Tax: United States (Miami)

Yes, generally, depending upon the law of the State within the United States which may be applicable. Many states impose sales tax generally between 2% and 10% of the value of the aircraft. However, there are states with no sales tax. Sales tax is generally imposed in the state where physical delivery of the aircraft occurs. Accordingly, sales tax may be eliminated by transacting a transfer in a state such as New Hampshire or Delaware which have no sales tax.   

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. Florida aircraft dealers and brokers are required to collect sales tax from the purchaser at the time of sale or delivery and remit same to the Florida Department of Revenue. Form DR-15AIR, Sales and Use Tax Return for Aircraft, is the tax return used to report sales tax on purchases of aircraft when Florida sales tax was not paid by the purchaser to the seller. There are exemptions available. For example, an aircraft sold by or through a registered dealer or broker to a purchaser who is a nonresident of Florida at the time of taking delivery of the aircraft is Florida exempt so long as the non-resident meets certain requirements.   

More information regarding the sales tax rates imposed by each state can be found by visiting the National Business Aviation Association website: https://nbaa.org/flight-department-administration/tax-issues/state-taxes/. 

No, generally, depending upon the law of the State within the United States which may be applicable. Many states have “Fly Away Exemptions” available for nonresident purchasers who will remove an aircraft from the state within a certain amount of time after the purchase. However, these exemptions are narrowly construed, so the purchaser should consult with aviation counsel to determine the applicability of any existing exemption.    

In Florida, for example, an aircraft sold by or through a registered dealer or broker to a purchaser who is a  nonresident of Florida at the time of taking delivery of the aircraft in Florida is exempt from sales tax if the nonresident purchaser meets the following requirements: 

(i) The nonresident purchaser signs an affidavit stating that he or she has read the law and rules regarding the specific exemption claims. When completing the affidavit, the nonresident purchaser must elect to: 

a)  Remove the aircraft from Florida within 10 days of the date of purchase;

b)  Place the aircraft in a Florida registered repair facility; or 

c)  Allow the aircraft to remain in Florida exclusively for flight training, repairs, alterations refitting or modifications; 

(ii) Within 5 days of the date of sale, the dealer or broker must provide the Florida Department of Revenue with a copy of the invoice, bill of sale, and/or closing statement, and the original, signed removal affidavit; 

(iii) Within 10 days of removal of the aircraft from Florida, the nonresident purchaser must provide the Florida  Department of Revenue with documentation evidencing the removal of the aircraft from Florida; 

(iv) Within 30 days of removal of the aircraft from Florida, the non-resident purchaser must provide the Florida  Department of Revenue with written documentation that the nonresident purchaser has submitted an application for registration to the Federal Aviation Administration.   

*This exemption does not apply to a Florida resident, an entity where the controlling person is a Florida  resident, or a corporation where any officers or directors are Florida residents.   

Florida also has an exemption for aircraft being exported outside of the United States. Aircraft being exported under their own power to a destination outside the continental limits of the United States may be subject to  tax, unless the purchaser furnishes the dealer a duly signed and validated United States Customs declaration, showing the departure of the aircraft from the continental United States and the canceled United States registry of said aircraft. The burden of obtaining the evidential matter to establish the exemption rests with the selling dealer, who must retain the proper documentation to support the exemption. 

No, although a license may be required. Export control laws should be carefully reviewed to determine  whether a license will be required. 

Possibly, depending upon applicable treaties. Prior to arriving in the United States, importers should arrange for a formal entry of the aircraft as cargo, which may require the service of a customs broker or posting of a bond.  

Florida’s use tax may apply and be due on any aircraft imported or caused to be imported from a foreign country into Florida for use, consumption, distribution, or storage to be used or consumed in this state. It is  immaterial whether such aircraft was used in another country for a period of six months or more prior to the time it is brought into Florida. Furthermore, tax paid in another country will not be recognized by the State of Florida in arriving at the tax due. More details regarding Florida’s use tax referenced in number 10 below.  

Yes, generally, depending upon the law of the State within the United States which may be applicable. In  Florida, for example, promissory notes and other written obligations to pay money signed in Florida may be subject to documentary stamp tax. Tax is due on the full amount of the obligation evidenced by the taxable document at the rate of 35 cents per $100 or portion thereof. However, the tax due on a note or other written  obligation to pay money is capped at $2,450. 

