Yes, a company can own an aircraft, and most aircraft ownership structures are usually set up utilising one or more companies. Structuring ownership using a company can often offer fiscal benefits and/or reduce liabilities. To do so effectively it is important to consider how and where the aircraft is to be used to ascertain whether there are any tax or VAT exposures.
Yes, although this is more common with light aircraft rather than executive aircraft due to potential liabilities that may arise through direct ownership. In fact, it is often recommended that high value luxury assets such as an aircraft not be owned in your own name to protect both yourself and your asset.
As the name suggests, fractional ownership simply splits the ownership of an aircraft into shares, or ‘fractions’ as they are commonly referred to. Fractional ownership allows owners to access most of the benefits of owning an aircraft independently, whilst splitting the cost of doing so with their fellow co-owners.
In most cases, like test-driving a car, it is possible to demo an aircraft before you opt to purchase.
A demonstration flight will allow you to determine whether the aircraft you are considering is right for you beyond looking at its technical specifications and images. It will enable you to have a first-hand experience of both the interior and exterior condition, as well as the aircraft being utilised in its intended role.
Many aircraft ownership structures involve lease or sublease agreements between connected parties. Doing so may present fiscal benefits and form part of an efficient tax or VAT structure.
Before proceeding with any form of ownership structure, it is essential to consider any fiscal benefits but, equally, any potential liabilities or issues that may arise from structuring the ownership a certain way. A professional tax or VAT advisor can help with this aspect of ownership planning.
Similar to a vehicle registration number, an aircraft registration is a unique code which is specific to a single aircraft and can be used to identify it. Depending on the jurisdiction in which the aircraft is registered, registrations may be numerical, non-numerical or alpha-numerical. Every registry has a unique prefix for aircraft registered, for example, the Isle of Man’s registry prefix is ‘M-‘, followed by four non-numerical characters.
Some jurisdictions allow the commercial operation of aircraft on their registers. For these, it is usually possible to charter your aircraft out to third-party users in order to offset some of your operational costs. However, some jurisdictions do not allow commercial operations, and so this is something to be mindful of in the planning phase of acquiring your aircraft.
There are many factors to consider when deciding which jurisdiction is best to register your aircraft in. These may include how you intend to use your aircraft, any fiscal benefits, and whether it has a suitable legal and regulatory framework. For more information, check out our guide on ‘Where should I register my aircraft?‘
In order to meet the eligibility criteria to be registered in the Isle of Man:
• Aircraft may only be operated for private, corporate or aerial work purposes (commercial air transport operations are not permitted);
• Owners of Isle of Man registered aircraft must meet the ‘Qualified Ownership’ criteria;
• Aircraft must have a maximum take-off weight (MTOW) of 5,700 kg or above – aircraft with a MTOW of less than 5,700kg but greater than 2,730kg may be considered for registration on a case-by-case basis. Aircraft of any weight may be registered if owned by an Isle of Man resident.
Registering your aircraft in the Isle of Man can offer many benefits. The Isle of Man:
• has an internationally endorsed regulatory system;
• is politically stable;
• is a self-governing Crown Dependency;
• has a low tax regime;
• has no capital gains tax, no inheritance tax, no wealth tax;
• offers a range of financial assistance to businesses;
• is home to an accessible & responsive Government;
• has a European time zone;
• has a strong IT & Telecommunications infrastructure; and
• has a highly skilled and experienced aviation sector.
It is also home to the Isle of Man Aircraft Registry, which is recognised for their:
• high regulatory standards and robust legislative framework;
• award-winning, excellent customer service;
• competitive scheme of charges;
• secure mortgage register and adoption of the Cape Town Convention;
• experienced customer-focused team of professionals facilitating tailored solutions;
• passion for incrementally raising standards of safety and regulation; and
• politically neutral registration prefix, which offers personalisation.
The registration process is generally straightforward, and turnaround times depend heavily on the collation, provision and processing times of documentation.
Whilst registrations don’t typically ‘expire’, there are ongoing compliance requirements to keep your registration valid, including the annual renewal of the aircraft’s Certificate of Airworthiness.
The process to transfer registration varies across jurisdictions and usually involves de-registering an aircraft before allocating the registration to a new aircraft.
However, some registries work on a single-use basis and do not allow the re-allocation of a particular registration. Therefore, it would be necessary to choose an alternative registration when changing aircraft.
Maintenance is essential for many reasons, including ensuring your aircraft is as safe and reliable as it can be and protecting the value of your asset. Maintenance requirements vary from aircraft to aircraft; however, most aircraft will generally require an annual inspection and for commercially operated aircraft, a check-over after every 100 hours of flying it completes. Additional, heavier checks are required at longer intervals, and ongoing light maintenance will be carried out in between, as and when needed.
If you intend on using your aircraft to, from, or within Europe, you will need to manage exposure to the EU’s Value Added Tax (VAT) and customs duty. Usually, this will involve either full importation of the aircraft or Temporary Admission (TA), depending on the nature of your intended aircraft usage.
The importation or TA procedure is generally very similar regardless of the aircraft’s point of entry into the EU. However, where liable to pay VAT, the rate at which this is payable and whether it is possible to have the VAT reimbursed at a later date will vary depending on a number of circumstances.
As with any tax or VAT aspect, it is always recommended that you obtain the appropriate professional advice to ensure that your aircraft is eligible and its ownership is structured effectively to avoid triggering any VAT liabilities.
Form more information on aircraft ownership and registration, check out some of our other articles and resources on this subject:
Private Jets – How Much do They Really Cost?
Top 10 Tips When Buying a Private Jet
Where Should I Register my Aircraft?
Isle of Man Aircraft Registration – M is for Manx
Malta Aircraft Registration – 9 Reasons to Choose 9H