Adrian Bailie and Paul Smith
Ireland’s strategic location between Europe and North America makes it a natural gateway for aviation, and it has become one of the pre-eminent locations for the global aircraft leasing industry. Over 50% of the world’s leased planes are managed from Ireland and the country is also home to 14 of the top 15 lessor companies. This thriving infrastructure around aviation has allowed Ireland to develop an unrivalled expertise in the field across legal, tax and corporate services.
Ireland’s commitment to aviation is evident in the substantial government investment into the sector which together with its tax regime and robust legislation, offers swift and efficient support for those venturing into this domain. The 2024 Airline Economics Global Growth Conference which was recently hosted in Dublin, highlighted the renewed interest in the space and the need for quality advisors and service providers such as HIGHVERN.
Noteworthy advantages include access to more than 70 double taxation treaties, tax exemptions such as zero VAT on international leasing, zero withholding tax on lease rentals and a stamp duty waiver on aircraft transfers. Aircraft Special Purpose Vehicles (SPVs) either used as securitisation structures or for holding aircraft can also avail of the Section 110 of the Taxes Consolidation Act 1997 (TCA) regime that enables the SPV, subject to certain conditions, to attain tax efficiencies. The country is also among the first to subscribe to the OECD BEPS project which is committed to protecting the onshore jurisdiction.
Cayman incorporated; Irish tax resident SPVs
A growing trend in aviation leasing transactions involves the use of SPVs incorporated in the Cayman Islands but tax-resident in Ireland. The Cayman Islands offer efficient and cost-effective incorporation, and these SPVs can be structured to maintain their Irish tax residency through central management and control remaining in Ireland. The Cayman SPV’s directors are required to regularly meet in Ireland with the majority of directors being Irish tax resident. Furthermore, the SPV is obligated to register with the Irish Companies Registration Office and adhere to Irish Revenue requirements. In turn, the Cayman Islands’ registered office provider for the SPV will partner with an Irish corporate services provider to oversee the Register of Members and assist in residency analysis. The use of an SPV allows the structure to become bankruptcy remote, which has multiple benefits for industry participants. The collaboration between Cayman incorporation and Irish tax residency not only streamlines aviation finance structuring but also proves to be highly beneficial, offering efficiency, cost-effectiveness, and strategic advantages for businesses engaged in these transactions.
HIGHVERN is proud to have over 50 years heritage and experience, building a reputation as one of the leading independent providers of fiduciary, corporate, and fund administration services. With a global presence, including offices in Dublin and the Cayman Islands, it delivers flexible support across borders, complemented by unique and award-winning client service. Backed by innovative technology and driven by a team of professional experts, HIGHVERN can help provide tailor-made solutions to your aviation structuring requirements.
