Navigating International Aircraft Financing: A Guide for Non-US Buyers and Cross-Border Acquisitions

Cracking the Code: FAA Ownership Requirements & Trust Structures for Foreign Aircraft Buyers

The United States maintains strict regulations governing aircraft registration and ownership, creating significant hurdles for international aircraft financing. Understanding these requirements and available solutions is essential for non-US citizens and foreign entities seeking to acquire US-registered aircraft.

FAA Ownership Restrictions

Who Can Own US-Registered Aircraft?

Under 14 CFR Part 47, US aircraft registration is limited to:

• US citizens: Individuals who are US citizens
• US corporations: Corporations organized under US laws with president and 2/3 of board being US citizens
• US government entities: Federal, state, or local government agencies
• Resident aliens: Foreign nationals with permanent US residency (green card holders)

According to the FAA Aircraft Registry, these restrictions ensure US regulatory control over aircraft operating in US airspace and protect national security interests.

Why Foreign Buyers Want US Registration

Despite restrictions, US registration offers significant advantages:

• Market access: Largest and most liquid aircraft market globally
• Financing availability: Access to US lenders with competitive rates
• Regulatory reputation: FAA certification recognized worldwide
• Resale value: US-registered aircraft command premium prices
• Operational flexibility: Easier operations in US and many international locations
• Maintenance network: Extensive US maintenance infrastructure

The Owner Trust Solution

What is an FAA Non-Citizen Trust?

An FAA non-citizen trust is a legal structure allowing foreign individuals and entities to own US-registered aircraft while complying with FAA regulations. The trust structure works as follows:

• Trust creation: Established under US law (typically Delaware or Oklahoma)
• US citizen trustee: Individual or corporate trustee who is a US citizen
• Foreign beneficiary: Non-US citizen or entity as beneficial owner
• Legal ownership: Trustee holds legal title for FAA registration purposes
• Beneficial ownership: Foreign party retains all economic benefits and control

How Owner Trusts Work

The trust structure provides a compliant ownership pathway:

1. Trust establishment: Aviation attorney creates trust under US state law
2. Trustee appointment: US citizen trustee appointed (individual or corporate)
3. Trust agreement: Defines trustee duties and beneficiary rights
4. Aircraft purchase: Trustee purchases aircraft on behalf of beneficiary
5. FAA registration: Aircraft registered in trustee's name
6. Beneficial control: Foreign beneficiary maintains operational and economic control

Types of Trustees

Individual Trustees:

• US citizen individual serving as trustee
• Lower cost ($2,000-$5,000 annually)
• Personal relationship with beneficiary
• Potential continuity issues if trustee unavailable

Corporate Trustees:

• Professional trust companies specializing in aircraft trusts
• Higher cost ($5,000-$15,000 annually)
• Institutional continuity and expertise
• Established relationships with lenders and FAA
• Professional liability insurance

Leading Corporate Trustees

• Wilmington Trust: Major provider with extensive aviation experience
• Aerospace Reports: Specialized aviation trust services
• Wells Fargo Corporate Trust: Large institutional trustee
• Bank of Utah: Popular for aircraft trust services

Trust Structure Costs and Considerations

Initial Setup Costs

• Legal fees: $5,000-$15,000 for trust creation and documentation
• Trustee acceptance fee: $2,000-$5,000 one-time fee
• FAA registration: $5 registration fee plus documentation costs
• Total initial cost: $7,000-$20,000

Ongoing Costs

• Annual trustee fees: $2,000-$15,000 depending on trustee type
• Legal review: $1,000-$3,000 annually for compliance review
• Administrative costs: $500-$2,000 for documentation and filings
• Total annual cost: $3,500-$20,000

Trust Agreement Key Provisions

Essential elements of owner trust agreements:

• Trustee powers: Limited to registration and legal title holding
• Beneficiary rights: Exclusive right to possess, use, and control aircraft
• Economic benefits: All income and proceeds belong to beneficiary
• Liability protection: Trustee indemnification provisions
• Termination rights: Beneficiary's ability to terminate trust
• Successor provisions: Procedures for trustee replacement

Alternative Ownership Structures

US Corporation Ownership

Foreign entities can establish US corporations:

• Requirements: President and 2/3 of board must be US citizens
• Foreign ownership: Foreign entity can own 100% of stock
• Operational control: US citizens control day-to-day operations
• Complexity: More complex than trust structure
• Costs: Higher setup and ongoing costs

Lease Arrangements

Foreign operators can lease US-registered aircraft:

• Dry lease: Aircraft only, operator provides crew
• Wet lease: Aircraft with crew and maintenance
• FAA approval: Requires FAA authorization for foreign operations
• Operational limitations: Restrictions on international operations

For context on aircraft ownership structures, see our guide to aircraft partnership agreements.

The Lender's Playbook: How to Build an Irresistible Loan Application for US Aircraft Financing

Securing financing for US registered aircraft as a foreign buyer requires understanding lender concerns and presenting a compelling application that addresses international lending risks. This section reveals strategies for maximizing approval odds and securing competitive terms.

Lender Concerns with International Borrowers

Primary Risk Factors

US lenders evaluate additional risks with foreign borrowers:

• Jurisdiction issues: Difficulty enforcing US judgments in foreign countries
• Asset recovery: Challenges repossessing aircraft located internationally
• Currency risk: Exchange rate fluctuations affecting repayment
• Political risk: Government actions affecting borrower's ability to repay
• Documentation complexity: Verifying foreign financial information
• Regulatory compliance: International banking and anti-money laundering requirements

How Lenders Mitigate International Risk

• Higher down payments: 30-50% vs. 15-25% for US borrowers
• Interest rate premiums: 1-3% higher than domestic rates
• Shorter terms: 10-15 years vs. 15-20 years for US borrowers
• Additional collateral: US-based assets or guarantees
• Restrictive covenants: Limitations on aircraft location and operations
• Cape Town registration: International registry for additional security

Building a Strong Loan Application

Financial Documentation

Comprehensive financial documentation is essential:

• Personal financial statements: Detailed assets and liabilities in USD
• Tax returns: Last 3 years with certified English translations
• Bank statements: 6-12 months from all accounts
• Income verification: Employment letters, business financials, or investment income
• Credit reports: From home country and US (if applicable)
• Source of funds: Documentation of down payment source

Documentation Standards

US lenders require specific documentation formats:

• English translations: Certified translations of all foreign documents
• USD conversion: All financial figures converted to US dollars
• Notarization: Documents notarized or apostilled as required
• Verification: Third-party verification of employment and income
• Consistency: Matching information across all documents

Demonstrating Creditworthiness

Strategies for proving financial strength:

• Substantial net worth: 3-5x aircraft value for international buyers
• Liquid assets: Significant cash and investment holdings
• US connections: US bank accounts, property, or business interests
• Credit history: Established credit in home country
• Professional reputation: Business success and industry standing
• References: Banking and professional references

Specialized International Aircraft Lenders

Lenders Serving International Buyers

Several lenders specialize in international aircraft financing:

• AOPA Finance: Experienced with international transactions
• Banc of California: International aviation lending program
• Textron Financial: Global aircraft financing
• International banks: HSBC, Citibank, Deutsche Bank aviation divisions
• Specialty lenders: Aviation-focused international lenders

Typical International Loan Terms

Improving Your Approval Odds

Establish US Financial Presence

Creating US financial connections improves approval chances:

• US bank accounts: Establish accounts with major US banks
• US credit history: Obtain US credit cards and build payment history
• US investments: Hold US securities or real estate
• US business interests: Establish US business operations
• US tax filing: File US tax returns if required

Work with Experienced Advisors

Professional guidance is essential for international transactions:

• Aviation attorney: Specialist in international aircraft transactions
• Aircraft broker: Experience with international buyers
• Finance broker: Connections with international aircraft lenders
• Tax advisor: Understanding of cross-border tax implications
• Trust company: Professional trustee services

Consider Co-Borrowers or Guarantors

Adding US-based parties strengthens applications:

• US citizen co-borrower: Joint application with US citizen
• US entity guarantor: US corporation providing guarantee
• US collateral: Additional US-based assets as security
• Parent company guarantee: Corporate guarantee from established entity

For comprehensive financing requirements, see our guide to aircraft financing credit requirements.

Beyond the Loan: Mastering Cape Town, Taxes, and Import/Export for a Seamless Acquisition

Successful cross-border aircraft acquisition requires navigating complex international regulations, tax considerations, and registration requirements. Understanding these elements ensures smooth transactions and ongoing compliance.

The Cape Town Convention

What is the Cape Town Convention?

The Cape Town Convention on International Interests in Mobile Equipment and its Aircraft Protocol establish an international registry for aircraft financing interests. Key features include:

• International registry: Global database of aircraft ownership and security interests
• Priority system: First-registered interest has priority
• Enforcement mechanisms: Streamlined repossession and enforcement
• Cross-border recognition: Participating countries recognize registered interests
• Lender protection: Enhanced security for international lenders

According to the International Civil Aviation Organization (ICAO), over 80 countries have ratified the Convention, covering the majority of global aircraft transactions.

Cape Town Registration Process

Registering aircraft interests under Cape Town:

1. Obtain consent: Aircraft owner consents to registration
2. Gather information: Aircraft details, parties, and interest type
3. Submit registration: File with International Registry
4. Pay fees: Registration and annual maintenance fees
5. Receive confirmation: International Registry issues registration
6. Maintain registration: Annual renewals and updates as needed

Cape Town Benefits for International Transactions

• Lender confidence: Enhanced security improves financing terms
• Priority protection: First-registered interest has priority globally
• Enforcement efficiency: Streamlined repossession procedures
• Transparency: Public registry of interests
• International recognition: Recognized in participating countries

Cape Town Costs

• Initial registration: $500-$1,500
• Annual maintenance: $200-$500
• Amendments: $100-$300 per change
• Discharge: $100-$300 upon loan payoff

International Tax Considerations

US Tax Implications

Foreign aircraft owners face various US tax considerations:

• No US income tax: Generally no US income tax on foreign owners
• Sales tax: Varies by state, some states exempt aircraft
• Use tax: May apply based on aircraft location and usage
• Property tax: Some states assess annual property tax
• Customs duties: May apply on import (often exempted for temporary imports)

Sales Tax Planning

Strategic approaches to minimize sales tax:

• Delaware registration: No sales tax on aircraft
• Montana LLC: No sales tax, popular structure
• Fly-away exemption: Purchase and immediately depart state
• Interstate commerce: Aircraft used primarily in interstate/international commerce
• Temporary import: Foreign-registered aircraft temporarily in US

Home Country Tax Implications

Consider tax obligations in owner's home country:

• Import duties: Duties on aircraft imported to home country
• VAT/GST: Value-added or goods/services tax
• Wealth tax: Annual tax on aircraft value in some countries
• Income tax: Tax on charter income or business use
• Registration fees: Annual registration and licensing fees

Import/Export Procedures

Exporting Aircraft from the US

Process for taking US-purchased aircraft to foreign country:

1. Export license: Obtain from US State Department (if required)
2. Customs clearance: File export declaration with US Customs
3. Deregistration: Cancel US registration (if applicable)
4. Foreign registration: Register in destination country
5. Airworthiness certificate: Obtain from destination country authority
6. Insurance: Ensure coverage for international ferry flight

Importing Aircraft to Foreign Country

Requirements vary by country but typically include:

