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Replacing an Aircraft

Whilst a huge amount of time and expertise may be dedicated to the purchase and delivery of your new aircraft, is there enough attention paid to the disposal of the old one?

The sale of any aircraft has potential pitfalls with various financial and technical details to consider, often overlooked however, is the customs export of the aircraft. Some brokers and lawyers are aware of this process but, out of understandable caution, often leave any export until after the ink has dried on the sales agreement.

This can often cause some issues where the export hasn't been fully considered in the sales contract: the seller may need a formal export to clear any VAT requirements, but no longer has control of the aircraft to effect this. A recent change to the new Union Custom Code (UCC) alters the way agents must interact with the customs authorities and the manner in way which some procedures work. For many years retroactive exports, which have been a common and reasonably straightforward affair, have been used by the industry once their sale has closed. These now have changed, and in many cases are no longer available or only in limited circumstances.    

This has the potential for a seller to be unable to formally export an aircraft having sold it, depending on the method and jurisdiction of the transaction; , there is the potential risk this could expose the seller to VAT on such a sale. Aircraft can be exported for sale outside the EU, and, if a sale were to fall through, the aircraft can be re-imported to the same status as before. Moving forward under the new UCC, this now needs to be the approach taken when placing aircraft for sale.

A consideration to bear in mind if making the export a purchaser's obligation - Where a purchaser is from a non EU country, and they are obliged to make the export, they will need to register with the authorities to declare such an export. Also, the export will be in the buyersir name; this declaration may not meet the requirements the seller is expecting, especially if it is an export sale from the EU. The key element is to look at the sales agreement and ensure that any export clause will allow, or enforce, any export at the appropriate point and be accounted for by the appropriate party.

Also, change the point at which an export is considered, and to be actioned. It may be best to effect an export ahead of any sales agreement, or even negotiations, whilst full control of the aircraft still resides with the selling party.
Essentially, whilst it may be the last part of the sale process, the export needs considering at step one. Please do not hesitate to discuss any potential export with Martyn Fiddler Aviation well in advance;, we can help to ensure the correct process is in place before any sale is negotiated.

About the author

Phill Rawlins is the project manager at Martyn Fiddler Aviation and joined the team in 2014. He is an experienced customs practitioner who started working ...

Contact Phill Rawlins
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