Bermuda has been predominantly known for its thriving insurance market, but there are other areas of business that have seen increased activity helping to reinforce Bermuda as a premier offshore jurisdiction. The registration of aircraft in Bermuda is one such sector that is worthy of mention.
The Bermuda register of aircraft came into existence in 1931. Since then, there have been huge changes in air travel and growth in the number of aircraft in operation. There are currently almost 300 aircraft registered in Bermuda in both the public and private categories. The aircraft registered vary significantly in size ranging from small private to large commercial.
While the majority of aircraft registered are private category (e.g. Gulfstream, Bombardier and Dassault etc.) aircraft may also be registered through leasing structures utilised by commercial airlines provided that a formal agreement is entered into between the Bermuda government and the foreign state exercising de facto regulatory oversight. Multinational companies or high net worth individuals own many of the aircraft registered in Bermuda.
Why Register in Bermuda?
Bermuda is a Category 1 Aviation Regulatory Authority as rated by the U.S. Federal Aviation Administration. Owners and operators benefit as Bermuda accepts all reputable international standards relating to airworthiness and crew licences. In addition the Bermuda nationality and registration mark (VP-B_ _) has the advantage of relative anonymity.
The Bermuda Department of Civil Aviation has an excellent reputation for maintaining high safety standards while remaining approachable and responsive. It is often possible for Certificates of Airworthiness and Registration to be issued in a short time frame whilst maintaining stringent standards. Aircraft registered in Bermuda can be operated anywhere in the world (excluding war zones etc.).
There are currently no Bermuda income, withholding, capital gains, transfer, inheritance or estate duties payable by a Bermuda company or its shareholders, other than those ordinarily resident in Bermuda. A Bermuda Exempted Company is likely to be the vehicle owning a Bermuda registered aircraft both in order to meet the qualification requirements pursuant to legislation as well as serving to limit liability associated with operation of an aircraft. The Bermuda Exempted Company will customarily receive a tax assurance from the Minister of Finance confirming that in the event of there being enacted legislation imposing tax, as identified above, such tax shall not be applicable until March 2016.
Russia as an Emerging Market
Bermuda has seen a significant number of registrations on behalf of Russian clients. This is largely as a result of the relaxation of Russian customs limitations applicable to Western built equipment as well as significant fleet growth and replacement by established as well as new Russian operators. As a result of easier access by Russian operators to new Western manufactured aircraft, the financing of Russian operated aircraft by European banks in particular has surged.
The attractiveness of Bermuda for such structures provides benefits to both operators and to financial institutions that can take security over the aircraft in the form of, among other things, an aircraft mortgage registered in Bermuda
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
