Understanding The Basics of Aircraft Tax Planning In The United States

At the time of planning to buy an aircraft people emphasize upon a single factor. It is whether they are going to trigger transfer taxes, explains a skilled Aircraft Tax Planning consultant with years of experience in the profession. This transfer taxes can be done in many ways, like excise tax, transaction privilege tax, stamp taxes, sales and use taxes and value added taxes or VAT. As a matter of fact, VAT is more relevant to the Asian and European nations whereas stamp taxes are levied when a purchase contract gets executed and is applied to in the same jurisdiction. Transfer taxes – as such – easily reach up to tens of thousands (if not millions) of dollars pretty easily depending on the price of an aircraft.  

Under normal circumstances, explains a leading Aircraft Tax Planning consultant, taxes that you pay for buying an aircraft are based on certain factors. The factors include –

•    The place where the aircraft is located at the time your sell or purchase
•    The place where the aircraft will be based and mainly be used once you purchase it
•    Whether third parties will be allowed to use the aircraft for compensation (like under post-closing leases)

The issues mentioned above arise in every aircraft purchase. It does not matter whether it is a commercial passenger aircraft, general aviation aircraft or a business jet that you are purchasing the issues remain the same. Wherever in the world you may be purchasing an aircraft, you must analyze the situation with a cool head and take benefits of the appropriate exemptions before making the purchase, suggests a skilled and trained Aircraft Tax Planning. It is relevant mentioning in the ongoing context that the task of tax analysis is particularly complex in the United States of America. This is because America is comprised of 50 different states and thus there are 50 unique jurisdictions to consider. Moreover, there are no less than hundreds of local jurisdictions to cover within each state. Each of these entities has its own set of rules and conventions.  

As far as the majority of American states are concerned, aircrafts are typically subjected to sales, use or other transfer taxes. The sales tax is applied by the state where the buyer is purchasing the aircraft from. Furthermore, the Aircraft Tax Planning consultant explains, use tax is typically applied in the circumstance where the aircraft is purchased in one state but will be based or used in another.

As far as most of the states are concerned, a seller of an aircraft has to charge sales tax on selling price to the buyer. The amount has to be remitted to the state taxation authority in case the buyer does not produce an appropriate exemption. As such aircraft purchase agreements usually places the responsibility of clearing the taxes on the shoulders of a buyer. For more information visit here: Advocate Consulting Legal Group, PLLC.