The German term for this is “Passive Veredelung” but I have no clue what it might be in English.
Outward processing. Aktive Veredelung – inward processing.
Buckerfan wrote:
Upgrade my 2006 Mirage
A few years ago we had the same choice. We choose to buy a pre owned Meridian and sold our Mirage. In the end it was just way cheaper. You can pick up a nice pre owned turbine plane at slightly more than the price of the conversion alone. Sure the engine will not be brand new but how many hours do you plan to fly as a private pilot. We then sold our Mirage and had nearly all the cash that was in it for other purposes. In general I think keeping the plane you know is great but is it still the same plane after such a big modification to justify that advantage? Also depending on the age of your TIO-540-AE2A that is also a 100k plus engine so it might be a big economic waste to more or less dump it or sell it used at a low price.
It’s been a very long time now, so take what I say here with a grain of salt, but I used to deal with this kind of issue on a regular basis. Essentially you pay VAT on, you guessed it, the value that’s been added abroad. The problem that can arise is establishing the outbound value. In the case of an airplane (much higher value than the stuff I dealt with) it might be an idea to get an appraisal with a detailed description done before the ferry to the US.
This is the procedure to follow for UK residents: authorisation for outward processing by declaration (if it is a one-off you get the authorisation when doing the export declaration) followed by application for VAT and duty relief on re-import. Customs doesn’t tie up anything, it is the duty of the importer to figure out (and document) duty and VAT he has to pay and the relief applied for.
Export: https://www.gov.uk/guidance/apply-to-pay-less-duty-on-goods-you-export-to-process-or-repair
Re-import: https://www.gov.uk/guidance/using-outward-processing-to-process-or-repair-your-goods
I doubt that you can apply for EU export relief if you are not domiciled – but once moving to sunnier shores you can presumably apply for import duties relief for personal belongings.
172driver wrote:
The problem that can arise is establishing the outbound value.
Why would he need an outbound value stated if the plane after the modification is transferred back to the UK? The value of the processing and hence the amount that is subject to tax is the price he pays for the conversion.
An outbound value would only be required if he claimed that the total value of the (re-)imported plane is less than original value plus cost of modification. I don’t think, however, that this is possible.
Normally if you get some work done in the US (say on an engine) you pay import VAT on the invoice which the item came back with. Simple.
You do have to declare that it was a “repair” otherwise they might assess the whole engine for VAT.
With the Jetprop conversion, you will have an invoice in your hand for the value of the conversion, so again it should be simple. And the fact of it being a “repair” should be self evident from the flight logs.
I think there is a huge grey area here. To do it properly at least over here in Germany many things “customs” like the outward processing have to be declared in the online “ATLAS” system in advance. You can not do that yourself you have to put some shipping company in charge to do the paperwork. Then if that was not done customs usually somehow works it out using the invoices on hand etc. But for a high value transaction like a complete Jetprop conversion I would pay a few 100 to a shipping company to get the proper paperwork and avoid expensive trouble. For a lower value item like a generator overhaul etc. just send it and work it out with the invoice.
Peter wrote:
Normally if you get some work done in the US (say on an engine) you pay import VAT on the invoice which the item came back with. Simple.
Is that the right thing to do, in general? With the turbine engine that might be close to reality, but what about the avionics install?
If you’ve spent 50K on the install, it does NOT mean that the aircraft value is now 50K more.
Would it work if you perform a valuation by a qualified specialist?
I would simply “forget” to report any upgrade 
– same registration, same airplane, same value.
Emir wrote:
I would simply “forget” to report any upgrade
If the upgrade you “forgot” is a 700k jetport conversion, somebody might ask questions ;-)
arj1 wrote:
If you’ve spent 50K on the install, it does NOT mean that the aircraft value is now 50K more.
At least if the aircraft is on the books of a company as an asset you would book it exactly at the “existing-value plus upgrade cost” value.
