Aircraft finance and leasing in Portugal

Information current as of March 2020

The Aircraft will be purchased by the Owner and leased on an operating lease basis to the Airline pursuant to the Lease.

Is this is the usual structure for transactions of this nature in the Relevant Jurisdiction?

Yes.

Yes, an electronic search can be made at Register of the Ministry of Justice, available via an on-line platform (Citius).

Searches can be made instantly and there is no associated cost.

3.1.1 Is any particular form of transfer required for the transfer to be legally recognised?

No particular form is mandatorily required. In practice a Bill of Sale is generally used.

Apart from the documentation mentioned below necessary for the registration, no.

Yes.

Transfer of ownership of aircraft registered in Portugal is not liable to VAT provided such aircraft is used by an airline operating for reward chiefly on international routes.

The transfer of ownership of aircraft parts or equipment of the above mentioned aircraft (used by an airline operating for reward chiefly on international routes) shall also not be liable to Portuguese VAT.

If the Aircraft is to be registered on the Portuguese register then there will be registration fees payable.

Government Requisition is possible but only in the event of war or serious national emergency. Compensation would then be due. Seizure of the aircraft could also take place if it was being used for illegal purposes. Airport Managing Entities have statutory rights of detention of Aircraft for unpaid airport charges and the National Aviation Authority (NAA) has a statutory right to detain, on a temporary or definitive basis, an Aircraft if it has no Certificate of Airworthiness, does not have the appropriate route licensing, if it is unfit for flight or contravenes air navigation requirements or lacks required certifications. Generally the right of detention would not lead to a sale without a Court direction. The tax authorities may seize goods (which can include an Aircraft) for unpaid taxes. If the unpaid taxes are not then paid within a given period, the goods may be auctioned. Customs officers have various powers to detain an aircraft – generally where the Aircraft has been used to carry items liable to forfeiture or which have not cleared customs. Generally the right of detention would not lead to sale without a Court direction. Certain liens can arise as a matter of contract or law, e.g. a seller’s lien for unpaid purchase price. A lien holder does not have the right of sale although the lien holder could seek a direction for sale of the Aircraft from a Court of the debt it is owed continues to be unpaid for a reasonable period of time.

The Chicago Convention of 1944 on International Civil Aviation?

Yes

The 1948 Geneva Convention on the International Recognition of Rights in Aircraft?

Yes

The 1933 Convention for the Unification of Certain Rules Relating to the Precautionary Arrest of Aircraft? 

No

The 2001 Cape Town Convention on International Interests in Mobile Equipment and the associated Protocol on Matters Specific to Aircraft Equipment (the Cape Town Convention)?

No

No.

Is there an Aircraft Register in the Relevant Jurisdiction and if so, what is it called and who operates it? Yes, it is called the National Aeronautical Register (Registo Aeronáutico Nacional) and it is operated by the National Aviation Authority (NAA). It is possible to make a separate registration for Aircraft Engines or Spares.

4.4.1 Who is responsible for registering the Aircraft – is it an owner registry or an operator registry?

It is an owner registry.

4.4.2 What details would normally be recorded on the Aircraft Register upon registration of an aircraft in the Relevant Jurisdiction? If not normally recorded, is it possible to record the Lease and/or an Aircraft Mortgage on the Aircraft Register?

The main details registered are the identity of the Owner, the details of the Aircraft (e.g., manufacturer and year of manufacture, model, serial number, number of engines, intended use and usual aerodrome) and its use. Aircraft leases and mortgages may be registered under the ‘registration of other acts’ procedure and form. Fractional ownerships and the percentages held in the ideal quota of an aircraft are also registrable.

4.4.3 If the Aircraft Register is an operator register, is it possible to record the details of the aircraft owner/lessor and any financier with an Aircraft Mortgage?

It is not an operator registry but it is possible to register e.g., lessors and mortgages.

4.4.4 If the Aircraft Register is an owner register, is registration on the Aircraft Register definitive to determine ownership of the Aircraft?

No, it is not but the “Registered Owner” will be presumed to be the owner. However, an Aircraft cannot be registered in the Portugal if it is already registered outside Portugal and that other registration would not terminate with registration in the Portugal.