 Mortgages, liens, security agreements, and other evidences of indebtedness may be subject to tax and payable when filed and recorded in Florida. The tax is based on the full amount of the indebtedness secured by the mortgage or lien regardless of whether the indebtedness is contingent or absolute. The rate of tax is 35 cents per $100 or portion thereof of the amount secured thereby. There is no cap on the amount of tax  due. 

All parties to the document are liable for the tax regardless of who agrees to pay the tax. If one party is exempt, the tax must be paid by a non-exempt party. 

There is a $5.00 USD registration fee due to the Federal Aviation Administration to register an Aircraft on the U.S. Registry. Some states require aircraft owners to register aircraft in the state of ownership. Additional registration costs may apply in these states.  

Florida does not impose a luxury tax. However, other states impose their own tax regimes, and, within a state, there may be county or city tax law considerations. Purchasers should review applicable state regulations with regards to luxury taxes.   

With respect to income tax, there are no added income tax requirements by virtue of an aircraft lessor/lessee  relationship. Accordingly, traditional income tax law applies. That is, if the lessor is a US taxpayer, such US lessor will be subject to Federal Income Tax. Non-residents are generally, with some exceptions, subject to tax on two categories of U.S. Source income: (i) Investment/passive income: U.S. Source income not connected to a U.S. trade or business (FDAP); and (ii) business income: income effectively connected with U.S. trade or business (ECI).  

With respect to withholding, possible 30% withholding tax on payments made to non-US taxpayers if characterized as dividends or branch profits. Withholding tax may be reduced or eliminated based on applicable tax treaties.  

With respect to other taxes, it generally depends upon the law of the State within the United States which may be applicable. Often the “Use Tax” referenced in number 10 below may be applicable. In Florida, for  example, a lessor may register as an “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. 

Commercial operators (Part 135) may be subject to the tax on transportation of persons or property. For  commercial transportation, Federal Excise tax 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. The excise taxes due on commercial air transportation are: Percentage Tax 7.5%; Domestic Segment Fee  $4.20; International Arrival/Departure Head Tax $18.60; Hawaii/Alaska Flight Tax $9.30 

If there is a nonresident alien individual or foreign corporation involved, a 4% tax may also be imposed for each taxable year on such individual’s or corporation’s United States source gross transportation income for such taxable year.  

Different tax considerations depend on a number of factors, including, but not limited to, the ownership structure, taxpayer status, operation of the aircraft and locations of operations.  

Some states impose a use tax on the use, storage or consumption of aircraft in the state. In Florida, for example, when an aircraft is purchased in another state and then brought into Florida for use in Florida, then Florida use tax is due, unless a specific exemption applies. Generally, Florida’s six percent (6%) use tax, plus any applicable discretionary sales surtax, is due on an aircraft used or stored in Florida when: (i) the aircraft is purchased in another state, territory of the United States, or District of Columbia and is brought into Florida within six (6) months of the purchase date; or (ii) the aircraft is purchased in a foreign country and is brought  into Florida at any time. 

In the United States, and in many states within the United States, taxes are imposed on taxable income. Finance lease payments and loan interest payments received by a taxpaying lessor or lender may be included as taxable income. By the same token, a borrower may deduct its interest payments and/or lease payments.  

Different tax considerations may apply when there are non-US taxpayer involved.  

Not at this time, but this is a changing landscape.

Depending on the type of operation, taxes may apply. Applicable taxes, include, without limitation, Passenger Ticket Tax, Flight Segment Tax, International Departure Tax, International Arrival Tax, Cargo Waybill Tax, Commercial Jet Fuel Tax, Non-Commercial Jet Fuel Tax, etc.  

Fuel Tax depends on the type of aircraft operations. FET on fuel is charged per gallon of fuel purchased. In general, FET on fuel applies to both commercial and noncommercial air transportation, but at different rates. 

FEDERAL FUEL TAX RATES   2019 

The taxes generally assessed are described above. However, additional taxes may apply depending on a variety of factors, including, without limitation, the location of the aircraft, aircraft ownership structure, type of operations, and taxpayer status. All relevant tax aspects should be considered when structuring transactions. The information above 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 above 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. 

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