Clarification of Customs Terms for Temporary Aircraft ... -T Yeomans.pdf · Amsterdam, Paris, and...
Transcript of Clarification of Customs Terms for Temporary Aircraft ... -T Yeomans.pdf · Amsterdam, Paris, and...
Clarification of Customs Terms for
Temporary Aircraft Admission to EU
PRESENTED BY:
Terry Yeomans – Program Director for IS-BAH™
International Business Aviation Council
Thursday March 26th 0825-0955hrs
International Operators Conference | San Antonio, TX | March 23 – 27, 2015
Sales and Use Tax
• ….assessed upon tangible personal property purchased by a
resident of the assessing state for use, storage, or
consumption in that state (not for resale), regardless of where
the purchase took place.
• If an aircraft is brought into XXXXXXXX within one year of
purchase and is either regularly based within this state or more
than one-half of the aircraft's operating hours are within this
state, such aircraft is taxable in this state.
• No use tax is due if the aircraft is hangared outside YYYYY and
more than 50 percent of its use is outside the state.
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ISTANBUL CONVENTION
On Temporary Admission
(Istanbul, 26 June 1990)
"temporary admission" means :
“the Customs procedure under which certain goods (including means of transport) can be brought into a Customs territory conditionally
relieved from payment of import duties and taxes and without application of import prohibitions or restrictions of economic character;
such goods (including means of transport) must be imported for a specific purpose and must be intended for re-exportation within a
specified period and without having undergone any change except normal depreciation due to the use made of them.”
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• In Feb 2014, The International Business Aviation Council (IBAC) requested
clarification from the World Customs Organization (WCO) on the interpretation of
the term „private use‟ and „commercial use‟ in the context of temporary importation
of aircraft. The terms were allegedly interpreted not in a harmonised manner by
Customs Authorities, which caused confusion among third country non-European
Union operators flying into the EU.
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IBAC highlighted that the terms „commercial use‟
and „private use‟ of means of transport (MoT) as
defined in the Istanbul Convention have a
meaningful difference compared to the definitions
of the global air transport safety and economic
regulatory regimes.
• Corporate aircraft used for business trips are “commercial”
use.
• If operated by a corporation or management company, a flight
is commercial and no internal flights allowed
• As a commercial charter operation, no internal flights in the EU
are allowed.
• Third country aircraft flying within the EU are not allowed to
carry EU residents as passenger and/or crew….
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Examples of concerns
• A Canada-based corporation flies its Canadian-registered
corporate aircraft from Montreal to Paris and Nice for business-
related meetings with local offices, customers and suppliers.
All on board are Canadian citizens. A Paris-based employee of
the corporation flies from Paris to Nice for the meeting there.
The aircraft departs Nice for Montreal.
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Scenario 1
• We deem above case to be the private use of company owned
transport for a business trip.
• Would carriage of promotional materials (brochures etc.)
change this ?
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IBAC position
• „Private use‟ as defined in Article 555(1)(b) CCIP (Regulation 2454/1993).
As the use of means of transport in this case does not involve remuneration, it does not fall under the definition of commercial use but remains in the scope of private use.
The transportation of company materials / brochures is not the main purpose for the usage of the means of transport and it is not a direct commercial activity but `transport of goods in commercial context`, therefore it is private use.
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EC position
• A Canada-based corporation flies its Canadian-registered
corporate aircraft from Montreal to Paris and Frankfurt for
business-related meetings with local offices, customers and
suppliers. All on board are Canadian citizens. A Paris-based
employee of the corporation flies from Paris to Frankfurt for the
meeting there. The aircraft departs Frankfurt for Montreal.
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Scenario 2
• We deem above case to be the private use of company owned
transport for a business trip.
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IBAC position
• There is no direct remuneration involved for the
transportation of company employees as it is carried out by
the corporate aircraft.
Direct payment means that a person using the service pays for
the service.
The case fulfils the conditions of private use.
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EC position
• A U.S. citizen, resident of the U.S., owns his aircraft but pays a
management company on a monthly basis to provide crew and
support. He chooses to use his aircraft to fly from the U.S. to
various destinations in the EU to watch a football tournament and
invites some U.S. citizen friends to join him at no cost to them.
The aircraft owner pays all transportation expenses.
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Scenario 3
• We believe this means of transport, is a not-for-remuneration
operation, meets the conditions under temporary admission
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IBAC position
• Private use.