4.4.5 Are any distinctions made between aircraft employed on international routes and those used purely for domestic flights?

No.

An application form must be completed and signed, a fee paid and evidence supplied of compliance with required minimum insurance criteria. The following documents are required: agreement or document of sale (Bill of Sale); deregistration certificate from the Aeronautical Registry of the country of previous registration or certificate of non-registration; customs clearance certificate in the case of an imported aircraft belonging to a non-EU country; two photographs of the aircraft, with a photograph of the front and a profile with the marks of nationality and registration painted in 9x12 format, borderless and printed with natural colours. Documents issued in foreign countries must be signed by a notary and be legalized by a notary involved with the affixing of the Apostille as per Articles 3 and 4 of the Hague Convention of 05.10.1961 on the Suppression of the Requirement Legalization for Foreign Public Documents, or duly notarized and legalized by diplomatic or consular officer from the Portuguese embassy or consulate there. Documents issued in Portugal shall contain the signatures of the legal representatives recognized under the law with the words “in the capacity and authority to act”.

No.

In respect of aircraft transactions connected with the Relevant Jurisdiction generally, are there any foreign Aircraft Registers that are commonly used, or should be considered, as alternatives to or in addition to registration with the Relevant Jurisdiction’s Aircraft Register? If so, what is benefit of such registration?

No.

No.

Yes

Generally yes, the parties are free to choose the applicable law and the choice of English law would be respected except for the Mortgage Agreement, if applicable, which has to be governed by Portuguese law.

Lease agreements have to be submitted for approval by the NAA at least 15 working days in advance before operations are due to start. Exceptions are made for some short term leases (no more than five days duration). For NAA approval, documentation in Portuguese or English or duly translated into Portuguese by certified translator is required. Please note also that in case of conflict submitted to Portuguese Courts, all documentation must be translated into Portuguese. For registration purposes, the original or a certified copy of the Lease Agreement must be produced. Documents issued in foreign countries must contain the signatures of duly recognized notary and be legalized by a notary involved with the affixing of the Apostille as per Articles 3 and 4 of the Hague Convention of 05.10.1961 on the Suppression of the Requirement Legalization for Foreign Public Documents, or duly notarized and legalized by diplomatic or consular officer from the Portuguese embassy or consulate there. Documents issued in Portugal shall contain the signatures of the legal representatives recognized under the law with the words “in the capacity and authority to act”.

N/A

The Lease Agreements must refer to the reasons for signing a lease agreement, which should be framed to fit one of the cases set in the NAA’s applicable Regulation 32/2003, as last amended by Regulation 832/2010, that (essentially temporary reinforcement of fleets or aircraft temporary substitution). In accordance with the Operator’s and the Aircraft nationality (national, EU or other) and the type of Lease Agreement (dry lease-out/in, wet-lease in/out), there are other requirements. There are also are terms that are advisable, e.g., the possibility of subleasing and the obligation to return forthwith and without delay the leased aircraft in case of termination of the lease agreement, regardless of the grounds of termination. It is advisable for a prospective lessor or lessee to retain experienced Portuguese law lawyers to advise on terms.

5.6.1 a secured loan?

No, in general no although this would ultimately depend on the substance of the Lease Agreement and the Parties’ behaviours in implementing it. The Courts in Portugal are free to characterise an agreement in light of its content and practical application regardless of the Parties’ intentions or classification of the agreement.

5.6.2 a finance (or capital) lease?

It would depend on the terms of agreement but there is the possibility that the Lease could constitute a finance lease (basically lessee has an option at the end of the agreement to acquire the property of the goods by paying a residual amount).

If, on the basis of these responses a proposed transaction appears to have constituents which could suggest a re-characterisation risk, we recommend detailed advice is obtained.

There is no separate registry but a lease should be registered under a separate form (‘other acts’) and is subject to NAA’s prior approval.

6.2.1 What documentation and/or consents are required for the registration of the Lease?

The Lease Agreement.

6.2.2 What registration fees are payable (if any)?

Currently none.

6.2.3 What information is recorded on the register? How is the eventual discharge of the Lease recorded?

Parties and date of entry into force and end date of Lease Agreement. Discharges of leases may be recorded via the submission of application for register of ‘other acts’.

