Increasingly ComplexRegulatory Environment

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International Regulations (EU)

• EU-ETS – European Union Emissions Trading

Scheme Update

• UK APD – United Kingdom Air Passenger Duty

Update

• EU Importation – TA Temporary Admission

Clarification

• EASA: TCO – Third Country Operator / PART NCC

Update

Self-Determined Status/Taxes - Background

EU-ETS

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Emissions Trading Scheme Update

EU-ETS - Administrative

• March 31, 2016 Reporting Deadline

– Obligation to Establish Monitoring Procedures, Calculate Emissions, and submit to

assigned Member State

– > 1,000 t/co2 (Full Scope) annual emissions Private-Exemption threshold

– > 25,000 t/co2 (Full Scope) annual emissions Commercial-Exemption threshold

– Only EU-EU Flights applicable for Carbon Offset

– Eurocontrol Small Emitter Support Facility

• Removes verification requirement

• Validation/Review by Operator and administrative steps

EU-ETS - Administrative

• Carbon Trading Period (2012-2020)

• Registry Accounts

– Documentation Requirements: Legalized (Apostille/Notary)

• Legal Entity: Certificate of Incorporation, Articles of Association, Beneficial Owners, Financial

Statements

• Legal / Authorized Representation: Criminal Background Check, Proof of Residence, Photo

Identification

– 3rd Party Representation Available in Most Member States

EU-ETS – Non-Compliance

• Carbon Credit Surrender deadline: April 30, 2016

– Applicable operators must surrender carbon credits equal to T/Co2 for Intra-EU

flights in 2015

• Fines for Non-Compliance

– Public notification of Non-Compliant operators for period of 1 year

– 1,000,000+ Euro fines issued for 2012 non-compliance

– Fines = 100 Euro per Credit not surrendered by deadline in addition to purchasing

and surrendering required 2013-2014 credits.

EU-ETS / ICAO MBM – 2016 + Beyond

• ICAO Global Market Based Measures (MBM)

– Mar-Apr. 2016 : 2nd Round Global Aviation Dialogues (Regional Associations)

– May 11-13, 2016 Montreal: High Level Meeting: Drafting of Global MBM Proposal

– Sept. 27 - Oct. 07, 2016: ICAO Assembly

• ICAO Global MBM Proposals

– Mandatory offsetting with revenue generation which may be used for additional

climate finance

– Mandatory offsetting without revenue generation

– A global cap-and-trade scheme7

EU-ETS / Euro Commission – 2017 + Beyond

• Temporary “Stop the Clock” Derogation ending

– The EU’s ETS Directive also calls for the Commission to “consider, and, if

appropriate, include proposals in reaction to, those developments on the appropriate

scope for coverage of emissions from activity to and from aerodromes located in

countries outside the EEA from 1 January 2017 onwards

• EU-ETS Full-Scope Impending

– EU is due to bring non-European flights back under its emissions trading scheme

from 2017

– Possible Removal/Reduction Small Emitter Exemptions

• Remove 1,000 T/Co2 Private – Exemption / Reduce 25,000 T/Co2 Commercial –

Exemption to 10,000 T/Co28

UK APD

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Air Passenger Tax Update

UK APD (Passenger Tax) Update

• Fee must be paid for all passengers departing from any airport in the UK

• Fee is based on size of aircraft and distance to capital city of the country of

destination

• Operators with approximately 12 flights per year are not required to register

with the HRMC. They will be considered “Occasional Users”

UK APD (Passenger Tax) Update

• Increase in Fees to begin: April 1, 2016

EU Importation

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TA – Temporary Admission vs. Full Importation

EU Importation - TA

• Temporary Admission

• Based on a working paper published by the EC, it is now clear that most private flights conducted by corporate operators within the EU are permitted under the temporary admission process.

• Once an aircraft arrives in the EU, it is automatically granted temporary admission so long as the conditions stated above are met. Temporary admission means that goods may be used in the Community without payment of duty or VAT under certain conditions and re-exported afterwards in the same state as they were in at import. Approval for temporary admission is normally verbal, however the customs authorities may require a written inventory or list to support the oral declaration. Operators should review the temporary admission form that can be used for these purposes.

EU Importation - TA

• For example, the working paper describes a scenario where a non-EU registered aircraft flies to multiple destinations within the EU with non-EU residents on board. The aircraft also picks up an EU-resident employee of the company and flies that person (along with the other passengers) within the EU. Once these flights are completed, the aircraft departs the EU. Finally, the aircraft also carried company materials/brochures and IBAC asked if this would be deemed "industrial or commercial transport of goods.

• The EC responded that this scenario would be considered private use for customs purposes since no remuneration is involved. Assuming the conditions described above are met, temporary admission would be available for this operator. Regarding the transportation of company materials/brochures, the EC responded that since transportation of these materials is not the main purpose of the flight, this is not considered to be the commercial transport of goods and is private use.

EU Importation - TA

• Full Importation

• For aircraft not meeting the temporary admission criteria, full importation into the EU is still an option. In order for an aircraft to be considered fully imported, all VAT and applicable customs duties must be paid when it enters the EU. However, there are various methods operators can use to fully import their aircraft that allow for the recovery of VAT. Operators should consult qualified legal counsel or service providers to review full importation options.

EASA Update

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TCO – Third Country Operators

Part NCC – Non-Commercial Operations

EASA - TCO

• TCO - Third Country Operators (Non-EU Based Commercial Operators):

– Initial application requirement implemented 11/26/14

– General operator information and contact details

– Type of operation, AOC and Operations Specifications

– Fleet data

– Other safety information, including accident history

– Program will continue to expand after initial “enrollment/identification” stage ending in Nov. 2016 to further require elements of ICAO’s defined Safety Management System recommendations

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EASA – TCO CHALLENGES

• Additional documentation requirement to obtain Charter Landing Permits into EU Member States

• Disjointed implementation by EASA Member States. Some countries adopted TCO as a requirement very quickly while others have not yet addressed it on a national level (CAA, DGAC, etc.)

– Currently only Italy, France and Germany requiring. All of UK by Oct. 2016.

• Trip feasibility planning, facilitation, and operations are determined by the implementation and enforcement of regulation on a national level

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EASA – PART NCC

• NCC – Non-commercial operations in EU

– Initial application requirement implemented 08/26/16

– Applies to operators: with an aircraft which is registered in an EASA State or with an aircraft which is registered in a non-EASA State but where the operator is established or residing in an EASA State.

– Aligns safety requirements of Non-AOC (Private) aircraft to the commercial industry

– Have an operations manual and management system

– Complete and submit a declaration to us which details their aircraft type, their operational and continuing airworthiness arrangements, any approvals held etc.

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EASA – PART NCC CHALLENGES

• Challenge for Operators:

• Changes to operational practices

• Increased internal controls and documentation requirements

• Unknown practical implementation and enforcement dates by EASA Member States.

• Trip feasibility planning, facilitation, and operations are determined by the implementation and enforcement of regulation on a national level

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Contact Information:

Adam Hartley

Universal Weather and Aviation, Inc.

Email: ahartley@univ-wea.com

Email: EU-ETS@univ-wea.com

Direct: 713-378-8075