Harper Meyer Perez Hagen O'Connor & Albert LLP
201 S. Biscayne Boulevard
Do tax authorities assess taxes, duties, or other impositions in connection with any of the following events and, if so, at what rates and under what circumstances?
Yes, generally, depending upon the law of the State within the United States which may be applicable. Florida, for example has a 6% sales tax, plus the local discretionary tax (a maximum of 1.5% of the first $5,000 of the sales price), if applicable, unless the transaction is specifically exempted by law.
Yes, generally, depending upon the law of the State within the United States which may be applicable. In Florida, for example, an aircraft purchased in another state or foreign country that is imported and based in Floridais subject to 6% use tax, unless specifically exempted. Anyone who purchases an aircraft tax-exempt under the nonresident removal provisions of the Florida Statutes must pay use tax, interest, and a penalty equal to the tax due if the aircraft is not removed within 10 days of the date of purchase; or removed within 20 days after repairs are completed. Any purchaser who fails to furnish all required documentation showing proof of removal from the state shall be liable for use tax on the cost price of the aircraft plus payment of a penalty equal to the tax payable (100% penalty). Effective July 1, 2010, a purchaser that meets the qualifications for the nonresident removal exemption in s. 212.05(1) (a) 2, F.S. will be exempt from use tax if the aircraft enters and remains in the state for no more than a total of 20 days during the 6-month period after the date of purchase.
There is also a Federal Excise Tax which may be applicable. Private and commercial business aircraft operators pay Federal excise taxes (FET) either on fuel or on the transportation of persons or property. In most cases, private operators (Part 91) are subject to the fuel tax on non-commercial aviation. Commercial operators (Part 135) are subject to the tax on transportation of persons or property. For commercial transportation, FET takes the form of a percentage tax or a head tax, or both. The traditional FET is a percentage tax on the amount paid for commercial transportation. There is also a segment fee due on each domestic segment. Finally, a head tax also applies to international transportation of persons. For non-commercial transportation, the fuel tax is a cents-per-gallon tax. Effective January 1, 2012, the excise taxes due on commercial air transportation are: Percentage Tax 7.5%; Domestic Segment Fee $3.80; International Arrival/Departure Head Tax $16.70; Hawaii/Alaska Flight Tax $8.40.
Finance (mortgage tax, promissory note tax, conditional sale tax, tax on loan payments, tax on interest)
Mortgage tax – varies from state to state, but no in Florida. Promissory note, yes, in some states – in Florida capped at $2,500.
Conditional sale tax – no in Florida but varies from state to state.
Taxes of loan payments and taxes on interest – Federal income tax.
Lease (Tax on payments other than income)
Yes, generally, depending upon the law of the State within the United States which may be applicable. Often the “Use Tax” referenced above may be applicable. In Florida, for example, a lessor may register as a “Aircraft Dealer” authorized to collect and remit tax and may “use” the aircraft subject to a 1% Use Tax for each month the aircraft is in Florida. Notwithstanding the payment by the dealer of tax computed on 1% of the value of any aircraft, if the aircraft is leased or rented, the dealer must collect from the lesser and remit a 6% plus tax that is due on the lease or rental of the aircraft.
Possible withholding on payments made to non-US taxpayers if characterized as dividends or branch profits.
Possibly, depending upon applicable treaties.
No, although license is required.
FOR FURTHER INFORMATION: Please contact us and we would be pleased to assist.
DISCLAIMER: The following information should not be relied upon by the reader for legal advice as it is intended merely to serve as preliminary guide to the vast body of laws and regulations governing the taxation of aviation and aircraft in the United States on a Federal basis and in the State of Florida, merely as an example of a state tax regime, which differs from state to state among the fifty states in the nation. Aircraft owners must consider sales and use taxes, fuel taxes, property taxes, and a host of additional state-specific issues when planning for the acquisition and operation of general aviation aircraft. The information below intends to provide summary-level information about a wide range of tax issues affecting general aviation at the Federal and state levels. Since these materials are general in nature, readers are encouraged to obtain legal and tax advice from their own professional legal and tax counsel licensed in the state in which the activity is occurring based on specific facts and circumstances regarding their acquisition and/or use of aviation and aircraft.