6.2.4 Does any registration in respect of the Lease remain valid throughout the tenure of the Lease or does such a registration require periodic renewal? If renewal is required when must this be done and what is the approximate cost of renewal?

The registration remains valid throughout the term of the Lease (the registration form already asks for the starting and end dates of the lease).

Yes, in certain circumstances. Please refer to next answer for details.

Yes, the Owner’s direct repossession has successfully been used but it is exceptional, the general rule being the need for judicial proceedings and obtaining of a Court Order.

The Lease Agreement should typically provide for the Lessor to be able to repossess the aircraft in the case of an Event of Default by the Lessee. A Financier/Lessor willing to repossess its Aircraft may either do so by way of enforcing its contractual rights (if any) under the Aircraft Lease Agreement (including the use of an irrevocable power of attorney from the Lessee, if existing) or by taking legal action against the Lessee. Self-help, in the sense of direct action by the Lessor to physically repossess the Aircraft is only possible if there is no absolute available recourse to the authorities. Thus, judicial intervention is not usually required unless the Lessee seeks to contend that such repossession is wrongful or undue. In any event, it is not unusual for the Lessor to need certain cooperation from the Lessee, e.g., to have access to the airport, to the aircraft and to the technical books, in order to obtain the certificate of airworthiness for export issued by the NAA. Upon such measures shall have been taken, the Lessor has to notify the NAA about the facts and attach evidence that the Aircraft Lease Agreement has been terminated accordingly. Should the Lessor obtain no cooperation from the Lessee, the only alternative shall be to initiate court proceedings against the latter, e.g., an injunction for provisional claim to possession followed within 30 days by the main suit to claim possession.

7.4.1 What documents would the Owner as lessor need to present in order to obtain possession of the Aircraft, both before and subsequent to judgment? Can documents be copies?

Essentially the Lease Agreement, title and registration of the Aircraft and all other documentation that could be relevant for proving that said Agreement has been terminated/ended. Documents can be copies and duly certified copies (lawyers or notaries can provide these) are equivalent to originals.

7.4.2 What is the approximate cost of issuing proceedings?

Variable according to the value to be attributed to the proceedings.

7.4.3 Would the Owner be required to provide a bond, guarantee or other security in order to issue proceedings?

No.

7.4.4 What is an estimate of the normal duration of possession proceedings from time at which all required documentation is made available – if uncontested?

Somewhere between six months to two years.

7.4.5 What is an estimate of the normal duration of possession proceedings from time at which all required documentation is made available – if contested?

Somewhere between two to four/five years (assuming the exhaustion of all possible appeals and thus a res judicata judgment).

7.5.1 Is there a waiting period before action may be taken?

There is no set period of time but if there is no risk of loss or damage to the Aircraft, the lessee should be notified of the default and given a reasonable period of time to make good the default before action to repossess is taken.

7.5.2 Is there a long stop date by which action must be taken?

N/A

7.5.3 Is a Public Auction of the aircraft required?

No.

There are practical issues such as clearance to repossess an Aircraft which is “airside” at an Airport. Generally a specialist aviation consulting firm with familiarity of such issues would be used to effect repossession. There is, however, no formal permission required – simply compliance with ground security and similar requirements.

There are practical issues such as clearance to repossess an Aircraft which is “airside” at an Airport. Generally a specialist aviation consulting firm with familiarity of such issues would be used to effect repossession. There is, however, no formal permission required – simply compliance with ground security and similar requirements.

There are a number of circumstances which might affect the recoverability of sums payable or enforceability of obligations. There is an automatic stay on enforcement of credit rights when a Company enters Special Revitalization Process (a form of pre-insolvency protection).

Rent will only be paid during the Administration by leave of the Administrator or the Court and this is only likely if the Administrator believe the leased asset is essential to turn around of the business and is willing to “adopt” the lease.

Other grounds on which the enforceability of obligations under a lease may be challenged by a lessee include mistake fraud, incapacity of the lessee, illegality, sovereign immunity and public policy. Insolvency rules provide for the setting aside of a lease that has been entered into within defined time periods before an insolvency where the lease is intended to benefit one creditor over others or where the obligations on the lessee under the lease are significantly below the value of the benefits of the lease. A Liquidator may disclaim an onerous contract and a lease may be an onerous contract.

