side of things.

I would suspect that rather than it being a full legal position statement, the official was making it up on the spot. I am sure it makes sense (e.g. the bit about going back to your home country regularly) if argued by a lawyer in a court, but how is your average airport policeman/customs officer going to be making that judgement on the tarmac? Yet, he has to make a judgement, using whatever brain capacity he has, because shortly you will be in the air and out of his hands. So, in aviation, if anybody is going to enforce anything, they have to make an on the spot judgement and then bend you over a barrel and shaft you, before you can get back in the air. They have to impose an on the spot fine (which you must pay somehow before you can depart) or they have to confiscate the aircraft as security for a fine yet to be determined by a more competent authority.

About the Italians I hear that they can also make a big fuss about the aircraft which came through the Danish route

From what I have read about this previously, it was not that they were voiding the Danish route to a zero-VAT Certificate of Free Circulation. That certificate is valid and AFAIK nobody has managed to void it. Reportedly, UK Customs didn’t like it very much but found they could do nothing about it.

The issue, from memory, was that for an Italian (or whatever country this was – the previous report of this was actually from Germany) taxpayer, the country’s tax authority did not accept that zero VAT was due – because the Danish route was an “artificial construct” which had no commercial substance.

I am sure every country has a law allowing the tax authority to void any construct without a commercial substance. It cannot be enforced totally (e.g. how can they stop a man transferring his savings to his non-earning wife so she can get tax-free interest?) but does get enforced in provocative scenarios. AFAIK the UK (whose tax people are pretty aggressive nowadays, IMHO bordering on dishonesty) has not tried to void the Danish VAT route for UK taxpayers, and anyway that finished in Dec 2009.

My understanding of the Italian 6-month luxury tax time limit is that it applies to everybody, not just Italians. The only solution to a bad AOG situation is to have the plane in the “care of” of an Italian maintenance company.

Last Edited by Peter at 11 May 08:12
Administrator
Shoreham EGKA, United Kingdom

Do you think they tend to only hit newer aeroplanes?

In our instance, we had it confirmed from HMCR that we were in Free Circulation because of the age of the aeroplane, and the fact that it was originally imported into the EU and then was registered on the UK register for 20+ years before becoming N reg. Due to the age there is no chance of getting a “VAT” invoice from 1980, and I have tried.

But we don’t need one due to this E.E.C. Council Directive 92/111, part of the Sixth Directive, Article 28N- Transitional measures, according to HMRC. Could one expect a foreign ramp checking Customs official to understand this directive? In the UK I’d feel pretty safe about quoting this if ever ramp checked in the UK, but in France I guess if they want to play hardball they could impound the aeroplane until such time as I could prove in court that this directive applied….

Interestingly the HMRC person I was dealing with said that Certificates Of Free Circulation were stopped by HMRC as “they had no legal standing in the EU”. Does this mean that if presented with a CoFC a foreign customs official could say “non”…?!

EGHS

We also have a G reg helicopter which does not have a C88 form, my business partner fancied flying it in France but knowing we didn’t have this document he phone the ‘flying policeman’ at Biarritz (as they have a reputation for ramp checks) and was told that without this form they would impound the aircraft, so it stays in the Uk now, I suspect that he was acting beyond his authority, and possibly illegally on a G reg aircraft, but who would take the risk?

Flying a Commander 114B
Sleap EGCV Hawarden EGNR

I would get that in writing (or tape it) and send it to the head office of French Customs, reportedly in Paris

It is completely outrageous.

Almost nobody has a C88 form, anyway.

I have posted this bit before, but there was a story posted on one UK chat site a few years ago, that there was a method of sending your documents to the head of Customs in Paris, and they would enter them into their database, and not bother you again. I spent ages trying to track down the source, annoying people by questioning their forum postings, got as far as the first two people in the line, and it became apparent the 2nd one made it up on the spot. A pity! They could charge money for a facility like that.

Interestingly the HMRC person I was dealing with said that Certificates Of Free Circulation were stopped by HMRC as “they had no legal standing in the EU”. Does this mean that if presented with a CoFC a foreign customs official could say “non”…?!

It is in here That writeup was checked for accuracy by an aviation VAT consultant and by a VAT lawyer.

I think the statement about “no legal standing” is bogus (Denmark used to issue them, I am told).

Last Edited by Peter at 11 May 20:08
Administrator
Shoreham EGKA, United Kingdom

’ the ‘flying policeman’ at Biarritz (as they have a reputation for ramp checks) ’

So there I was (5yrs ago) flying my G reg Beech 36 from Santiago to Biarritz, nearing Biarritz I decided to continue on to La Rochelle.
After landing (dark and raining) I was surrounded by 4 customs officers and then not long after by another 4 of the ‘flying policemen’ in a C182 who had chased me up the coast from Biarritz.

Total 8 no, welcome to France!

I cant say that they were happy having to leave Biarritz but I had a free vacuum out of the plane which they analyzed for drugs and explosives, as if anyone
would be that stupid?

Now I avoid both places like the plague.

Last Edited by quatrelle at 11 May 20:30

@Peter .. A few years ago .. I believe 2008/2009 the european courts decided that all “setups” with the intention to avoid or lower VAT taxes by making use of loopholes in laws wether national or international are deemed “abuse of law” and as such were suddenly considered illegal. This applies for example to the crossborder leases, the italian boat leases .. Etc.

I have seen quite a few cases were the tax authorities strike forcefully. Usually it will never come to a conclusion (so far) but they have shut down most of those setups succesfully. The danish route is also considered a setup for a non danish person or entity. This applies especially to all those aircraft which were only there for a day or so.

I believe this is what the italians als attacked.

Interesting.

However would that catch the Danish zero-VAT route? It wasn’t an empty construct. It just happened that Denmark had a zero VAT rate for a certain class of aircraft. This was 100% legit. The EU didn’t like it but at the time they could not stop it.

It’s like some US company setting up in Ireland because Ireland has a lower corporation tax rate than most places. I am sure Brussels doesn’t like that either. Does that mean that if the officers of that company travel to say Germany, the German police can grab them and demand that they pay the extra German CT?

If you have evidence the Danish zero VAT route is being set aside, it would be good to hear of it. I have heard of Germany trying it, but (if it isn’t a pure rumour) have there been any wins in the courts?

quatrelle – may I suggest that in your case there were two factors which might have driven the Biarritz police to go crazy:

  • the flight originated in Spain (yeah, full of drugs and proceeds of bank robberies in the UK, we are told)
  • you diverted

The first one got me “looked at” in the UK a few years ago. I had flown in from San Sebastian (not possible today – no Customs) and a bomb had gone off there the day before, so they asked me (well not quite in so many words) if I had anything to do with it. Also San Seb is full of shops selling a certain type of plant and the apparatus to make it grow

The second one is a classic method for smuggling. The police use intelligence (yeah, I know…) to decide who to wait for, and when the said flight diverts at the last moment, they get extremely suspicious because the diversion would be done to facilitate a landing where nobody is waiting for you. Prob99 the Biarritz police phoned up La Rochelle to get them to turn you over which is why you got four of them to start with, but they wanted to get a jolly out of it anyway (overtime, etc) so they did the C182 flight on top of that. France is a huge employment support scheme (ever visited the Socata factory?) and Biarritz is pretty dead these days in GA terms (after they hiked their fees) so they jumped at the chance. I have been to La Rochelle many times and never seen anybody at all interested.

Administrator
Shoreham EGKA, United Kingdom
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