Non-Citizen Trusts
Update August 20, 2012
In 2010, the FAA announced a moratorium on non-citizen trusts (NCTs), which would have resulted in a significant, harmful impact on the business aviation industry. NBAA quickly teamed with other affected parties and sent a letter to the FAA expressing the harmful consequences such a decision would have on the industry, resulting in delayed transactions and the potential for sales to be halted.
In response to the industry's urgent concerns, the FAA issued a letter clarifying that the agency continues to process registration involving NCT registrations and that it is not challenging the registration of aircraft currently registered under non-citizen owner trusts.
On August 17, 2012 an industry coalition, in which NBAA is involved, submitted substantive comments to the FAA regarding Non-U.S. Citizen Trust aircraft registration.
Review the Coalition Comments (250 KB, PDF)
Uses of Non-Citizen Trusts
Over the past 40 years or more NCTs have been utilized for the U.S. registration of aircraft owned by trustees for the benefit of non-U.S. citizens, and these uses have been on the whole extremely beneficial to the U.S. in terms of economic benefit and global competitiveness.
For example, non-citizen trusts are used by U.S. corporations that own aircraft and either (a) do not or may not satisfy the U.S. citizenship requirements because their President or the required percentage of other managing officers and directors are not U.S. citizens or (b) they cannot sufficiently determine the citizenship status of their shareholder. Examples such as the President of a large public corporation being a foreign citizen who is not a resident alien are well known. With global business development, these situations occur with some regularity.
There are many other uses of non-citizen trusts, such as aircraft leased by non-U.S. citizens and aircraft in transition during the purchase and sale process.
FAA Public Meeting on Non-Citizen Trusts
On June 1, 2011, the FAA held a meeting to seek the views from the public with respect to the use of owner trusts to register aircraft for the benefit of beneficiaries that are neither U.S. citizens nor resident aliens. NBAA participated in this meeting to discuss the important role of non-citizen trusts, and address concerns the FAA may have surrounding such trusts.
All U.S. registered aircraft, whether operating in the states or abroad must comply with applicable safety regulations. Some operations with aircraft registered under non-citizen trusts have not met minimum safety requirements and this initiative is intended to assist the FAA in their oversight responsibilities. NBAA is committed to working with the FAA on this matter, while preserving the important function of non-citizen trusts.
Coalition Submits Comments to FAA
An industry coalition, in which NBAA is involved, submitted substantive comments to the FAA regarding Non-U.S. Citizen Trust aircraft registration. In an effort to address key issues and further elaborate on the industry’s position, the industry prepared a supplemental submission which focuses on concerns for non-operators, facilitating the information flow and access to records and aircraft, the submission and non-disclosure of operating agreements, the removal of the trustee for specific cause, as well as a revised trust agreement.
Review the Coalition Comments (250 KB, PDF)
Learn about NBAA's Involvement in the Coalition
For additional information, contact the NBAA Operations Service Group at (202) 783-9451 or info@nbaa.org.