It is also worth noting that the Administrator has power to sell a leased asset even though it is owned not by the lessee but by the lessor. Broadly the Administrator would need to account for value realised. In practice this power is seldom exercised except with agreement of the affected lessor and it is believed has not been considered appropriate in respect of aircraft.

Provided the lessee is not in Administration, as a matter of law, the Owner is free to sell at any time (subject to the lease and taking account of the warranty of quiet enjoyment and peaceful possession if the lease has not been terminated for default). Contractually the lease could restrict the Owner’s ability to sell or to assign the lease. If the lessee is in Administration then consent of the Administrator or leave of the Court would be required for a sale.

An Export Certificate of Airworthiness is required. Procedures and requirements differ depending on the destination of the export. VAT and Customs Duty may also be applicable and clearance on both may be required depending on the particular circumstances.

Yes (but previous cancelation of lease should be asked for in the latter case) and no.

No.

Variable in accordance with the workload of the NAA.

Export licences are not required for all goods and generally there are no requirements for a licence to export civil aircraft. Where UN sanctions are implemented in Portugal there may be a complete prohibition on export to an affected country or an export licence may be required.

Variable in accordance with the workload of the competent authorities.

No.

Yes.

Will the courts recognise a power of attorney in the form of an IDERA and governed by English law?

Yes.

Yes.

No, unless the power of attorney was essential for actions to avoid foreseeable damages to the insolvent estate (and until the administrator takes the necessary measures).

9.1.1 Would the airline be required to file for insolvency protection?

It is mandatory to do so in the period of 30 days from the date of awareness of the insolvency. The company is considered to be insolvent if is unable to meet its obligations due. Portuguese law establishes a legal presumption of the situation of insolvency three months after general failure to comply with certain obligations, e.g., payment of tax debts, payment of social security, payment of debts arising from an employment contract, payment of rentals of any type of lease or instalments of the purchase price or loan repayments secured by a mortgage on the debtor’s business premises or head office. With the declaration of insolvency, the company directors will lose their powers to manage and to dispose assets of the insolvent which will be assumed by the insolvency administrator.

9.1.2 Do the available forms of insolvency protection in the Relevant Jurisdiction involve the appointment of either an officer of the court or a specifically court appointed official to take control of the Airline (an Insolvency Official) while in insolvency protection?

Yes, after the insolvency is declared, the court appoints an Insolvency Administrator empowered to manage the company in order to obtain the satisfaction of creditors through an Insolvency Plan (based mainly in the company’s recovery) or through Liquidation (sale of assets of the insolvent ).

Besides the insolvency process, there is also a special restructuring process aiming the recovery of a company that is in a “difficult economic situation” or in a “situation of imminent insolvency” to establish negotiations with the creditors. This process also involves the appointment of a Provisional Insolvent Administrator which will have to authorize certain “particularly relevant acts”.

9.1.3 Does the Insolvency Official have authority to negotiate and reach agreement with the Owner in relation to matters such as the payment of unpaid rent, continuation or termination of the Lease and repossession of the Aircraft without the need for court approval?

Yes. The declaration of insolvency does not suspend the lease contract where the insolvent is the lessee. However, the Insolvency Administrator may terminate the contract by giving with 60 days notice in advance. There is no need for an authorisation of the court but the Insolvency Administrator acts are supervised at any time, with the possibility of removal and replacement of an Insolvency Administrator.

