The cost of acquiring an aircraft can be extremely high; however, there are ways to lessen the impact of sales and use taxes.
Negotiated the purchase of one of the first Boeing Business Jets and Bombardier Global Express aircraft, and the first operational Eurocopter EC 155B VIP-configured helicopter delivered in the United States.
Represented aircraft owner in connection with the simultaneous fleet transition involving the acquisition and trade in of 12 business aircraft.
Sales and Use Tax
The cost of acquiring an aircraft can be extremely high. One of the largest upfront costs during the acquisition is the payment of sales and/or use tax on the aircraft purchase. Fortunately, there exist planning opportunities that can defer or even eliminate the imposition of sales and use taxes in almost every state.
Typically, an aircraft is located in a tax neutral jurisdiction at the time of closing or a jurisdiction that has an exemption when the aircraft is to be relocated to another State (a “flyaway exemption”). However, States with sales tax also typically have a companion “use tax” which applies when the aircraft repositions to the State in which it will be based. Unless proper planning is implemented, a State will charge “use tax” on the value of the aircraft. Even though the aircraft registration may reflect an out-of-State address (Delaware, for example), use tax is applicable at the aircraft’s home base unless proper planning is implemented.
Sometimes use tax can be applied even if you do not base your aircraft in a particular State. For nonresidents who do not base their aircraft in Florida, Florida will tax a non-resident on the value of its aircraft even if the aircraft is based elsewhere if it is brought into Florida within the first six months of purchase and spends more than an aggregate of 20 days in Florida in those first 6 months.
Proper planning is the order of the day for State sales and use tax relating to aircraft.
KEEPING YOU ON COURSE
We are experienced in working with tax, legal and financial advisors of companies of all sizes in addition to family offices, to implement appropriate operating structures and planning objectives. For first time business aircraft buyers, we can quickly assemble a team of experienced industry professionals and others to assist the client with business, technical and other aspects of an aircraft purchase and ongoing aircraft management under Parts 91 and/or 135 of the Federal Aviation Regulations.
THE RIGHT TEAM. THE RIGHT DEAL.
Business aviation is our passion. We closely guide foreign and domestic clients through the purchase, sale and financing of corporate aircraft, including regulatory compliance.
- Stewart Lapayowker