1 . A I R C R A F T A N D E N G I N E PURCHASE AND SALE
1.1 Sales Agreements
1.1.1 Taxes/Duties Payable Upon Execution of the Sales Agreement
VAT
Whether there will be any VAT payable on the sale of an aircraft is
determined by its physical location at the point of sale. If the
aircraft is physically located in Ireland at the time, the place of
supply for Irish VAT purposes will be Ireland. As a result, the
seller will be liable for any Irish VAT chargeable on the supply,
at 23%. However, if the aircraft will be used outside the EU or by
a transport undertaking operating for reward chiefly on
international routes, Irish VAT will apply at 0%. The seller will
be obliged to be registered for VAT in Ireland, regardless of
whether the 0% or 23% rate applies.
Stamp Duty
Irish stamp duty legislation provides an exemption in
respect of the lease, transfer and sale of an aircraft, regardless
of where the aircraft is located at the time of sale.
Customs Duties
No customs duty will be charged on the transfer of title
of the aircraft where the aircraft is on the ground in Ireland and
in free circulation in the EU.
Customs duties will only apply on the importation of an aircraft into Ireland from outside the EU or on the release of an aircraft in Ireland in circumstances where the aircraft is coming off a duty-suspended procedure such as transit or inward processing.
1.1.2 Enforceability Against Domestic
Parties
As a matter of Irish law, translation, certification, notarisation
or legalisation is not required to enforce a sale agreement against
an Irish party.
1.2 Transfer of Ownership
1.2.1 Transferring Title
Transfer of title is legally effected upon delivery of
the bill of sale, which will usually include engines installed on
the airframe and installed parts on its face, but does not set out
the entire commercial agreement between the parties, usually set
out in the aircraft sale and purchase agreement.
If an aircraft registered in Ireland has a new owner, a change of ownership form should be filled in and lodged with the Irish Aviation Authority (IAA); a new Registration Certificate will be issued to the new owner upon filing the form. The aircraft may not be flown until the IAA issues the new Registration Certificate in the new entity's name and the certificate is on board the aircraft.
The sale of the ownership interest in an entity that owns an aircraft or engine is effectively recognised as the sale of that aircraft or engine itself, to the extent that the entity to whom the ownership interest is being transferred holds title to the aircraft or engine.
1.2.2 Sales Governed by English or New York
Law
There is no formal legal requirement under Irish law
that a bill of sale needs to be governed by Irish law. See
2.6.5 Domestic Courts' Approach to Foreign Laws and
Judgments.
Generally, the transaction documents used in aircraft sale transactions (including bills of sale) are well-established forms and do not present a difficulty from an Irish legal perspective.
1.2.3 Enforceability Against Domestic Parties
As a matter of Irish law, translation,
certification, notarisation or legalisation is not required for the
enforceability of a bill of sale against an Irish party.
1.2.4 Registration, Filing and/or Consent From
Government Entities
A bill of sale cannot be registered with the IAA or
any Irish government entity. No government applications or consents
are prerequisites to the execution and delivery of a bill of sale
in relation to an aircraft or engine registered in Ireland. See
also 1.2.2 Sales Governed by English or New York
Law.
1.2.5 Taxes/Duties Payable Upon Execution of a Bill of Sale
VAT
VAT payable on the sale of an aircraft will depend on the
physical location of the aircraft at the point of sale. If the
aircraft is physically located in Ireland at the time of sale, the
place of supply for Irish VAT purposes will be Ireland. As a
result, the seller will be liable for any Irish VAT chargeable on
the supply, at 23%. However, if the aircraft will be used outside
the EU or by a transport undertaking operating for reward chiefly
on international routes, Irish VAT will apply at 0%. The seller
will be obliged to be registered for VAT in Ireland, regardless of
whether the 0% or 23% rate applies.
Stamp Duty
Irish stamp duty legislation provides an exemption in
respect of the transfer and sale of an aircraft, regardless of
where the aircraft is located at the time of sale.
Historically, the Irish Revenue Commissioners (Irish Revenue) had extended by concession the stamp duty exemption in respect of the lease, transfer or sale of an aircraft also to apply to the sale or transfer of shares in an aircraft-owning entity (AOE). The current position regarding the transfer of shares in an AOE is that this concessionary treatment does not apply, and stamp duty on the sale of shares in an Irish AOE is payable at a rate of 1% (subject to any available reliefs). The duty applies to the market value of the shares or the consideration paid, whichever is higher. Irish stamp duty does not apply to the transfer of shares where the consideration payable or market value (whichever is higher) for such shares is EUR1,000 or less.
Customs Duties
No customs duty will be charged on the transfer of title
of an aircraft where the aircraft is on the ground in Ireland and
in free circulation in the EU.
Customs duties will only apply on the importation of an aircraft into Ireland from outside the EU or on the release of an aircraft in Ireland in circumstances where the aircraft is coming off a duty-suspended procedure such as transit or inward processing.
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Originally published by Chambers Global Practice Guides
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