9.1.4 Does the commencement of insolvency protection involving the appointment of an Insolvency Official in the Relevant Jurisdiction have the effect of prohibiting the Owner from taking the following actions to enforce the lease after commencement of such protection:

• applying any security deposit held by the Owner against any unpaid amounts due under the Lease? Yes. Once the insolvency is declared by the Court, the assets of the insolvent are all frozen with the insolvency estate. This means that the Owner will have to claim the credit within the insolvency proceedings. Please note that, as general rule, the security deposit is not a security in rem and for that reason it create contractual rights between the parties. The provisions of the Lease relating to the deposit would be relevant and might impact on the conclusions above.
• accepting payment of rent or other lease payments from:
  1. (i.) the Airline? After the insolvency is declared, the Insolvency Administrator is empowered to manage the company and it is he who must make any payments.
  2. (ii.) a guarantor? No.
  3. (iii.) a shareholder? No.
• giving notice of default under the lease? No.
• obtaining a judgment or arbitral award for unpaid lease payments? No. Any credit against the insolvent company should be claimed within the insolvency proceedings.
• giving notice to terminate the leasing of the Aircraft? After the insolvency is declared, Portuguese law only prevents the Owner to terminate the contract based on unpaid rents or financial deterioration of the lessee.
• exercising rights to repossess the Aircraft? This question will depend on whether the Insolvency Administrator decides to perform of the contracts or decides to terminate the contract. If it is decided to perform the contract, it is not possible to recover the Aircraft; on the other hand, if it is decided to terminate the contract, the Owner can exercise his rights to repossess the Aircraft immediately.

9.1.5 Can the commencement of Insolvency Proceedings have retrospective effect in relation to any such actions taken before commencement? If so, for what period can there be a look back?

Yes. Pursuant to Portuguese Insolvency law, the Insolvency Administrator can void or claw back detrimental acts to the insolvent within the two years prior to the date of initiation of proceedings. Acts or omissions that diminish, frustrate, make difficult, endanger or delay the settlement of creditors are deemed detrimental. Additionally, some acts are assumed to be detrimental, without admission of evidence to the contrary (none of which can be found in the structure of the transaction, however).

9.1.6 Is there, either under law or as a matter of practice in the Relevant Jurisdiction, a period of time within which the Insolvency Official will either “adopt” the lease and pay rent and other lease payments as an expense of the insolvency or “reject” the lease and permit the Owner to enforce such rights as it may have under the lease?

The Insolvency Administrator may terminate the contract by way of 60 days prior notice. There is no specific time limit to do so but in practice Insolvency Administrators tend to take such decisions as soon as possible. In case the Insolvency Administrator decides to the perform the contract, the credits resulting from the contract that have already become due before the insolvency is declared shall be ranked as ordinary unsecured claims; the credits that have become overdue after the insolvency is declared are priority claims on the insolvent’s estate. Please note that the costs of the insolvency shall be paid firstly and before any claim in the insolvency.

9.1.7 If the lease is “adopted” will the Insolvency Official also pay any unpaid lease payments due as at commencement of the insolvency protection?

Please see 8.1.6 above.

9.1.8 If not or if the lease is “rejected”, would the Owner’s claim for any outstanding sums rank equally with other ordinary unsecured creditors of the Airline?

Yes. Please see also 8.1.9.

9.1.9 Are there certain types of preferred creditors whose claims will rank above claims of the Owner? 

As regards the rank of credits in an insolvency proceedings, it is important to distinguish between: (i) costs of the insolvency, i.e. the credits arising out of the insolvency situation (e.g. costs of the insolvency proceeding, payment of the insolvency administrator´s fees, any n “super priority” debt created after the declaration of insolvency); and (ii) claims in the insolvency, for example all the credits over the insolvent with a patrimonial nature or secured by assets included in the insolvent´s estate.

The costs of the insolvency shall be paid firstly and before any claim in the insolvency.

The Insolvency Administrator shall rank the claims in the insolvency respecting the following order of priority: (i) specific preferential credits; (ii) secured credits; (iii) general preferential credits; (iv) ordinary unsecured credits; and (v) subordinated credits.

9.1.10 If the Aircraft is in the possession of a person other than the Airline at the commencement of Insolvency Protection of the Airline, for example an independent maintenance facility, will such person be entitled, under the laws of the Relevant Jurisdiction, to assert a lien arising under law or contract over the Aircraft in respect of amounts then due and unpaid to such person by the Airline?

No, because the Aircraft is owned by Owner until the end of the lease and the person in possession of the Aircraft would be unable to assert a lien over a good that is the property of a third party to the Lessee/bailee relationship.