• Import permit: Authorization from aviation authority
• Customs declaration: Detailed aircraft and equipment listing
• Duty payment: Import duties and taxes
• Registration: National aircraft registration
• Airworthiness validation: Acceptance of US certification or new inspection
• Insurance: Local insurance requirements

Temporary Import Considerations

For aircraft temporarily operating in foreign countries:

• Carnet: ATA Carnet for temporary admission
• Time limits: Maximum stay periods (typically 6-12 months)
• Operational permits: Authorization for commercial operations
• Crew licensing: Recognition of US pilot licenses
• Maintenance requirements: Compliance with local regulations

Ongoing Compliance Requirements

US Registration Maintenance

For aircraft remaining US-registered:

• Annual registration renewal: $5 fee, due every 3 years
• Address updates: Notify FAA of trustee address changes
• Airworthiness compliance: Maintain US airworthiness standards
• Trust maintenance: Annual trustee fees and compliance
• Insurance requirements: Maintain adequate coverage

International Operations

Requirements for operating US-registered aircraft internationally:

• Overflight permits: Authorization to fly through foreign airspace
• Landing permits: Permission to land in foreign countries
• Customs procedures: Entry/exit documentation
• Crew licensing: Ensure pilots meet foreign requirements
• Insurance coverage: Adequate liability coverage for international operations

For additional guidance on aircraft acquisition, see our comprehensive guide to aircraft purchase timeline.

From Term Sheet to Takeoff: The Definitive Cross-Border Aircraft Acquisition Checklist

Successfully completing an international aircraft acquisition requires meticulous planning and execution. This comprehensive checklist ensures you address all critical elements for a smooth transaction.

Phase 1: Pre-Acquisition Planning (Weeks 1-4)

Ownership Structure

• ☐ Consult with aviation attorney on optimal ownership structure
• ☐ Decide between owner trust, US corporation, or lease arrangement
• ☐ Select and engage trustee (if using trust structure)
• ☐ Draft and execute trust agreement
• ☐ Establish US bank account for aircraft transactions

Financing Preparation

• ☐ Gather financial documentation (tax returns, bank statements, etc.)
• ☐ Obtain certified English translations of foreign documents
• ☐ Convert all financial figures to USD
• ☐ Prepare personal financial statement
• ☐ Research and contact international aircraft lenders
• ☐ Obtain pre-qualification from 2-3 lenders

Tax Planning

• ☐ Consult with US tax advisor on sales tax strategies
• ☐ Consult with home country tax advisor on import implications
• ☐ Determine optimal registration jurisdiction
• ☐ Plan for ongoing tax compliance

Phase 2: Aircraft Selection and Negotiation (Weeks 5-8)

Aircraft Search

• ☐ Engage aircraft broker experienced with international buyers
• ☐ Define aircraft requirements and budget
• ☐ Review available aircraft and market conditions
• ☐ Conduct preliminary aircraft evaluations

Due Diligence

• ☐ Review aircraft logbooks and maintenance records
• ☐ Verify aircraft registration and title
• ☐ Check for liens and encumbrances
• ☐ Review airworthiness directives compliance
• ☐ Obtain preliminary insurance quote

Purchase Agreement

• ☐ Negotiate purchase price and terms
• ☐ Draft purchase agreement with aviation attorney
• ☐ Include appropriate contingencies (inspection, financing)
• ☐ Establish escrow arrangements
• ☐ Submit earnest money deposit

Phase 3: Financing and Inspection (Weeks 9-12)

Loan Application

• ☐ Submit formal loan application with complete documentation
• ☐ Provide aircraft specifications and purchase agreement
• ☐ Respond promptly to lender information requests
• ☐ Review and negotiate loan terms
• ☐ Execute loan commitment letter

Pre-Purchase Inspection

• ☐ Engage qualified pre-purchase inspection facility
• ☐ Coordinate inspection timing with seller
• ☐ Review inspection findings
• ☐ Negotiate repairs or price adjustments
• ☐ Obtain final inspection sign-off

