New Guide Clarifies Aircraft Export Requirements

Business aviation professionals involved in aircraft transactions usually are familiar with FAA registry requirements and tax planning best practices, but aircraft export requirements are less familiar. However, recent enforcement cases involving alleged failures to meet export reporting requirements have raised awareness of this issue. Specifically, when is it necessary to make Electronic Export Information (EEI) filings, and which party is responsible for ensuring that the filing is made in a timely manner?

“There’s been a lack of clarity in the industry about which party to the transaction is required to make the EEI filing when an aircraft is permanently exported from the U.S.,” said Scott O’Brien, NBAA’s senior director of public policy and advocacy. “The rules are geared more toward goods being exported by a manufacturer, not toward mobile assets. NBAA members had detailed questions about EEI filings that came to light as the result of this recent enforcement case.”

NBAA’s Tax Committee and Regulatory Issues Advisory Group recently developed a new, members-only resource titled “Guide on Exporting Aircraft from the United States.” The publication focuses on “permanent” aircraft exports, that is, “an aircraft physically exported, usually under its own power, as part of a sale, lease or transfer of possession to a foreign person, or otherwise based outside of the United States for one year or more.” (“Temporary” exports are sojourns in which aircraft return to the U.S. within one year and do not involve transfer of possession.)

“There was a disconnect in the industry between the regulatory requirements and the industry norms for how transactions were conducted,” said Jeff Towers, general counsel at TVPX, who added that these were most often not circumstances of willful disregard of the rules, but rather a fundamental misunderstanding of the rules’ applicability to aircraft exports.

The guide also includes several common export scenarios and explains various filing requirements and the responsible parties for each scenario. For example, assume a U.S. corporation decides to relocate an aircraft based in the U.S. to a branch office overseas, where the aircraft will remain for more than one year. In this case, the corporation is the exporter and has the responsibility to make the EEI filing.

Towers recommends all parties to an aircraft export transaction identify which party is responsible for export-related filings and include these filings in their standard closing checklists.

Towers said NBAA was a “constructive force” in helping the agencies involved understand the nuances of aircraft transactions. “It was helpful for the government and industry to work together to come to conclusions that are reasonable and understandable to both sides. Educating the industry about these requirements is an ongoing priority because there are always new entrants.”

Review NBAA’s export resources at nbaa.org/export.