9.1.11 Is a person other than the Airline, for example an airport authority, entitled under the laws of the Relevant Jurisdiction to seize possession of the Aircraft after commencement of Insolvency Protection and assert a lien arising under law or contract over the Aircraft in respect of amounts then due and unpaid to such person by the Airline.

No, all creditors have to follow the insolvency proceedings and, as above, the Aircraft is owned by Owner until the end of the lease. 

As a preliminary remark, we note that under Portuguese domestic legislation, the income deriving from the lease of an aircraft is qualified as a royalty, which, being due to a non-resident company, is liable to withholding tax at a 25% rate. However, this may be reduced under the Double Tax Treaty (DTT) in force between Portugal and the country of residence of the beneficiary of the income.

10.1.1 the Owner is incorporated and is tax resident in Ireland?

Yes/no DTT yes/no If yes, rate:
Qualified as royalty under the DTT Portugal-Ireland. Income liable to withholding tax in Portugal at the rate of 10% (DTT rate), provided the Portuguese paying company is in possession of a residency certificate duly signed by the Irish tax authorities attesting that the owner is resident in Ireland (until the 20th of the month following that in which the income amount was computed or the payment was made).

10.1.2 the Owner is incorporated and is tax resident in the United Kingdom?

Yes/no DTT yes/no If yes, Rate:
Qualified as royalty under the DTT Portugal-UK. Income liable to withholding tax in Portugal at the rate of 5% (DTT rate), provided the Portuguese paying company is in possession of a residency certificate duly signed by the UK tax authorities attesting that the owner is resident in UK (until the 20th of the month following that in which the income amount was computed or the payment was made).

10.1.3 the Owner is incorporated and is tax resident in Hong Kong?

Yes/no DTT yes/no If yes, Rate:
Qualified as business income under the DTT Portugal-Hong Kong. Income can only be subject to tax in the country of residence of the owner, meaning that no withholding tax will be due in Portugal, provided the Portuguese paying company is in possession of a residency certificate duly signed by the Hong Kong tax authorities attesting that the owner is resident in Hong Kong (until the 20th of the month following that in which the payment was made).

10.1.4 the Owner is incorporated and is tax resident in Singapore?

Yes/no DTT yes/no If yes, Rate:
Qualified as royalty under the DTT Portugal-Singapore. Income liable to withholding tax in Portugal at the rate of 10% (DTT rate), provided the Portuguese paying company is in possession of a residency certificate duly signed by the Singapore tax authorities attesting that the owner is resident in Singapore (until the 20th of the month following that in which the income amount was computed or the payment was made).

10.1.5 the Owner is incorporated and is tax resident in Malta?

Yes/no DTT yes/no If yes, Rate:
Qualified as royalty under the DTT Portugal-Malta. Income liable to withholding tax in Portugal at the rate of 10% (DTT rate), provided the Portuguese paying company is in possession of a residency certificate duly signed by Malta tax authorities attesting that the owner is resident in Malta (until the 20th of the month following that in which the income amount was computed or the payment was made).

10.1.6 the Owner is incorporated and is tax resident in the Channel Islands?

Yes/no DTT yes/no If yes, Rate:
No DTT between both countries. Since the Channel Islands are considered as a tax haven under Portuguese law, income is liable to withholding tax at an increased 35% rate.

10.1.7 the Owner is incorporated and is tax resident in the Isle of Man?

Yes/no DTT yes/no If yes, Rate:
No DTT between both countries. Since the Isle of Man is considered as a tax haven under Portuguese law, income is liable to withholding tax at an increased 35% rate. 

10.1.8 the Owner is incorporated and is tax resident in Mauritius?

Yes/no DTT yes/no If yes, rate:
No DTT between both countries. Since the Mauritius is considered as a tax haven under Portuguese law, income is liable to withholding tax at an increased 35% rate.

10.1.9 the Owner is incorporated and is tax resident in Bermuda?

Yes/no DTT yes/no If yes, Rate:
No DTT between both countries. Since Bermuda is considered as a tax haven under Portuguese law, income is liable to withholding tax at an increased 35% rate.

10.1.10 the Owner is incorporated and is tax resident in the Cayman Islands?