Appraisal and Insurance

• ☐ Arrange lender-required appraisal
• ☐ Obtain binding insurance quote
• ☐ Provide insurance documentation to lender
• ☐ Finalize insurance coverage

Phase 4: Closing and Registration (Weeks 13-16)

Closing Preparation

• ☐ Review closing documents with attorney
• ☐ Arrange wire transfer of funds
• ☐ Coordinate with escrow agent
• ☐ Verify all conditions satisfied
• ☐ Schedule closing date

FAA Registration

• ☐ Complete FAA registration application (AC Form 8050-1)
• ☐ Execute bill of sale (AC Form 8050-2)
• ☐ Submit trust documentation to FAA
• ☐ Pay registration fee
• ☐ Obtain temporary registration
• ☐ Receive permanent registration certificate

Cape Town Registration

• ☐ Obtain owner consent for Cape Town registration
• ☐ Gather required aircraft and party information
• ☐ Submit registration to International Registry
• ☐ Pay registration fees
• ☐ Receive registration confirmation

Closing Execution

• ☐ Execute all closing documents
• ☐ Transfer purchase funds through escrow
• ☐ Receive bill of sale and title documents
• ☐ Obtain aircraft keys and documents
• ☐ Activate insurance coverage

Phase 5: Post-Closing (Weeks 17+)

Aircraft Delivery

• ☐ Arrange ferry flight or delivery
• ☐ Obtain necessary permits for international ferry
• ☐ Coordinate customs clearance
• ☐ Complete delivery acceptance

Ongoing Compliance

• ☐ Establish maintenance tracking system
• ☐ Schedule required inspections
• ☐ Maintain trust compliance (annual fees, filings)
• ☐ Ensure insurance renewals
• ☐ Track Cape Town registration renewals
• ☐ Maintain FAA registration currency

Tax Compliance

• ☐ File required US tax forms (if applicable)
• ☐ Comply with home country tax obligations
• ☐ Maintain documentation for tax purposes
• ☐ Track deductible expenses

Conclusion: Successfully Navigating International Aircraft Financing

International aircraft financing presents unique challenges, but with proper planning and expert guidance, foreign buyers can successfully acquire and finance US-registered aircraft. The key lies in understanding FAA ownership restrictions, establishing compliant trust structures, and working with lenders experienced in cross-border transactions.

While international buyers face higher costs—including larger down payments, premium interest rates, and trust structure expenses—the benefits of US registration often justify these additional investments. Access to the world's largest aircraft market, competitive financing options, and globally recognized FAA certification provide significant advantages for international operators.

Success requires assembling a qualified team of professionals including aviation attorneys, experienced trustees, international aircraft lenders, and tax advisors familiar with cross-border transactions. These experts navigate the complex regulatory landscape, structure compliant ownership arrangements, and optimize tax efficiency.

The Cape Town Convention has significantly improved international aircraft financing by providing lenders with enhanced security and streamlined enforcement mechanisms. Registration under Cape Town, while adding modest costs, often results in better financing terms and increased lender confidence.

For foreign buyers, thorough preparation is essential. Gathering comprehensive financial documentation, establishing US financial connections, and demonstrating substantial net worth significantly improve approval odds and financing terms. Working with specialized lenders who understand international transactions ensures access to competitive programs designed for foreign buyers.

International aircraft ownership requires ongoing compliance with US registration requirements, trust maintenance, and potentially home country regulations. However, with proper structure and professional management, foreign owners successfully operate US-registered aircraft worldwide while enjoying the benefits of US registration and financing.

Whether you're a foreign individual seeking personal aircraft ownership or an international corporation building a flight department, understanding these international financing dynamics is essential for success. With the right approach and expert guidance, international aircraft acquisition can be a smooth, efficient process leading to successful aircraft ownership.