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Brexit and EU VAT status

Peter wrote:

Most people who travel significantly (an airline flight, etc) to do a prebuy end up buying the plane regardless, and that is assuming they actually know what to look for…

I once took an engineer with me to South Africa to look at a King Air 200. After a good few hours work by the engineer we had a problem. The seller assumed we would buy anyway and declined to fix the fault. but he was wrong, we came home without it.

Darley Moor, Gamston (UK)

@maxwell I moved your post into this thread as it seems the most directly relevant. There is also this one and some others found by searching for the word Brexit.

IMHO the choice of N or G depends on what sort of maintenance setup you have and your willingness to maintain the FAA pilot papers. Brexit should have minimal effect. In fact I would say N may be better because there is considerable antipathy on the mainland against the UK for having rocked the boat so badly, and this may even exceed any past antipathy against N due to US foreign policy (which was a big reason for bizjets going on the M-reg) If you search for

N reg

you will dig out a lot of past threads on the N situation.

Administrator
Shoreham EGKA, United Kingdom

I wonder whether anyone has sought legal advice regarding any of the following questions:

With a no-deal Brexit potentially looming, does anyone know what the effect would be on UK-based aircraft that are currently deemed free for circulation within the EU (or so called “Union goods”)? Will these cease to be deemed free for circulation within the EU and therefore a sale into the EU would be deemed an import subject to import VAT?

Would that be mitigated by moving the aircraft into the EU-27 prior to 29 March? (Hopefully yes but does it depend on where the owner resides?) If yes, at what point does flying out of the EU-27 to the UK (or anywhere else) and a subsequent return to the EU-27 constitute a potential export and import (which presumably means that the aircraft loses its status as a “Union good” upon export)?

What I am trying to get to is whether it would be sensible to fly the aircraft into the EU-27 before Brexit date and leave the aircraft there over Brexit date and whether it would then retain its status as a “Union good” even if flown back to the UK after Brexit date.

Last Edited by wbardorf at 13 Feb 23:35
EGTF, EGLK, United Kingdom

There are plenty of aircraft based in say Switzerland that were imported into the EU via an EU country but are no longer based there so that they are EU VAT paid. But they were never exported and spend enough time in the EU to remain OK. UK aircraft were similarly imported so EU VAT has been paid even if the UK is no longer part. But I would want documentary proof of it. Also, if they spend enough time outside the EU they will lose the EU vat paid status.

Last Edited by JasonC at 14 Feb 00:15
EGTK Oxford

There is no such thing as a no deal brexit. It is a misunderstanding of the tactical position, as well as being a handy media label.

There is a prior deal brexit, and there is a no prior deal brexit.

In the latter case, many things will get sorted by negotiation, along lines of mutual interest. For example we already know Spain won’t send back the 100 million Brits living there They broke ranks with Brussels to do that one.

So nothing much will happen on 29th March specifically.

Administrator
Shoreham EGKA, United Kingdom

@ Peter, you couldn’t be more wrong. All that is on the table at the moment is a withdrawal agreement. That commits both parties to another 2 years of kicking the can down the road about the future relationship and agreed it is unlikely that anything will change on March 30th. However, without a deal the UK will become a third party and be treated like any other country which does not have an agreement with the EU from March 30th.
As for your 100 million Brits living in Spain, Portugal or France for that matter, no- one of any consequence has ever hinted that they would be thrown out and Spain so there was never a need for Spain to go against Brussels. The problem for the Brits, many of whom are pensioners is the question of who will cover the cost of their health treatment. In the event of a no deal/agreement, on the 30th March Brits who have not paid into the country’s health system will have to pay for their own health care or get private insurance cover. This is causing many Brits to sell up and move back to the UK. Take a trip to Dordogneshire and see how many Brit owned properties are up for sale.

France

The point I am making, Gallois, that the present Brussels position (“the UK will be nuked on 29th March”) is not going to be reality on 30th March, because everybody has to carry on living, flying, trading, selling, buying, etc.

In terms of negotiating tactics, what Brussels is doing is the correct procedure. You play maximum hardball – until the last moment. It has one obvious problem: if it fails to deliver the desired result (a collapse in the other party to the negotiation) then “you” end up with egg on your face.

Obviously I would say this – because I live in the UK and I believe in the UK. And I am convinced that those who think the UK will melt down on 30th March are wrong. The UK is not – for example – Greece, which (a) could be shafted into submission because via economic mismanagement they got themselves into a situation where they had their backs to the wall and (b) it was too small a country to have economic significance, no earth-shattering international trade factors, etc. Greece could be thrown to the lions… and would have been.

So I would not worry about being grounded in 30th March. Some licensing deal will be done. There is too much at stake for everyone to not do one. There are all the UK licensed airline pilots, for example. All the UK made aerospace parts, used in airliners all over the EU.

Sure many Brits are selling up. But this has been an ongoing process, with recent acceleration, as the “French converted barn” dream has run its 20-30 year term and has worn thin for many. Most of them found it pretty difficult to integrate into the local community, in the scenic but small provincial towns, where a box of wine bottles to the mayor is the starting point for “local community integration” It’s nothing specific to France or Spain; it’s been the same here in the UK, with many well-off Britons having bought holiday homes in the Lake District, bits of Wales, etc, only to find that the locals basically hate them (and there was no language or culture issue there). One friend of mine did that particular “emigration” and after some years his wife and kids got sick of it and they came back to where “more stuff happens”, leaving him up there.

Administrator
Shoreham EGKA, United Kingdom

Business will go on and people will carry on. With the eurozone industrial output down 4% year on year I think there is going be a decent amount of pressure from business within the eu to keep trading.

I wouldn’t worry too much about any EU VAT implications if you already purchased it at a time where vat had been paid within the EU then there should be no issue.

The answer to this might be “who knows”, but in light of this thread on customs in Germany, I’m wondering about the impact of Brexit on the following two scenari for UK-based N-regs:

1/you’ve imported your plane via a third party EU country, say Denmark which used to be popular. Your Danish paperwork showing that import serve as an import in the UK today, i.e. those papers show you don’t need to pay VAT in the UK. After Brexit, moving a plane from Denmark to the UK would incur VAT, so how do you prove you’ve made the import to the UK before?

2/If you’ve solved (1) and your plane is imported in the UK, but you want to sell it in the EU, there will then be a VAT impact. So the market for your airplane has just been reduced to the UK. Right?

EGTF, LFTF

Post moved to what I think (?) is a very similar thread.

1) You could not have done Danish route after c. 2010. Also the Danish route must have given you a document: the Danish Certificate of Free Circulation for VAT. A lot of countries hated that certificate but under the rules they had to accept it… with some exceptions where general tax avoidance rules were applied e.g. Germany and Italy.

2) If your plane attracts VAT, it is like it being “non VAT paid”, anywhere. There have always been two markets for planes:

  • customers who can claim VAT back; these prefer non VAT paid planes, since these are ~20% cheaper
  • customers who cannot claim VAT back; these prefer VAT paid planes (basically any plane which at some point has passed through a non VAT registered individual or corporate body) but those planes are all 20% more expensive because some poor bugger lost the VAT on them and wants to get the money back

However I may not be understanding it right, because once you paid EU VAT you should not pay it again. Or maybe you do? No doubt it depends on how long it has been outside the EU. I recall a previous thread on this. If a UK based VAT-paid plane is sold to Jersey and sits there for a few years, when it comes back, it may atract VAT again. Movement logs are required…

OTOH the UK may do a deal with the EU. They probably should, because the same issue can arise with a car, etc.

Administrator
Shoreham EGKA, United Kingdom
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