• The payment involved in this case is not remuneration for the
transport of persons as stated in the definition of commercial
use but is regarded as indirect payment by the owner of the
means of transport.
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EC position
• A UAE-based company charters a UAE-registered jet to take
employees, all non-European citizens, from Dubai to
Amsterdam, Paris, and Rome. The aircraft carries only the
same passengers throughout the journey. The operator
obtains the appropriate traffic right permissions from the
individual states. The flight returns from Rome to Dubai.
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Scenario 4
• We believe this means of transport is a for-remuneration
operation, meets the conditions under temporary admission
where the operator obtains the necessary traffic rights.
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IBAC position
• Private use.
• The payment made by the company is not direct payment for
the transportation of employees but for the lease of the jet.
Therefore, it remains private use.
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EC position
• For purposes of customs regulations, an "internal" flight is between any two points within the EU. "Private use" flights may operate between any two points under temporary admission. "Commercial use" flights may also operate between any two points under temporary admission, provided such flights have received the necessary authorizations from the Member States concerned.
• Position of the EU Customs Code Committee:
It agrees with above statements.
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Internal traffic
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Commercial use ?
• Regarding the definition of "commercial use" of means of
transport, in this case business aviation, transport "for
remuneration" means whether passengers paid for air transport
service (i.e., a ticket) or whether the whole aircraft was chartered
to provide transport service.
• Position of the EU Customs Code Committee:
Commercial use as defined in Article 555(1)(a) CCIP means that
passengers have paid for air transport service (i.e., a ticket).
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Commercial use ?
• Transport of brochures or materials for promotional purposes would not
cross the threshold of "commercial use", but transport of items for sale,
whether or not for remuneration, would qualify a flight as "commercial".
• Position of the EU Customs Code Committee:
If the transportation of company materials/ brochures is not the main
purpose for the usage of the means of transport and it is not a direct
commercial activity but `transport of goods in commercial context`, then it
is private use even if the company brochures or materials for promotional
purposes are sold (which is usually not the case).
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Registered owner
• Definition and use of “person”: According to the Convention, a
“person” means “both natural and legal persons.” In considering
private vs. commercial use, some Customs Authorities see private
use of an aircraft as only personal use by an individual. If a
corporation or company, i.e. a “person” according to the
Convention, operates its aircraft for its own purposes, without
holding out to the public for remuneration or hire, under what
context is the operation of that aircraft considered commercial and
under what context is it considered private?
• Position of the EU Customs Code Committee;
in all scenarios given – Private.
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Crew
• Citizenship or residence of crew aboard: Does the citizenship or
residence of the crew members, e.g., pilots, cabin crew, have a
bearing on the decision as to whether a business aircraft is eligible
for temporary admission? If so, please provide the policy basis.
• Position of the EU Customs Code Committee:
Only the residence of the pilot / co-pilot matters. The
citizenship or the place of residence of the cabin crew is not relevant in
the case described.
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Crew
• In the case when the owner of the aircraft is a corporate entity and
the aircraft is used under TA by a contract pilot (natural person established in the EU), then Article 561 CCIP is applicable.
“…. employed by the owner of the means of transport established outside that territory or otherwise authorised by the owner.”
The condition of “this holder being in the customs territory at the time of use” set in Article 560 is not relevant in this case.
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Conditions
Istanbul Convention ANNEX C
ANNEX CONCERNING MEANS OF TRANSPORT
Article 5
For the facilities granted by this Annex to apply :
Means of transport for private or commercial use must be registered in a territory other than that of temporary admission, in the name of a person established or resident in a territory other than that of temporary admission, and be imported and used by persons operating from such a territory;
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Period of discharge
ANNEX C
ANNEX CONCERNING MEANS OF TRANSPORT
Article 9
1. Means of transport for commercial use shall be re-exported once the transport operations for which they were imported have been completed.
2. Means of transport for private use may remain in the territory of temporary admission for a period, continuous or not, of six months in every period of twelve months.
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Thank You
CUSTOMS CODE COMMITTEE
Section for Special Procedures
Temporary Importation
Commercial and private use of means of transport
(request for clarification by IBAC)
Brussels, 13 November 2014
TAXUD/A2/SPE/2014/010 EN-REV3
http://ec.europa.eu/taxation_customs/customs/procedural_aspects/imports/tempora
ry_importation/index_en.htm
EN/FR/DE