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Retention and loss of EU Free Circulation status under the Returned Goods Relief (RGR) rules

Are you aware that aircraft that have previously been imported into the EU can still lose EU "Free Circulation" import status?

(Unfamiliar with EU Free Circulation? Find out what it means and how it works here.)

It is important to understand the risk of losing the free circulation status to reduce the danger of challenges by EU Custom's authorities. A challenge could lead to potential delays to the aircraft's journey or in the worst case scenario retrospective imposition of Import VAT by an EU Member State authority.

Aircraft in EU Free Circulation (where VAT has been accounted for) are usually able to depart and return to EU territory relatively freely under the RGR regime without any formal export and re-import requirements (subject to certain conditions). However the RGR rules can result in the aircraft losing its free circulation status where:

  • title to the aircraft is sold or otherwise transferred while physically outside the EU; or,
  • the aircraft is outside the EU for a continuous period of three years or more.

Examples of when this could occur are:

  • where the aircraft is normally based and operated outside of the EU; or
  • has been transferred between related parties or where there is a change of ownership.

Therefore, it is highly advisable, before operating aircraft inside EU territory, to check the aircraft's history for any possible events that might have triggered a loss of free circulation.

If free circulation has been lost, the owner/operator/lessee can seek advice from our specialist Martyn Fiddler Aviation team to find out whether they need to re-import the aircraft or explore using the Temporary Admission (TA) relief regime (if the criteria for TA is met).

If you would like to get certainty on an aircraft's current EU status please get in touch with our Tax and VAT experts Adrian Parcell-Jones, Greta Kemper or Angie Deady-Fiddler who will be pleased to discuss and provide confirmation and/or advice on your available options.

About the author

Angie Deady-Fiddler is a director of Martyn Fiddler Aviation based at their Shannon office. Angie manages the Ireland, UK and Netherlands businesses . ...

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