Yes/no DTT yes/no If yes, Rate:
No DTT between both countries. Since the Cayman Islands are considered as a tax haven under Portuguese law, income is liable to withholding tax at an increased 35% rate.

Gross up clauses are acceptable from a Portuguese perspective. If the parties are considered as being related, the increase of the cost shall be analysed from a transfer pricing perspective.

10.3.1 New lease to airline operating for reward chiefly in domestic routes: VAT will be applied to lease rentals at current rate:

6%

10.3.2 New Lease to airline operating for reward chiefly on international routes: VAT will not be applied to lease rentals by reason of application of exemption:

Yes

10.3.3 Sale of aircraft by an aircraft lessor to another aircraft lessor of an aircraft subject to a lease to an airline operating for reward chiefly in domestic routes: VAT will be applied to the purchase price. If the seller and the purchaser are both EU entities and the purchaser supplies its EU VAT Number to the seller then the VAT charge will be a reverse charge. Otherwise VAT will be applied to purchase price at current rate:

6%

10.3.4 Sale of aircraft by an aircraft lessor to another aircraft lessor of an aircraft subject to a lease to an airline operating for reward chiefly on international routes: VAT will be applied to purchase price:

No

10.3.4.1 If no, is this because of application of the exemption under Article 148(f) to the airline following the decision in ECJ Case C-33/2011?

Yes

10.3.4.2 If yes, is this because the Relevant Jurisdiction does not apply the decision in ECJ Case C-33/2011?

N/A

10.3.5 If the transaction involves the first importation of the aircraft into the EU (and assuming the aircraft is intended for use as a civil and not military aircraft) what rate of Customs Duty will apply?

0%

N/A

N/A

10.6.1 being owner and lessor of an aircraft registered in the Relevant Jurisdiction and operated/leased by a company incorporated or registered in the Relevant Jurisdiction?

N/A

10.6.2 making available a lease facility to a company incorporated or regulated in the Relevant Jurisdiction?

N/A

10.6.3 receiving rent and other lease payments under the Lease from the lessee incorporated or registered in the Relevant Jurisdiction?

N/A

10.6.4 repossessing the aircraft and exporting the aircraft from the Relevant Jurisdiction?

N/A

10.6.5 selling the aircraft at a profit, whether such sale is after repossession or is subject to the Lease and the lessee’s rights?

N/A

No, there is no exchange control regime in the Relevant Jurisdiction.

N/A

It is a legal requirement that adequate insurance will be maintained but there is no requirement that the risk is placed with insurers or underwriters in the Relevant Jurisdiction. For Lease Agreements, there is a need to produce an insurance certificate that covers hull risks, civil liability as regards third parties, passengers, baggage, cargo and mail, including risks of war (and in some cases, the risks assumed by lessor and lessee should be specified).

No.

N/A

Yes.

Yes, Owners or Operators are strictly liable as regards damages caused to third parties on the ground by an aircraft during flight or by objects detached from said aircraft and for the damages caused by the aircraft while on the ground (either in motion or immobilised) and except if the damages were caused by those sustaining the damages or in case of natural cataclysm, wars, revolutions, armed conflicts and use of atomic weapons.

Yes.

No.

No.

N/A

Yes, but to the extent that the Owner’s choice of jurisdiction would have a link with the underlying relationship.

Yes, such a judgment could be automatically enforced in Portugal subject to and in accordance with the terms of the EU Regulation No. 1215/2012 on the jurisdiction and the recognition and enforcement of judgments in civil and commercial matters provided that the Lease Agreement’s clause to submit to the jurisdiction of an EU Court is valid under the law applicable to the Lease Agreement. Note that certain formalities apply in respect of a valid choice of jurisdiction in accordance with EU No.1215/2012, for example, the place of jurisdiction must normally be agreed in a (written) document executed by all parties.

Yes and yes.

International Arbitration, e.g. ICC Arbitration.

No.

Yes.

Yes.

Are there any other matters, issues, recommended courses of action or steps which can be taken to protect and/or perfect the Owner’s interests, as owner and lessor of the Aircraft in the Relevant Jurisdiction or of which the Owner should be aware when contemplating leasing an aircraft to a company incorporated and operating in the Relevant Jurisdiction?

N/A