NAFA member, Tobias Kleitman, President and Founder of TVPX Group of Companies, discusses importing aircraft into the U.S. and what you need to know.
More than 61% of all business turbine aircraft owners and users are U.S.-based, due in large part to the strong demand for secure travel among the more than 4,000 airports without scheduled airline service. Coupled with current low used aircraft inventory levels, your next aircraft likely may be imported from outside the U.S.
But unlike traditional types of merchandise that enter U.S. customs territory on trucks or cargo container ships, business aircraft brought to the U.S. in preparation for sale often transport themselves. They are both the merchandise AND the method of transportation.
Because of this unique characteristic, when a used aircraft first enters the U.S. for a pre-buy inspection, it must be imported and clear customs as merchandise. This is a very different process from an aircraft entering the U.S. as a vehicle transporting passengers, who must clear customs when they disembark.
When merchandise such as an aircraft enters the U.S., the government requires that certain information be accurately reported. Among other information, it wants to know:
- Who is the importer of record? This can be the buyer, the seller, a customs broker, or any party with a financial interest in the transaction.
- Who is the ultimate consignee? This can be the party in the U.S. that receives the merchandise, such as the buyer.
- What is the value of the aircraft, the empty (unladen) weight in kilograms, and the Harmonized Tariff Classification Code (an internationally standardized system of names and numbers to classify traded products)?
- What is the country of origin and manufacture, and what is the manufacturer’s ID number?
When importing an aircraft, you must fulfill several requirements, including:
- A Customs Bond Form 301. All merchandise that comes into the U.S. must come in under a surety bond – an insurance policy that guarantees that U.S. Customs will be paid the duties, taxes, and fees that are owed.
- Timely payment of the merchandise processing fees, fees on shipments owed to U.S. Customs, in addition to duties and taxes.
- Entry forms, such as Customs Form 3461 (Entry) and Customs Form 7501 (Entry Summary), must be filed, along with any other documents required by the port of entry, such as a pro forma invoice, a bill of sale, airworthiness certificate, and/or eAPIS manifest.
The pre-closing process of a non-U.S. aircraft is fraught with uncertainties, including the fact that there is no guaranty that the sale will be consummated. So it’s understandable why sellers might think it premature to undertake the process of clearing the aircraft through customs when it is brought in for a pre-buy inspection. Even when the terms of the sale are agreed upon, it could take weeks or even months before the closing.
Then, when the buyer asks for evidence that the aircraft was properly imported and finds out that it was not, among the potential alternative solutions the parties have are:
- The importer can risk paying a hefty penalty for late filing, if found negligent by U.S. Customs & Border Protection, or
- The parties can decide to fly out of the U.S. and then fly back in to properly make entry: an expensive and inconvenient way to import an aircraft (this should not be done without consulting a customs attorney).
There may be other complicating factors that require direct communications with U.S. Customs, so it’s best to retain a customs attorney to have that conversation on behalf of the importer.
With proper pre-planning, you can avoid each of these undesirable scenarios. The best practice is to import the aircraft before it goes to the pre-buy inspection. Then, if the sale doesn’t close, simply export the aircraft back out of the U.S. The entire process can be handled expeditiously by a licensed customs broker.
This article was originally published by Business Aviation Advisor on September 1, 2019.