The Bulgarian solution

Bulgaria joined the European Union (EU) as a full member on 1 January 2007. A major Bulgarian law firm is offering a cost-effective and speedy solution to operators of corporate aircraft that are registered outside the EU and seeking full importation of the aircraft for VAT and customs duties.

Full importation allows “free circulation” within the EU and is the preferred route recommended by most corporate aircraft and VAT experts. Some operators rely on using a temporary importation facility assuming that the aircraft is registered outside the EU, is not used commercially and does not carry EU citizens. This temporary facility operates under stringent rules, many of which can be open to different interpretation across the member states.

In recent years several prominent companies have offered ways to defer and effectively reduce or nullify the effective rate of VAT and customs duties for aircraft used on a corporate basis. Aircraft used commercially on scheduled routes or for charter under an AOC qualify for zero rate VAT. The Bulgarian solution offered by MH Legal applies to corporate aircraft registered outside the EU but which require free circulation without cabotage restrictions within the 28 member states. Aircraft do not need to be re-registered in Bulgaria. MH Legal act as agents for the owner of the aircraft and liaises with the Bulgarian tax authorities to gain written “pre-approval” for each importation. This pre-approval will require confirmation of the planned corporate operation of the aircraft.

As an alternative, MH Legal can also provide registration in Bulgaria. The Bulgarian (“LZ”) aircraft register is relatively small and the registration process is quick and efficient. Aircraft can be held in the name of an individual or corporate entity. The corporate entity, if it is trading, can benefit from Bulgaria’s attractive 10% corporation tax flat rate and 5% dividend tax. Alternatively, the aircraft can be held in a dormant special purpose vehicle (SPV) offering wide scope in terms of ownership. Incorporation, like the process of aircraft registration, is efficient and can be achieved in a short period of time.

For more information on the MH Legal Bulgarian solution contact

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