Navigating import and export fees when purchasing a helicopter

A buyer with strong insight into the intricacies of these fees can prepare well in advance of a purchase to minimize costs.

By: Jen BoyerPosted on: April 4, 2023

When purchasing a helicopter from another country, there are a few important steps to consider compared to a domestic purchase, including taxes, duties, and import and export processes. A buyer with strong insight into the intricacies of these transactions can prepare well in advance of a purchase to minimize costs.

The first thing to understand is that individual taxes, fees, duties, and import/export processes can vary between the two countries involved in the transaction. The U.S., Canada, and Mexico, for instance, have no trade taxes due to the North American Free Trade Agreement (NAFTA). However, sales between any of these countries and a country outside of NAFTA, or between any other two counties, can involve a different set of requirements. Working with a good broker or dealer with experience in international sales around the world is absolutely vital in these instances. This partner can advise you on the steps, taxes, and fees involved when purchasing from different countries for import to your country. In most cases, they can manage the entire process for you.

Buyers or companies based in Canada, the United States, or Mexico looking to purchase a helicopter from one of these countries will benefit from NAFTA as they will not pay trade taxes.

“Our focus is to purchase helicopters all around the world where we take on these risks so our end users can focus on their business,” said Adam Caldwell-Waluk, founder and CEO of Victoria Helicopters in Canada. “We take the risk on, use our capital up front, and do the work of export/import, registration, and airworthiness, so our end users can just pick up their helicopter to lease or purchase and fly away stress free.

“To be honest, international purchases are very complex with so many variables around the world,” continued Caldwell-Waluk. “My best advice for a first-time buyer is to use a reputable company to help.”

It is also not uncommon for a broker or dealer to work with another party to help make the transaction as smooth as possible. Victoria Helicopters, for instance, works closely with Direct Helicopter International Ltd., which has many times supplied valuable support and transportation logistics to bring helicopters across borders.

While a number of steps in the process can vary between countries, a few are common, such as deregistering an aircraft in its sale country and registering it in its home country. This is definitely required for aircraft operating in the U.S. What’s more, in addition to registering an aircraft with the Federal Aviation Administration when it comes into the U.S., American buyers will also need to acquire an airworthiness certificate from the FAA in order for the aircraft to operate in the U.S. The aircraft must be deregistered from its former country before it can be registered or receive an airworthiness certificate.

Taxes are another part of a helicopter sale. That said, there are ways buyers can reduce their tax burden with some advanced planning.

Fernando Oaxaca is the business development manager for Jetheli Executive Service in Mexico City. His company focuses on aircraft sales between the U.S. and Mexico. In his experience, he says it is very common for buyers to set up a business structure that allows them to reduce taxes and duties.
“In the U.S., there is not an import or trade tax due to NAFTA — as long as the aircraft has been produced either in the U.S. or Canada,” Oaxaca explains. “The parties involved will also choose to close their aircraft purchase deal in a tax-friendly state. They also work with their accountants to define a structure that can bring tax benefits by using the helicopter for their business. Actually, the end of the year is a very busy time for us for that reason. Companies prefer to buy an aircraft they can write off than to pay taxes.”

Working with a company focused on aircraft sales allows buyers to be guided through the buying process, ensuring that the purchase taxes are minimized.

It’s important to note, however, that closing an aircraft deal in a tax-friendly state doesn’t necessarily mean avoiding taxes for your company. Each state has different rules around an aircraft’s tax based on the time it is in the state. Again, a well-versed broker can walk you through the legalities.

Other taxes vary quite a bit. Oaxaca explained that there is tax when selling a Mexican-registered aircraft, but that is paid by the seller and the percentage of tax depends on the aircraft’s use. He also noted that deals involving aircraft manufactured in the European Union (EU) are subject to more strict importation requirements including value added tax (VAT) and customs duties when imported to another country, and vice versa. For this reason, aircraft operators will either use temporary admission or full importation processes, both of which can be walked through by your broker or dealer.

Temporary admission allows the aircraft to operate in its new country if outlined conditions are met without paying duty or VAT. Full importation does require applicable customs duties and all VAT to be paid, though there are methods for operators to recover their VAT. This is where having your aviation company set up as per advice from legal and accounting professionals can help reduce such costs, said Oaxaca.

These highlighted examples of fees and processes are only the tip of the iceberg when it comes to purchasing overseas. However, both Oaxaca and Caldwell-Waluk emphasized that with some pre-planning, specific business set up, and an experienced broker or dealer, an overseas purchase can be smooth and cost-effective.